The Fifth Industrial Revolution and finance: insights from Naveed Sultan

Naveed Sultan, Professor of Practice at Imperial College Business School and former Chair of Citi’s Institutional Clients Group, shares his insights into how data and technology are transforming finance and business, and what challenges and opportunities this presents

With over 30 years of experience in global banking and finance, including as Chair of Citi's Institutional Clients Group, Naveed Sultan has been at the forefront of digital transformation in the financial sector. Now a professor of practice at Imperial College Business School, he sat down with us to discuss how technology is changing finance and business. 

What opportunities does financial digital transformation offer to businesses? 

The world is going through a major transition, which some observers are calling a fifth industrial revolution. Large parts of the economy are being reorganised, new business models, ecosystems and platforms are emerging, and lifestyles are changing.  

Digital transformation, as the deployment of a range of technologies to create better economic and societal outcomes, is part of this, with data at its core. For the finance function within a business, if you can get data promptly and accurately through technology, with the right analytics, you can make better decisions and create better outcomes.  

In time, these processes can make organisations more productive, efficient and accurate, and provide a greater level of confidence in their underlying activity, particularly from a compliance and risk perspective. The greater the confidence organisations have in their core processes and their operating and business models, the greater the confidence they have in doing business with clients.  

How is this playing out in the financial sector? 

We can split the sector broadly into two camps: new fintech players such as Stripe, Square and Revolut, and established banks. On the consumer side, there has been growing competition between the two, but on the institutional side there’s actually greater collaboration.  

Fintech firms need access to banks’ customers, while banks themselves see that fintech solutions can deliver better results for their clients. This has led to incumbents in the sector taking equity positions on emerging fintech players or buying them outright.  

This allows banks to offer a better, more innovative and efficient proposition to their clients. And, as fintech firms become more successful, their valuations go up and banks benefit from investing in them. 

What should businesses be aware of when planning digital transformation? 

Whenever new technologies come up, there is a natural tendency to deploy them in the current operating model or on top of legacy systems, without considering the underlying core processes, or the organisational, cultural and talent implications. Generally, this is unlikely to be successful. 

Businesses have to first reorganise how they work, in a holistic way. They need strategic commitment from senior management, the right talent to manage data and deploy new technology, and plans in place to change culture and staff mindsets. Only when these key organisational and cultural requirements are met will a business be ready for technology-led change. 

And from a society-wide perspective too, we need to start seeing digital transformation not as a technology issue, but as a policy, strategic, cultural and organisational issue. All economic actors need to operate in alignment for an optimal transition, both economically and societally. 

What role are specific technologies such as blockchain and AI playing in financial digital transformation? 

At the surface level, they are already increasingly important. For example, blockchain provides smart contracts, improved supply chain management and greater transparency in transactions, while AI offers better risk management, fraud detection, algorithmic trading and personalised customer experiences. 

However, there is often an inflection point when technologies work in combination. So, when AI and blockchain are combined, we can see, for example, cross-border tokenisation of securities with smart contracts and enhanced fraud protection – something that combines the technologies as more than the sum of their parts. 

Mr Sultan, thank you for your time.

About the expert

Professor of Practice at Imperial College Business School since 2023, Naveed Sultan is Co-Director of the School’s Centre for Financial Technology and co-founded the Centre for Responsible Leadership.