“To achieve business objectives, financial services firms will need to flex their organisational structures and develop new skills – building a better tech foundation will not suffice.” Forrester
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For the past five years, the top driver of transformation in financial services has been customer experience. But a Forrester report on the state of transformation in financial services shows that in 2021, new imperatives prompted by the COVID-19 pandemic shifted organisations’ priorities. Now, improving operational efficiency is the number-one driver of transformation in the sector.
Forrester’s findings also show that it’s become abundantly clear to financial services firms that they need to adapt to the changed business landscape if they’re to survive and flourish. Some 34% of respondents to Forrester’s survey answered that an improved ability to innovate is another critical priority. These two key metrics are symptomatic of accelerated digital transformation across the financial industry as a whole.
Investing in tech for improved customer service
The reasons behind that acceleration are clear. When asked about their motivation for digital transformation, 40% of purchase influencers in financial services companies point to the pandemic as the main factor in its rising importance. Meanwhile, 35% of them agree that the need to invest in digital experience tech has also increased due to COVID-19.
Employees and customers alike have found themselves working and buying online to an unprecedented extent, so many companies were left with little choice but to invest in service-related tech simply to continue trading. Now that that has become the norm, however, Forrester suggests that priorities are being readjusted as companies once again think about the future instead of merely dealing with the present: security and privacy capabilities are a top priority for 35% of respondents.
“Financial firms have embraced end-to-end transformation, focusing more on operational levels in service of customers.” Forrester
Digital transformation hasn’t entirely diminished the importance of CX
Operational efficiency’s rise to be the number-one priority has not meant, however, that customer experience no longer matters. In fact, the number of respondents citing CX improvement as critical has not changed – it remains at 33%. But the financial sector has a much stronger focus on IT, data analysis and of course financial processes than other industries.
When asked “Which business processes are the focus of your firm’s digital transformation?”, just over half the respondents in the financial sector point to IT processes, and some 44% of them cite data and analytics. Responses to this question also illustrate the critical importance of customer retention in financial services, with 37% of respondents answering “Customer service/experience” compared to 34% in other industries who were posed the same question.
As firms shift their focus to digital operations, CIOs and CTOs are even more likely to lead digital transformation efforts.” Forrester
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Tech leaders still driving digital transformation
Understandably, Forrester shows that it’s the tech leaders in financial firms who are the driving force behind both strategy and execution of digital transformation. More than half – 55% – say it’s the Chief Information Officer and/or the Chief Technology Officer at the forefront of tech transformation strategy, while it’s 50% in the case of execution.
These figures certainly make sense in light of the fact that, in 2020, an average of 22% of organisations’ budgets went to digital transformation. It’s clear that the financial sector recognises the need for the right people to be responsible for such considerable investment.
SaaS is where the money is being spent
Forrester’s data shows that few financial-sector firms are using the cloud for industry-specific capabilities. The leading focus of investment in digital transformation is Software as a Service (SaaS) – half of all respondents placed that as the number-one response. Business intelligence, digital experience platforms, security and privacy tech, and Infrastructure as a Service (IaaS) were also high on the list of considerations.
Indeed, emerging tech features highly in financial firms’ investment priorities, in another recognition of the critical importance transformation has assumed in the sector. AI and machine learning, 5G technology, the Internet of Things, serverless computing and blockchain technology all appeared prominently in responses concerning investment priorities.
“Machine learning and deep learning can help improve process automation, while natural language technologies streamline business processes.” Forrester
Forrester does point out that there are still challenges facing financial-sector companies, with many of them underestimating the cultural and organisational issues that go hand-in-hand with digital transformation. Security, data issues and tech strategy are given as the three greatest challenges in the execution of digital transformation, with 22% of respondents having trouble finding employees who can devote the time necessary for tech transformation initiatives alongside their other responsibilities.
The need to find solutions is inescapable, however. Forrester summarises the report by pointing out that new, flexible organisational structures and new skills will be necessary to achieve business objectives in the post-pandemic financial sector. Simply building an improved tech foundation will not suffice.
At redk we’re digital transformation experts, helping brands achieve digital maturity in any industry. Talk to us to see what our 15 years’ experience in complex technical solutions can do for your company.
CRM Transformation Practice at redk
Hideki applies over 15 years of experience in the field of CRM and Customer Experience to overcome business challenges in the customer cycle.