Charles Darwin’s research showed it isn’t the strongest of the species that survives, nor the most intelligent, it is the one that is the most adaptable to change. This sentiment may have come to light in the 1800s but still bears great relevance to modern business, especially in the midst of the digital age.
When it comes to explaining the concept of ‘Digital Darwinism’ or digital disruption, people need case studies they can relate to – such as Blockbuster. Once an icon for the video rental industry, it failed to adapt to the demands of a digital world, was reduced to the least profitable movie distribution company in the United States, and now the likes of Netflix, Amazon, and HBO dominate its market.
The lesson is that digital disruption has affected organizations all over the world. Whether it’s cloud, machine learning, or AI, no industry or line of business has been immune from digitalization – especially financial services, where disruption is forcing established players to innovate to keep pace or risk losing out to agile competitors.
Financial services has been slow in its uptake of cloud – risking failure to meet customer demand for faster delivery of product innovations, personalized services, and more efficient operations.
Customers are increasingly focused on cost reduction and flexibility, and the banking industry is no exception. Simply look at the United Kingdom’s Faster Payments; not only does the payment arrive in seconds, the fees charged by the banks for this service have fallen dramatically to almost, if not completely, free. So having your own on-premises system, security, IT, and data centers is no longer a great option.
Despite the clear advantages of moving to the cloud, financial services is lagging other industries. Banks are hampered by the rigidity of legacy systems lingering often from the last century. The ever-evolving regulatory landscape has added to the complexity.
There is light at the end of the tunnel as the European Banking Authority (EBA) sets out guidance for the use of cloud by financial institutions. This clarity reduces the anxiety around cloud, especially with the regulators, making the adoption of cloud initiatives a case of “when,” not “if.”
IDC predicts that the industry will react to this shift, finding that by 2018 more than 85% of enterprise IT organizations will commit to multi-cloud architecture. That is not simply a “public cloud” but many “clouds” working together. Banks must service customers impeccably on a day-to-day basis while providing new mobile services, fast.
Darwin would have understood; it’s Digital Darwinism, accelerated evolution.
Learn more about SAP cloud services, which covers SaaS, PaaS, and IaaS as well as a range of cloud deployments from public and private to hybrid. You can also download our Digital Banking white paper and visit SAP for Banking for further insight.