Key points include:
- The finance industry is at risk of disruption due to the growth of AI, the migration of tech talent from finance to tech, and the desire of big tech companies to enter the finance sector.
- Leaders in finance need to accept a necessary culture shift, avoid settling for AI illusions, and proactively recognize the reality of disruptive threats.
The disruption of industries has historically been a rare occurrence, with only 23 of the 568 companies featured in the Fortune 500 since 1997 being younger than 15 years upon their entry. However, three current trends could change this, particularly in the finance sector. These trends are the fast-paced growth of AI, a considerable shift of tech talent from finance to tech, and big tech companies showing an increased interest in entering industries like finance.
One walk around a major investment bank late at night would show an industry unchanged for several decades. Employees in their mid-twenties to mid-thirties, typically with advanced degrees from top universities, would be hard at work pasting data from PDF files into Excel models, and then transferring those charts into PowerPoint presentations. These slides would then be used the following day to attempt to persuade a potential client to hire the bank for their services.
To safeguard the finance industry from these potential disruptions, leaders are advised to take three steps. Firstly, finance leaders must accept that cultural transformation is key to digital transformation. Resistance to change could cause a company to get left behind as the industry evolves. Secondly, companies should not settle for AI optics. Simply adding AI features to a product is not enough – organizations need to leverage AI to truly innovate and add value. Lastly, finance leaders should assume that the disruptive threat is real and take proactive measures.