Digital transformation in financial services sees an upswing

02 January 2022 Consultancy.com.au 6 min. read

Executives and IT decision makers in the financial services industry believe cloud will be the most important technology to the success of their organisations over the next 12 months, according to a joint report by Economist Intelligence Unit and Appian. Luke Thomas, Vice President APAC at Appian, walks through the report’s key findings.

During Covid-19 cloud has proven it can help financial services organisations to scale operations quickly and effectively. Collaborative tools that previously were used occasionally are now being used almost continuously.

Another clear example of cloud-enabled digital transformation in financial services during the pandemic is the swing to online-only models for customer service. In a recent report, EY refers to the “incredible transformation” during lockdown, with major banks moving nearly all their interactions with customers to digital channels, such as through web sites and mobile apps.

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Accelerated use of digital channels

Neil Morgan, chief operating officer at Australian insurance giant IAG, witnessed a similar transition at his company. Early in the pandemic, IAG saw app usage at NRMA insurance – which is one of the firm’s core brands – increase by more than 50%. Morgan says the company continues to see “really high levels” of app usage across renewal activities, new business sign-ups, and insurance claims.

“Covid-19 has definitely accelerated the appetite for customers to use the digital channels that historically they may not have done. The question for us just keeps coming back to how much we can take advantage of that change in behaviour,” says Morgan.

European Bank Capital One has witnessed a similar transition. The bank’s mobile app is its predominant customer service channel in the UK. However, some customers still prefer to speak with an assistant on the phone – and that wasn’t always possible at the start of the pandemic, when call-centre operations were affected by the transition to home working.

Joe Soule, chief technology officer at Capital One Europe says the bank’s long-standing investments in digital automation meant it was able to continue serving its customers in a variety of ways online. Rather than moving straight to the bank’s app, many customers who had traditionally used the phone started using the web channel as a first step into digital interaction with the company.

Digital transformation out of the pandemic

Financial services organisations should use these operational success stories to build a case for further digital transformation. Based on their experiences of the pandemic, more than four in five (81%) financial services executives believe their organisation needs to improve its IT infrastructure and applications to better adapt to external change.

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The research also provides evidence of increased demand for digital automation. Close to three-quarters (71%) of IT decision makers in financial services report that the growth of technology project requests exceeds IT budget growth, which is higher than the global average of 64%.

Financial services IT teams will need every assistance to deliver this continuing development workload. One potential aid is robotic process automation (RPA), which can be used to help reduce the strain of repetitive tasks in business, including software development processes.

Application development is a resource-intensive activity, both in terms of people and costs. So, cloud and automation can help financial services businesses to standardise activities and deliver products to market securely, efficiently and effectively.

Further reading: What lies ahead for cloud adoption in financial services.

Automation is viewed as one of the most important focus areas during the next 12 months by 31% of financial services executives. Respondents expect cyber security to be at the centre of automation efforts (with 43% suggesting it will be a top-three focus). Innovation and R&D (35%) and customer-facing processes (34%) are seen as other priority areas.

Concerningly, around two-thirds (66%) of IT decision makers in financial services suggest RPA efforts often fail. As well as gaining access to better quality data, 42% of respondents believe closer collaboration between IT and business units will help their organisation achieve its automation objectives.

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Breaking down silos to speed up automation

The research highlights how a strong bond between business and IT is crucial to overcoming IT backlogs and delivering digital transformation objectives. IT needs to partner with business units to work out how technological solutions can solve business challenges.

Agile leadership techniques play a crucial role in this partnership approach. With its origins in software development, Agile management – which uses techniques such as iteration, stand-ups and retrospectives – promotes decentralised decision-making across collaborative teams.

The most unified, complete views of automation across financial services organisations bring about the greatest benefits. That’s because unification seamlessly provides benefits for the customer experience, for employee satisfaction, and for the future of the organisation – as well as supporting risk, compliance and change management, and business strategy.

Solutions such as low-code can help financial services businesses to break down the silos so IT and business units can effectively work together. Low-code is designed to unify all financial services systems, databases, channels and customer information, as well as bring together people, processes, and data via automation: robotic process automation, artificial intelligence (AI), workflows and more.