Embrace Disruption in Financial Services Because It’s Here to Stay

By Jim Tomaney

The dinosaurs of old are ready to be challenged by businesses that have evolved and are hungry – This article discusses how technology starts to influence and transform the financial services sector, considering the innovations in ATM during this new wave of tech disruption provided by prepared businesses to offer change.


Traditionally, the pace of innovation in financial services has been sluggish, glacial even, particularly when you consider how other industries have evolved over the years. Tuning your television into a VHS recorder using a dial will likely strike a chord with anyone over 30, yet it’s a distant memory compared to how we watch things today.

Until very recently that same level of innovation, combined with any sort of desire to change, had spectacularly failed to spill over into the financial services sector. 

Yet, at long last, change is afoot. 2018 was a disruptive year in financial services with fledgeling Fintechs and challenger banks starting to make pulses race under the neatly ironed collars of large-scale financial enterprises.

This new momentum in innovation for financial services can be attributed to three key factors. Consumers expect more when it comes to their experience of financial services; Fintechs are prepared and able to offer change; and the infrastructure, both social and technical, behind traditional access to financial services is changing. We don’t need to go into banks anymore.

As recently published in PricewaterhouseCoopers’ 19th Annual Global CEO report, 81% of banking CEOs are concerned about the speed of technological change, more than any other industry sector. What a refreshing statistic. Through technology, new players in global financial services have found a backdoor into the market and come armed with some very specialist knowledge and creative ideas about how to meet the rising tide of 21st century consumer demands.

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The 50-year ATM experience

Consider the Automated Teller Machine (ATM) in the context of this welcome wave of disruption to financial services, for example. When the first ATM was opened at a Barclays in North London in 1967 it represented the pinnacle of technological innovation in banking, both improving customers’ experience, reducing operating costs for banks, while increasing convenience for everyone involved. It was hailed as a revolution in money management.

Until very recently however, 50 years later that is, very little has changed in respect to innovation in the service. ATMs have, for the large part, come to be perceived as cash dispensers. Given the impact of contactless and the heavily reported dearth of cash, you could be forgiven for thinking they probably won’t be around much longer, particularly if they’re becoming unprofitable for operators. 

Vendor lock-in and the perpetual cost of having to routinely upgrade legacy architecture has been a major turn off for banks when it comes to innovation in the ATM space. A chronic lack of desire to invest and improve the consumer experience makes your average high-street ATM look about as intuitive as mud.

Now, however, thanks to the availability of more appropriate 21st century cloud technology, the agility and flexibility to allow for new ATM functionality has been rolled out by businesses that see the potential for change and improvement. 

“Smart ATMs” built using agile cloud technology and working tandem with other innovations, including mobile banking, are turning these “cash dispensers” into a convenient way to offer customers a range of financial services without having to step foot into a bank, in other words they are creating a “branch-in-a-box”. Given the rate at which bank branches appear to be closing, across the UK at least, this break in the mould couldn’t have been timelier. 

ATMs could become the ideal tool through which the availability and coverage of financial services can be maintained and eventually, increased. Exclusion from financial services is becoming a real concern in rural areas, to the extent the issue is now under debate in House of Commons. In developing countries some of who face endemic levels of financial exclusion, ATMs are a window to the connected world for both the banked and the unbanked, creating possibilities that can genuinely change people’s lives for the better.

The recently announced “Next-Gen” initiative from the ATM Industry Association is a campaign that seeks to catapult ATMs into the 21st century and beyond. It illustrates that across the industry, positive change is en route. The dinosaurs of old are ready to be challenged by businesses that have evolved and are hungry. 


Fortune favours the bold

Innovation in the ATM industry is just one example of how Fintech is injecting new life into financial services. Challengers are succeeding throughout the sector because they recognise the winning formula is offering a better consumer experience at a much lower price and being brave enough to take the plunge. Take Monzo’s concept, for example; all the power of a current account, free (unlike many current accounts offered by banks), with sophisticated money management tools, all controlled from an app on your phone.  

One of the single biggest constraints financial organisations face when it comes to responding to new demands is the technology that underpins their payments platforms. It’s old, too old, and clunky. Particularly when it comes to ATM technology and other cogs in the payments cycle, the architecture and code behind these systems was written back in the 1980s and 1990s. It is incredibly hard to see how a system built around – and they are built around, to the side, on top, and patched on wherever else possible – legacy technology is expected to work alongside and be integrated with today’s technology. 

Over the last 12-or-so-months the financial services sector, and particularly banks, have had their fair share of high-profile crashes and outages. The reputational damage these create is immense. More often than not they are caused by trying to integrate modern technologies, often deployed in public or private clouds, to traditional processing platform which are embedded in legacy systems and protocols.

Banks need to re-think their approach to technology and be bold. The move away from lethargic legacy technology towards a leaner, more agile cloud-native approach would significantly improve financial organisations’ ability to respond, innovate, and bring new and robust products to market at pace and without having to take risks. Innovation in financial services is now being driven by businesses that are prepared to offer change.


About the Author

Jim Tomaney is the chief operating officer at Renovite Technologies Inc. He has 30 years of experience building, delivering, and selling enterprise payments solutions and associated services for the transaction processing industry across the world. He has worked in a variety of senior roles delivering solutions for organisations including Barclays, ING, CIBC, Bank Of America, ABN AMRO & Vocalink and working with ACI Worldwide, Wincor Nixdorf, Level Four Software and Barclays Bank.


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