As the digital revolution accelerates, financial institutions are racing to create enterprise value by investing heavily through the economic cycle, according to a study published by global fintech, Broadridge Financial Solutions.
The study reveals that 75% of executives are confident in their tech transformation roadmap.
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Growing digital maturity map
But a digital maturity gap is growing between leaders and non-leaders. More than two-thirds say they have made meaningful progress in modernising their core IT platforms. But organisations must make progress against multiple tech and talent frontiers as they grapple with new technologies like GenAI, rising cybersecurity challenges, and accelerating needs for seamless digital customer experiences.
When it comes to areas of focus, more than 80% of all executives indicate that they are making the biggest day-to-day investments in cybersecurity technology and building an advanced IT cloud platform. Meanwhile the majority also expect to maintain or increase their investment in next-gen technologies like AI, quantum computing, crypto/digital assets, and blockchain over the next two years.
“It’s no surprise that we are seeing significant momentum in the adoption of next-generation technology like GenAI from financial services firms looking to solve their most pressing business challenges. They’re also gaining measurable value from more established technologies including AI, blockchain, cloud and core infrastructure platforms,” said Chris Perry, President of Broadridge.
“Focusing on the human aspect of digital transformation – attracting and retaining digital talent and fostering a culture of innovation – has proven to be just as critical to ensuring these initiatives succeed. Our study also revealed that firms with a decentralised approach to innovation are more likely to be leaders in transformation.”
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By GlobalDataAI-centric customer experiences anticipated to be the new norm
Personalised and seamless digital customer experiences have become an expectation in the financial services industry. 40% indicate that being customer obsessed with priorities deeply rooted in client needs is the top accelerator of digital transformation.
Fueling many of these changes in the customer experience paradigm is AI. Seventy percent of leaders (52% overall) indicate that they are prioritising their AI investments in customer interaction to fuel stronger and more meaningful customer engagement. When it comes to Generative AI, leaders are more likely to be making large or moderate investments in the technology (44%). That is more than twice the level of non-leaders.
Despite the higher levels of investment by leaders, the lower cost of entry to deploy GenAI may allow non-leaders to get in on the action more easily. This will enable them to catch up in their efforts to deploy the technology to both customer-focused and internal use cases.
Focus on talent and culture for innovation initiatives to succeed
There have been significant IT advancements year-over year. However, there is still work to be done in enterprise-wide skills development. Only 28% of all executives surveyed have reached the advanced stages of implementing a digital skills and talent strategy. That represents a year-on-year increase of 4 percentage points.
In addition to the technology aspects of transformation, digital leaders have not neglected the human side. 71% of leaders have reached the advanced stages of implementing digital skills and talent strategy. This compares with 12% of non-leaders. A further 85% say they have created an advanced innovation culture versus 24% of non-leaders.
Cyber risks are still a top challenge
As financial organisations accelerate digital customer experiences, they continue to put enormous effort into strengthening trust and security.
Over the next two years, financial institutions plan to boost their investments in cybersecurity by 28% on average. This impacts their internal security protocols, but also how they engage with third-party technology vendors. According to the study, cybersecurity is the top capability executives say they expect from their technology vendors, outpacing their ability to deliver projects on time and on budget and building next-generation technologies into their solutions.
Executives also cited cybersecurity risks as the top challenge currently inhibiting the pace of digital transformation at their company.
