The theoretical physicist Stephen Hawking wrote that “Intelligence is the ability to adapt to change.” But as the pace of technological change quickens, the challenge of keeping up — let alone staying one step ahead — is an ever-present existential threat to companies and industries alike. Nowhere is this more acutely felt than in finance and healthcare, where regulation can at times seem a powerful counterforce to rapid progress and disruption.
As business leaders operating within the walls of these two industries, we naturally tend to view our challenges as unique. After all, finance and healthcare each have very different goals, stakeholders, and complex histories that have shaped their current forms. Despite these obvious differences, they face similar structural challenges when it comes to driving innovation in regulated markets.
Sharing cross-industry knowledge and best practices can offer fresh ideas and a healthy perspective on how to approach our work. Here are a few themes that have emerged from these cross-industry conversations.
1. Start with Building Trust
It’s not that long ago that people were hiding their money under mattresses. Now, a new app appears almost daily for managing our budgets while robo advisors counsel us on our most valuable investments. None of this would be possible without a strong foundation of trust in the underlying security of financial data exchange.
Healthcare, by contrast, is just starting to catch up to the modern age. Consumers can withdraw cash and check their balances from any ATM in any random corner store in America. But just try walking into your primary care provider’s office and asking for a record of all care you’ve received at different locations over the past year. All you will get are shrugs and blank stares.
Both industries are changing fast. Healthcare providers are digitizing consumers’ health data and sharing it with tracking apps, AI-driven health assistants, and through video consults. This brings to the fore the question of responsibility for patient data and security. Is our doctor still responsible? Are we as patients? In the era of hidden, fine-print privacy agreements, how do we know whom to trust? As the healthcare industry grapples with this seismic shift — and its regulatory implications — it would do well to learn from financial services where trails have already been blazed.
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“Not only has the customer experience been increasingly digitized, but the center of gravity has shifted from the institutions to the customers themselves.”
In the financial world, the industry dynamics are also shifting to accommodate a more consumer-friendly experience. Banks, credit unions and wealth companies are placing much more focus on ensuring that there is a seamless customer experience, and shifting from a world of augmented finance to a journey-driven world of autonomous finance — all of which requires even more alignment with industry regulators.
2. Work with Regulators, Not Around Them
The first step in working through regulation is to separate myth from fact. Too often, in both industries, regulation is used as an excuse for sidelining innovation and falling back on the status quo. In healthcare, for example, HIPAA (the Health Insurance Portability and Accountability Act) is often the scapegoat blamed for lack of open data sharing or sub-par patient experiences.
As you look to bring new products and ideas to market, be sure to enlist myth-busters within your institutions who clearly know what regulations say, and don’t say.
Second, enlist regulators and compliance officers as your partners and champions. These crucial stakeholders tend to be viewed as obstacles rather than assets in the march to innovation. This approach simply doesn’t work in industries where regulation exists to protect consumers and safely guide products to market. Instead, include everyone in the process — early and often — who might potentially throw up roadblocks down the road.
Regulators want to be part of the process, and are increasingly taking an innovation posture of their own. The Monetary Authority of Singapore, for example, became the most recent financial regulator to launch a “sandbox” initiative to provide firms with a faster way to test innovative financial products and services and bring them to market. The results of such regulatory initiative are evident in the U.K., where a similar sandbox has encouraged a wave of financial innovation.
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3. Re-Center Around the Consumer
Both healthcare and financial services were built around being the brick-and-mortar destinations for customers — the doctor’s office and the branch. In recent years, not only has the customer experience been increasingly digitized, but the center of gravity has shifted from the institutions to the customers themselves.
This shift has come slower to healthcare where third-party insurers traditionally distanced patients from buying decisions. But as patients take on more out-of-pocket costs of care, they are acting more like the cost-conscious, convenience-seeking consumers they are elsewhere in their lives. Consumers in both industries are less loyal to their financial institutions and doctors than ever and are continuously shopping for the easiest, most convenient experience.
“Consumers are less loyal than ever and are continuously shopping for the easiest, most convenient experience.”
In both industries, new tech-enabled entrants are disrupting entrenched incumbents and forcing them to compete or lose market share. In the financial services sector, companies like Chime and Betterment are spurring traditional financial services firms to improve their digital capabilities through banking apps, robo advisors, virtual chat and simulators. In healthcare, century-old hospitals are launching their own health tracking apps, opening urgent-care storefronts, and embracing a retail mindset in an effort to retain patient volume and loyalty.
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4. Show Value, and Be Patient
Financial institutions and hospitals used to be able to launch a new credit card or a new specialty care offering, advertise its benefits, and watch the business stream in. Those days are long over. Now, consumers and other stakeholders all expect to see measurable value for any new innovation or product.
Financial consumers want to compare rates and analyze ever-expanding lists of perks and benefits. Healthcare consumers increasingly want to compare quality scores, doctor ratings, and wait times. Before fully embracing new processes and innovations, healthcare providers want to see clinical and financial results to be sure it’s good for both their patients and their bottom lines.
Finally, patience remains a virtue in both these essential industries. While the best practices outlined here are helping the industries become more nimble, adaptive, and responsive to consumer needs, it’s important to remember that both are the trusted stewards for people’s health and financial well-being. In their desire to innovate and move quickly, banks and credit unions, and health-care providers must always make the time to do it thoughtfully and safely.