TransUnion’s Financial Services Summit concluded with a keynote panel discussion about the future of banking
As financial institutions prepare for a more normal lending environment, a recent panel of TransUnion and Amazon Web Services, Inc. (AWS) executives posit that this industry should avoid a return to normalcy by investing in disrupting their work flows. The keynote panel, “Unlocking Banking Opportunities via Cloud Computing,” was delivered last week at the virtual 2021 TransUnion Financial Services Summit, which was attended by financial services executives from across the country.
The panel included Abhi Dhar, CITO of TransUnion, and Scott Mullins, managing director and head of worldwide financial services business and market development at AWS Financial Services, and was moderated by Matt Komos, TransUnion’s vice president of research and consulting.
Panelists highlighted how a disruption in financial services activities through cloud computing could help reduce credit invisibility, bank the unbanked and create credit history for those with none. Panelists said the need for such change is also rooted in the fact that consumer preferences and the lending landscape have changed.
With 244.3 million credit active consumers (those with a balance) in the U.S. as of Q2 2021, 3.2 million more than the previous year, financial institutions may be incentivized to change their practices as a way to acquire new customers and keep existing ones.
“While a return to the status quo in financial services has obvious immediate-term appeal—especially given the economic shocks of the past 18 months—we believe that a reversion to the old ways of doing things puts the industry at risk of being left behind by broad social and demographic changes,” said Dhar. “Leveraging cloud computing and making other innovative changes to their processes is the best offense for financial services firms operating in an environment of constant change. Ultimately, tech innovation will unleash human innovation in the financial services industry.”
Though financial services organizations can derive a multitude of benefits from updating their processes, panelists examined how this particular industry is prone to resisting change. Among the reasons for resisting change is the difficulty of updating legacy systems.
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“Innovation is the process of making changes in something that’s already established. Changing established processes, practices, and technologies can be challenging for financial institutions as they also weigh how to make the necessary adjustments to their risk management practices,” said Mullins. “At AWS, we see the industry’s adoption of cloud services as an opportunity to improve not just the technology that powers the global financial system, but also inform and evolve financial institutions’ ability to more effectively measure and manage risk.”
Four Key Steps for Healthy Disruption
Panelists were presented with the challenge of how disruption may look in the future financial services landscape. To make change happen, the panelists said the following four steps must be taken:
- Reskill talent at scale: Hiring is obviously critical to building a workforce that possesses the technology skills organizations needed to compete. But there are limits to an organization’s ability to source new talent. A limited supply of experienced engineers makes training and reskilling existing team members an imperative. Investing in training a workforce at scale is critical to broad transformation efforts.
- Invest in and embrace a diverse workforce: As studies have shown, diverse teams perform better than homogenous ones. Moreover, if an organization wants to expand its business and access new markets, it needs to develop new products and services for new consumers. To do so, a company needs a diverse workforce to get these products right.
- Create and foster a culture of experimentation: The cloud reduces the costs and risks of performing research, enabling organizations to try new ideas and fail quickly. Creating a culture of experimentation enables organizations to respond more quickly to changing customer needs and evolving trends in consumer behavior. This results in a feedback loop that enables customer feedback to drive continuous innovation.
- Ease access to and usage of alternative data: To access new markets and new consumers, organizations can’t rely only on the datasets that they have traditionally used to assess creditworthiness. They need to make it easier to access alternative data sources to develop non-traditional credit models. Moreover, better integrating data allows organizations to better assess their loan portfolios and apply different data science techniques, including machine learning.
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“It’s important to remember that when we talk about unlocking opportunities, we’re not just talking about technology serving organizations, we’re also talking about people: creating value for financial consumers, their families, and their broader communities,” said Mullins. “The future of the industry lies in greater inclusion, fairness, and diversity, and we believe that technology will play a key role in this evolution.”
To better support its own innovative practices, including offering more solutions that foster greater financial inclusion, TransUnion recently began to implement a hybrid multi-cloud strategy. As part of this strategy, TransUnion collaborated with AWS, among other companies, to ensure the highest levels of security while further automating management and processes.
“TransUnion is a good case study on how disrupting the norm can be exceptionally productive for an entire organization. With our hybrid multi-cloud strategy, we are freeing up the company’s technologists and engineers to innovate and provide them with access to a broader technology toolkit enabled by the cloud,” concluded Dhar.
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