Financial services are changing at a very fast pace due to the disruptive effects of technology across the whole financial value chain. New developments represent a threat to the current status quo and it is vital for banks and asset managers to incorporate new technologies. Simmons & Simmons presents a report that explains how some leaders in the industry are adapting their innovation strategies.

International legal practice Simmons & Simmons released a report that explores the challenges that banks and asset managers are facing to cope with the changes that technology-driven developments are bringing to the whole financial industry. It also explores some of the strategies that these institutions are using to accelerate their digital innovation. In order to become more competitive in the actual financial landscape, large financial institutions need to incorporate tech solutions into their way of operating.

The report suggests that since the financial crisis, the Fintech sector experienced rapid growth. This gave birth to new players who started playing roles across the whole financial value chain to the point where, in some cases, financial institutions are being replaced. This, according to the report, represents a material threat to big parties in the financial landscape.

The key findings in the document present the status of the landscape and in describe the ways big players across the financial industry are approaching innovation. The report states that big institutions need to recognise that they are not usually first-movers when it comes to innovation; however, the ones that manage to be first-movers will be rewarded. It also states that not all players are fintech-ready, and that in order to cooperate with fintech firms, institutions have to make some changes. Cybersecurity and regulatory issues need also be taken into account as the environment changes at such a fast pace. The report also recognises the importance of industry consortia, developments such as distributed ledger technology, and the fact that growth is also driven by innovation.

The also inform mentions six steps that can help big financial institutions to move towards a digital innovation model:

• Create innovation spaces outside the constraints of organisational culture
• Adapt an on-boarding process that is compliant
• Flexibility approach to IP structure
• Centralise the digital innovation programmes
• Spend time with partners in order to know them better
• Work in a cross-industry investment model

Simmons & Simmons carried out the research in partnership with Longitude Research. It surveyed 200 senior level respondents form banks (67%) and asset managers (33%) across five financial centres: Frankfurt, Hong Kong, London, New York and Singapore.