Innovations have been causing a lot of disruptions in the markets in the last few years. The biggest global banks have finally made up their minds, and instead of waiting for the newest ideas to disrupt the markets once again, they joined the race. This of course means heavy investments into the segment. J.P. Morgan is actually an example of the new policies, as they invested $11 billion into technologies.
There is also an increasing number of banks that decide to outsource the big share of their works and responsibilities. This is a great relationship for both sides, as banks do not have to develop the whole infrastructure needed, and the ‘smaller’ companies have big and influential partners. One of the examples of such a company is Fusion Risk Management.
What’s important in the process, is the implementation of ‘operational resilience’. Although this may sound like a made-up and empty concept from the post-2008 era, it is actually a crucial element of planning the business’ trajectory.
According to the Bank of England, it is a firm’s ability to absorb the shocks, adapt to them, and keep on going undisturbed. This is a set of planning techniques that go beyond damage control and recovery, but rather include preparing for different scenarios and being able to deliver services no matter what the environment is.
The financial system, when left unchecked, could in fact keep on developing, but also in ways that would leave it shock-vulnerable. Public authorities have a role in establishing baseline resilience levels. Whenever shocks occur, they should not disrupt the whole financial system. And here comes the technology that brings solutions to a lot of that matters - that is what the banks are investing in.
To find a brilliant Disruption Banking piece written by Benjamin Jenei on this matter, where the author analyses different solutions, feel free to use the following link: https://disruptionbanking.com/2021/04/19/why-are-banks-spending-so-much-on-tech/.