PA financial services expert, Magnus Krusberg, is quoted in an article in Realtid explaining the need for the financial services sector to embrace innovation and partner up with FinTech companies to stay competitive over time.
Magnus says: “The financial sector is an industry in rapid transition. In addition to more transparency in the industry, and a more customer-oriented bank, we will see closer cooperation between banks and startups in FinTech sector.”
The article then goes on to outline how PA is different from many other management consulting firms. One area in which this distinction is clear, is that PA is co-owned by a private equity firm – The Carlyle Group. Whereas other management consulting firms are largely focusing on acquisitions of smaller specialists to meet the demand for developing digital services, PA is bringing in external capital to further develop its own innovation and sector strategy.
The existing ownership model has allowed the company to roll out a global go-to-market strategy relatively quickly and this has been followed by strong growth. The Nordic region is one of the growth markets that, in 2016, we recruited 60 employees. Magnus holds the position as country head Sweden and leads the financial services team at PA in Sweden.
The article highlights that one reason why Magnus chose to join PA one year ago, is its focus on innovation. PA has a long tradition of innovation that stretches back to the 1940s when the company contributed widely to innovation in the defense industry. PA has its own research and development centre in Cambridge, UK, where around 200 people work on the various types of innovation projects, including product and process development.
Magnus says: “The work at our Cambridge Technology Centre spans a wide range of sectors. From the process of developing an idea that can turn into a mass-manufactured product, to creating various prototypes for the manufacturing industry.”
PA is also very active in the FinTech market and assists the supervisory authorities, banks and FinTech companies to meet the future financial market.
“We help banks and other players in the financial sector to develop processes to fulfill all the legal requirements. But in the UK we also help the authorities to design their processes and policies to meet the needs and expectations of industry,” says Magnus.
The financial sector is an industry in rapid transition. The EU's payment service, PSD2, is one of the directives that has emerged in recent years and which places new demands on the industry. The purpose of the directive, which was pushed through in autumn 2015, is to make it easier for third-party services – such as payment services from Klarna or saving apps like Tink – to access data and conduct transactions in the banking system. For large banks, the new directive means they are forced to open up their systems for services – and in many cases, in direct competition with its own operations.
Magnus explains: “One of the big questions now is how banks should interpret legal requirements and how best to adapt to the legislation, as both are perceived as complex and contradictory given the new data protection regulation requires control of data.”
Magnus predicts: “The transition to greater transparency will not stop with legal requirements. Customers will want to see their mortgages, pensions and mutual fund savings schemes. Most likely, customers will drive development towards increased transparency so the requirements go far beyond what the law requires. The big winner is the customer as competition increases. But banks can also benefit because they gain insight into their competitors' conditions.”
“The increased competition from FinTech companies will lead to banks and insurance companies becoming more customer-oriented. Instead of the customer having to navigate among banks’ products, I believe banks will be more focused on what happens in the individual customers’ life and adapting their offers accordingly. This will lead to customers engaging more than one bank so each one meets customers’ various needs.”
The FinTech sector will also change because many players will need a more sophisticated infrastructure to be able to meet a larger share of customers' needs, and become a fully-fledged distributor to the individual customer's bank.
Magnus concludes: “The adjustment to the new reality requires new internal structures that are both complex and cross-border in nature. To achieve efficiency it is important the transition is carried out in a structured way and that resources are coordinated. This is where PA can add value.”
“PA will be a significant company. We will not be among the biggest players, but we will be a major player for the main banks and insurance companies in Stockholm.”