adoption of digital transformation into financial services

The post-crisis regulatory frameworks have been gradually settling into place, and financial institutions have been adjusting their business models accordingly. Companies should consider a formal digital upskilling program—ideally with personalized training modules based on preferred ways of learning—to future-proof their workforce. This will inevitably lead to investing in self-diagnosed, automated and preventive-maintenance solutions. While the latter is usually reactive (and just one component of the former), customer experience refers to a customer’s overall journey from start to finish, including every touchpoint and interaction along the way. Whether you want to focus on enhancing your customer interaction, increasing profitability through operational excellence, improving your employee experience, or deploying to the cloud for increased agility and flexibility. Training, managing and team-building will become primarily electronic; though, ironically, social and away-day events will also become more important as enterprises work to foster feelings of community within their businesses. Visit our Technology & Business Transformation Services practice page, or read our related insights: Digital Transformation in Financial Services, About the BDO Middle Market Digital Transformation Survey, Business Restructuring & Turnaround Services, International Financial Reporting Standards, Financial Institutions & Specialty Finance, BDO Center for Corporate Governance and Financial Reporting, Top Financial Services Digital Transformation Trends. The Financial Services industry is currently in the midst of profound transformation as it embraces the ‘next normal’ phase of digital transformation. Copyright © 2020 Stalworth Consulting Group, LLC. While cryptocurrency may be the most widely known application to date, blockchain technology could also ensure more secure and automatic payments via the use of smart contracts; strengthen supply chains, trading systems, and claims processing; streamline back office operations; and mitigate fraud risk, among others, by removing friction from processes. At BDO, we advise and guide our clients to see digital transformation through to fruition, so they can reimagine the way they’re doing business, and then make it a reality—maximizing value with minimal disruption to their existing infrastructure. It is now becoming … It has been forecast that over 150 billion devices will be connected across the globe by 2025, mostly able to gather and create data in real time. Applying our deep industry solutions and extensive experience, our group of talented professionals provide a holistic approach to middle market clients looking for successful digital transformation, using our Digital 3+1 approach. But, are we in danger of embracing digital without really understanding the consequences? Digital transformation brings proven—and highly anticipated—ROI. Changing customer expectations, cutthroat competition, increasing regulatory complexity, the pressure to streamline operations, and other factors are driving the push for reinvention and innovation. 2019 BDO Middle Market Digital Transformation Survey, 2019 Middle Market Digital Transformation Survey, The Digital Transformation Playbook for the Middle Market, The Middle Market Goes “Back to the Future”: The Digital Transformation Journey, Do Not Sell My Personal Information – For CA Residents as to BDO Investigative Due Diligence. This can be especially challenging for financial institutions that existed in the pre-digital age. Lower middle market companies, especially, anticipate the greatest increase in revenue and profitability (10 percent or more) over the next three years, and are thus willing to also increase their spending by the same percentage. The tax function is transforming. Digital Adoption in Financial Services In the financial services sector, the risk appetite of many banks changed post-2008. It’s a mindset shift that hinges not on digital capabilities but on the adoption of those digital capabilities by the end users—employees and customers—and business enablement. Therefore, in difficult environments poor decisions will have financial costs. While many fundamental banking services (i.e., safekeeping, payments, loans, and investments) remain the same as they were 100 years ago, how banks manage these activities and transactions—as well as how customers expect to receive them—has changed significantly. These cookies do not store any personal information. Embracing digital … And in addition to the current pressures, many are facing challenges in terms of reduced revenues and funding, complexity, and talent availability. One component of streaming operations is updating legacy IT systems, cited by 88 percent as a top goal for next year. Physical banks and paper systems are quickly being replaced by robust networked digital ecosystems. Data-driven decision-making will be used to help guide every enterprise through challenging times, transforming core missions such as last-mile delivery, supply-chain management, product development, customer demand analysis, raw materials sourcing and logistics, data and information governance. NEW YORK – China’s pledge in September to pursue carbon neutrality by 2060 was followed by a similar pledge from Japan a month later.... Zoweh Global Consult, in partnership with Evolution Consult, embarked on a series of discussions and engagements with various professionals and stakeholders in the human... “Any brand that does not innovate and grow, dies!” As mentioned, COVID-19 has brought a fundamental shift in business operations – including forced adoption of online, mobile, and call centres; and overnight virtualisation of workforce, workplace, ways of working and managing teams remotely…a tipping point for digital and contactless payments, with an evolution of underlying market structure and economics. You have entered an incorrect email address! They will need to shed old habits, update cultural norms, upskill their employees, and adjust their way of thinking to become a digital business. Data privacy and cybersecurity will remain a serious problem for decades to come, as attackers use increasingly sophisticated methods and enter through a greater number of entry points due to the proliferation of technology platforms and IoT devices. But, are we in danger of embracing the ‘new normal’ of digital without really understanding the consequences? – McKinsey & Company, “Next-generation Technology Transformation in Financial Services 2020”. Boards’ High Stakes Balancing Act: Navigating Through Crisis. The senior-most leaders of a company need to convincingly evangelize the vision and get their employees to understand why they need to leave the status quo behind, believe in the strategy, and engage in the process. The good news is that the challenges of making the business case to internal stakeholders and employee pushback are lower than the average for all industries—indicating that most financial services companies are aware that digital transformation is a must. Only 39 percent say it’s “excellent” or “very good” (vs. 63 percent of all organizations). As a result, financial services companies worry more about their IT infrastructure’s capacity to integrate advanced technologies than those in other industries: The majority (61 percent) cite their IT system as “fair or poor,” compared to 31 percent of all organizations. The digital transformation journey can be challenging. BDO is here to help your business – and you – navigate the COVID-19 health crisis, prepare for recovery, and once again, thrive. All businesses want to cut costs, but financial services companies are especially feeling the pressure to tighten their belts. Financial Services ‘all in’ on multi-cloud adoption as industry accelerates digital transformation Lori MacVittie of F5 Networks discusses the new research from F5 revealing that the … The driver behind it? Meanwhile, over half (53 percent) of financial services organizations cite poor communication and project management as a top barrier to successful digital implementation, once underway. SCG is the trading name for Stalworth Consulting Group LLC, a management and strategy consulting firm focused on digital economy, emerging technology advisory and inclusive financial services. IoT, AI & Blockchain investments heat up. Digital transformation has made a positive impact on business operations in the finance industry. You don't have to go back very far in time to find an example of the monumental role risk can play in the financial industry. The benefits of digital transformation, including improved customer experience and operational efficiency, are clear. Thus, improving customer experience is 83 percent of financial executives’ top long-term business goal and one of their top three short-term goals (74 percent). Businesses and Financial Services technology is currently in the midst of profound transformation, as pressure has increased across operations and supply-chains. Establishing the right metrics to measure progress is financial services’ biggest challenge to moving forward with a new digital initiative (39 percent, compared to 27 percent for all organizations). Furthermore, the current COVID-19 shock has put immense pressure on technology capabilities (e.g. Today, it’s nearly impossible to walk into a boardroom, client meeting, or innovation brainstorm without hearing the phrase bandied about at least once, twice, or—more likely—a dozen times. Cultivating this shift—and inspiring organizational behavioral change—starts with tone at the top. Integration of technology with some businesses, especially in the informal sector, may be hard or slow due to the nature of their operations and limited capacity to use different technology tools; for example, use of cloud-based services, computers, and smartphones among others. Their top driver is disrupting the industry to unlock new areas for growth, enter new markets or create new revenue streams (like via data monetization). Organizations can conduct customer sentiment and mood analyses and personalize customer experiences based on individual customer profiles—such as suggesting customized portfolio solutions based on each individual’s risk appetite. Digitalization or Digital transformation is nothing but the restyling of financial services. The adoption of digital transformation is routing a new era or industrial transformation, allowing companies to track their operations, enhance productivity, augment business strategies, and … The survey showed that overall, the financial services industry is on the cusp of a digital transformation right now. Management Consulting | Technology Advisory | Outsourcing. This is why banking CIOs are putting digital transformation as the number #1 priority. Nearly half (49 percent) state that interoperability with legacy technology is their biggest barrier to successfully implementing digital initiatives. This starts with defining and documenting potential threats and making that a part of their existing risk management framework. Regardless of whether it’s the Financial Crimes Enforcement Network, the Financial Industry Regulatory Authority (FINRA), the Office of the Comptroller of Currency (OCC), or another entity, financial institutions can’t afford to let down their guard, even once. In the past decade, a future with more people using technology has become a real possibility. This is going to transform working habits and remote working; use of managed office and co-working spaces will predominate as enterprises seek flexibility to manage uncertainty and sudden change. Optimizing business efficiencies and operations across the supply chain is financial services organizations’ top digital priority (cited by 37 percent). Financial services companies know this—and know they have a lot of catching up to do—compared to other industries. Nearly one fifth (17 percent) of financial services executives say that investing in innovative digital capabilities for anticipated business needs is a top digital priority. They will also need to keep abreast of rapidly changing economic and regulatory policies. That’s because, in executing a cloud transformation… As the above report concludes, and as we see in the marketplace as well, financial services is looking to move to cloud-based platforms for a few key reasons: The ability to provide unique types of services … Unfortunately, many financial services companies are overconfident in their ability to withstand an attack, or are ignorant of the potential causes of their own security failure. FSI firms are making significant investments to enhance customer … Eighty-two percent also cite reducing operational inefficiency as one of their top three long-term goals, and 76 percent point to it as one of their top three short-term goals. Blockchain’s significant promise has a third of all financial services organizations considering its deployment over the next year—a percentage expected to increase in the future. Not only has the number of regulations increased over the past decade, but so has the number of federal governing groups keeping watch and the costs of compliance (and non-compliance). 3 Realizing the digital promise COVID-19 catalyzes and accelerates transformation in financial services Already, COVID-19 has dramatically accelerated the rate of digital adoption in financial services, … If there’s one factor that all financial institutions can agree on, it’s that the number and complexity of rules, regulations, and compliance demands they’re subject to is endless. Customer experience is much more than just customer service. This category only includes cookies that ensures basic functionalities and security features of the website. The Business & Financial Times online is the African Leading Platform In Providing Business and Financial News. remote working, new cyber-security threats, increased online shopping, card-less and cashless payments error alerts, etc.) The digital transformation market by vertical has been segmented into banking, financial services, and insurance (BFSI), healthcare, IT and telecom, education, retail, media and entertainment, … A few decades ago, the idea of having a good “customer experience” may mean having a pleasant experience at a physical bank or other financial services firm. What does the COVID-19 crisis mean for your business, and for you? This website uses cookies to improve your experience while you navigate through the website. This refers to data-driven decision-making and other needs: such as those around data regulation, storage; network provision; machine learning; analytics processing and more. Financial services companies, with their treasure trove of sensitive client and third-party information, are particularly susceptible to these attacks. This often includes a blend of enhanced FinTech offerings (often developed through partnerships, collaborations, and joint ventures with start-ups, innovation hubs, and accelerators) and more traditional offerings. Private Capital through Crisis: Calculating Risks. Allstate, AXA, Generali and other major global insurers have, for instance, implemented open APIs to expand thei… Big is no longer better or safer—and, in many cases, can even be a barrier to innovation. Equifax, WannaCry, NotPetya, etc.). This website uses cookies to improve your experience. Those that experience a breach will face serious consequences, including the loss of money and reputation, as well as legal claims and sanctions. This technology will enable all transactions to be recorded and traced and will provide the customer with a digital log of previous payments, receipts, timestamps, warranties, and contracts. Stay abreast of legislative change, learn about emerging issues, and turn insight into action. Improving customer experience may be top of mind for most financial services institutions, but equally important is cultivating a strong employee culture. Only 12% of financial services organizations aremature in their digital transformations and fall into the digital transformer cluster. It is mandatory to procure user consent prior to running these cookies on your website. Consequently, digital technology has now become a strategy for business growth… As part of digital transformation … And in times of crisis, everyone wants a fistful of cash for comfort and security. Stalworth Consulting Group, LLC is a leader in technology, media and telecommunications (TMT) and financial services strategy consulting, offering digital transformation strategy, technology advisory and inclusive financial services. In the subsequent years, many challenged their analytical resources to refine, … Just take a look at one subsector—banking—for example. Nearly all (97 percent) of financial services firms are making some sort of inroads on … They must also strive to cultivate a corporate culture that embraces constant experimentation and learning—one in which short-term mistakes and failures are expected and accepted in the pursuit of long-term innovation and value creation. A lack of leadership or vision by senior management is another big issue for a fourth of participants, especially for lower middle market organizations (33 percent). “Worldwide smartphone forecast update, 2018–2022”, for average selling price (ASPs), International Data Corporation (IDC), June 2019. BDO is continuously finding new ways to help your organization thrive. Businesses must therefore reimagine the role of technology as an innovation partner; reinvent business models and technology delivery to drive change in productivity and speed by building flexible, secure enablers for supply; and explore new customer channels. 21% of North American and European enterprises say their digital transformation … “Worldwide smartphone forecast update, 2019–2023” for smartphone and devices units International Data Corporation (IDC), June 2020. EY’s survey of the financial services industry discusses the continued use of paper and the barrier it creates for digital transformation. These cookies will be stored in your browser only with your consent. We'll assume you're ok with this, but you can opt-out if you wish. Save my name, email, and website in this browser for the next time I comment. Capital market firms can make faster, smarter trade decisions based on sophisticated analyses of past market performance data. Let's take a … As a result, most financial services companies anticipate high returns on revenue and profitability from digital transformation—even more than those in other industries. digital transformation—and to recognize the risks it brings. 3 insights into digital transformation in banking 1. Successful transformation strategy and execution capabilities would rely on external collaboration and proactive engagement. Digital transformation has seen to the major shift across the world, with emerging technologies and adaption to new applications. To make digital transformation effective, financial services companies should develop a distinct function within their organization to drive digital efforts—a crossdisciplinary “Digital Dream Team” of individuals to be their champions in the field. The current crisis will also lead enterprises to further diversify their ‘just-in-time’ manufacturing operations, but it will also require them to develop fast and actual reporting systems across the chain. Here are the top 8 digital transformation trends for banking and financial services. The industry may still be in its early stages of adopting blockchain and distributed ledger technology, but few companies doubt its huge potential. Please see www.scg.ug to learn more about our firm and our clients. The digital transformation of financial services is just as disruptive as it is for any other industry – even more so if you take into account the traditionally conservative stance this industry … However, this is still in its early days – based on experience, most are only at the beginning of their journey. T he UK financial services industry continues to be disrupted. Cultivating a strong “employee experience” is critical. To effectively serve their markets, enterprises will require real-time data on temporary or permanent market interruptions. Digital transformation is a business imperative across all industries, and financial services is no exception. At the same time, competition within the sector has ramped up quickly. Farmers cultivating cucumis melon, also known as yellow melon, say a chunk of their produce is left to go waste because of the lack... Knauf Ghana Limited, a global leader in gypsum production and related technologies, has signed a memorandum of understanding (MoU) with the Artisans Association of... © All Rights Reserved 2020. By 2024, the blockchain market is expected to be worth more than $16 billion, according to Global Market Insights, with applications related to identity management anticipated to be the most lucrative, with a greater than 90 percent compound annual growth rate (CAGR) from 2018-2024. Banks have transitioned to remote sales and service teams and launched digital outreach to customers to make flexible payment arrangements for loans and mortgages. With the recent COVID-19 pandemic shock, the acceleration of digital transformation became more eminent. The business of the future will supply a product or service that is needed by customers in an environment defined by increased personal surveillance and intermittent business interruption, as lockdowns to control COVID-19 infection clusters are applied. Many adoption of digital transformation into financial services yet to implement it is about changing the way companies work less about technology... Digital initiatives, strategy, and financial executives will have financial costs based on various sources, including: data... Financial times online is the African Leading Platform in Providing business and financial services industry to supply-chains to... 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