How FSIs Are Dealing With Digital Transformation

See how the financial services industry is progressing on its digital transformation journey, and which challenges lie ahead.

A successful digital transformation requires wide-reaching changes–cultural, financial, operational, and technical. For large organisations still wedded to entrenched processes and systems, making a short-term business case for these shifts can be especially difficult. The financial services industry (FSI) understands that firsthand, but they’re not letting that stop them.

So how are companies within this sector handling the changes necessary for digital transformation? Adobe’s “Digital Trends In Financial Services” report breaks that down by type of FSI business, including banks, insurance providers, and wealth and asset management firms.

Insurance Companies Appear Bullish

Within FSI, insurance providers said they are a bit more confident in all areas of their digital capability than other players, with 77% agreeing “strongly” or somewhat strongly” that they “have a cross-team approach with the customer at the heart of all initiatives,” compared with 75% in retail banking and 72% in wealth and asset management. More noticeably, 84% of insurers agreed that they “are combining digital marketing skills with technology,” compared with 72% and 65% in in retail banking and wealth and asset management, respectively.

This confidence in skills is encouraging. Insurance companies are much more likely to indicate reluctance to upskill their workforce, with nearly a quarter (24%) of these companies suggesting they will make little or no investment in digital skills and education this year, against 13% of retail banks.

Adobe industry marketing director Mike Plimsoll recalled one major insurer he worked with that enjoyed a successful transformation because it appreciated the need for an agile approach.

In particular, the organisation knew this method of working would only be successful if everyone adopted it. “You can have all of these teams working on one-week sprints, scrums, and other elements of agile, but if the legal team, for example, doesn’t follow the process and takes two weeks to approve things, it won’t work,” he said. “You’re only as agile as the lowest common denominator.”

Merging Personal And Digital

In contrast, the report found wealth and asset management firms lagging in their less digital transformation progress, possibly owing to regulatory tightening and a greater legacy of personal client relationships.

Chris Skinner, a long-time fintech advocate and chairman of The Financial Services Club, said he sees this reliance on physical meetings changing and a shift to embrace communicating digitally.

“Most of the corporate institutions and individual investors that I speak to today would be more than happy to deal with their financial relationships through digital devices,” he said. “If you’re not allowing videoconferencing options or other forms of social access to the institution, then you’re missing a trick.”

Plimsoll said he sees the same shift in behaviour now that tech has improved, offering an enhanced ability to nurture one-to-one relationships properly. He’s also witnessing the same companies using tech to ensure great continuity of service and retain institutional expertise.

“If you’ve got a successful adviser who leaves behind a huge book of business, you want to have as much information as possible about those people clients, which is easy to access. When was the last time they were contacted? What was the content of the last conversation?” he said. “Well, if that’s all available on a centralised system, then you retain that.”

Cultural Champions Drive Success

Board-level leadership behind any transformation is a prerequisite for success, though it is still lacking on occasion, Skinner said.

“In some companies, the CIO reports into the CFO or the COO, so they don’t actually sit on the leadership team. You need someone with a seat at the top table to oversee the process,” he said. “It’s the only way that you can be sure the leadership team will truly understand the challenges and rewards involved.”

Plimsoll agreed, saying that “strong executive sponsorship” is essential for success. Citing the sector’s long-term reliance on IT for security and efficiency, he said financial services companies are predisposed to accept leadership from digital experts and embrace agile working.

“They’ve thought about the strategy and culture needed and adapted their working practices to become more agile, introducing tribes, scrums, and sprints to their marketing approach,” he said. “I haven’t actually seen it as much in other industries.”