Financial services insights
Expert insights surrounding the financial services sector.
According to the latest Forvis Mazars C-Suite Barometer, one-third of respondents identified the need to transform company IT as a strategic priority ahead of issues such as sustainability initiatives.
The current landscape requires financial services organisations to develop digital strategies that ensure technology budgets deliver enhanced operational efficiency and improved customer experience while remaining compliant with evolving regulatory requirements. To help meet these strategic objectives, financial services organisations also plan to increase their spending on digital transformation in the coming year.
However, financing digital transformation requires more than deep pockets. It is a fundamental shift in how an organisation operates and aligns with business values to ensure that technological advancements are not just for innovation’s sake but are strategically implemented to drive business goals and objectives. This alignment is crucial because it directs resources and efforts towards digital initiatives that have a measurable impact on the organisation’s success, creating cost savings and increasing revenue opportunities.
In the last few years, technology spending has focused on foundational technologies for growth and gaining a competitive edge. While growth remains a core strategy, the speed of digital transformation and the emergence of new technologies, such as generative artificial intelligence (GenAI), have seen financial services tilt their focus. Now, technology spending is shifting towards modernisation, to deal with ageing legacy systems that can hinder innovation and scalability. By replacing or updating these systems, organisations can reduce technical debt and enable faster adaptation to changing business needs.
Also, in today’s fast-paced environment, staying competitive requires agility. Modernising technology allows organisations to respond quickly to market shifts, customer demands and emerging trends and regulations. Modernisation often leads to cost savings as well. By streamlining processes, automating tasks, and adopting hybrid IT solutions, financial services organisations can reduce and optimise operational expenses. A further significant benefit is that modernising technology can help enhance security, protect sensitive data and meet regulatory standards and obligations from cyber threats and strict compliance requirements.
Achieving greater agility through innovation, improving cost optimisation, developing more efficient processes and driving operational excellence requires financial services organisations to move up a gear to reach the next level. With the limitations of employing new technologies and solutions alongside legacy systems becoming all too apparent, a more profound approach to modernising the information system and its underlying infrastructure is now required. In particular, AI is set to massively impact how financial services operate, requiring more robust and resilient digital architecture and processes with data at their core. While factoring in AI and other emerging technologies will increase costs in the short term, planning for the next level will ensure financial services organisations can offset costs by future-proofing the business model.
The main purpose of technology is to support strategic goals. It’s, therefore, essential to ensure that digital transformation steps align with business priorities that quantify the cost versus the value derived. This avoids using technology budgets on innovation that has no apparent business value. By leveraging a customer-centric approach, mastering cloud economics to optimise resource allocation, and prioritising cybersecurity to protect data, systems, and customer trust, financial services organisations can empower business priorities to achieve greater agility and gain a competitive advantage more efficiently.
The key to making better decisions and IT investments is having a clear link between your technology strategy and your organisation’s mission-critical priorities. The first step is to assess current capabilities in terms of people, processes and technology. Then, map results against your strategic vision to identify how to reach your target state. This can be a long-term project that involves different stages of digital transformation, each with tangible business benefits. Building a business case at each transition state will help maintain support in reaching broader transformation goals.
Importantly, digital transformation is a long-term project that affects the people, processes and technology across the whole organisation. Successfully managing transformation challenges will include identifying gaps in competencies and skills, rolling out training programmes to upskill employees and having a clear technology talent strategy. Equally, adapting governance oversight that underpins the ethical concerns surrounding the use of data and AI is a top priority.
How the financial services sector addresses such challenges so that change is managed effectively and the business value is clear will be vital.
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