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Moving the Financial Industry from Early-Phase Technological Transition to a Full-Blown Transformation

Data Science and Technology

By FactSet Insight  |  December 30, 2020

In May 2020, FactSet, in partnership with Forbes Insights, surveyed more than 200 investment professionals from around the globe to better understand the competitive landscape their firms currently face, the strategies being adopted to keep up, the role of technology in their processes, and how they anticipate their firm’s approach to technology may change in the coming years.

Our research, executed at the height of the COVID-19 crisis, shows that this pandemic is partly responsible for sparking greater demand and the need for fully digital end-to-end business models. This means the digitization of a greater swath of back-office processes but also the ability to deliver a completely digital customer experience. Amid the scramble to respond, leaders are demonstrating just how much technology can strengthen a business and why accelerating their digital transformation efforts is critical.

During our analysis, we identified a segment of “technology leaders.” This group, based on the technology leaders’ responses to key questions, is in the highest quartile of technology implementation, demonstrating leadership in everything from advanced data platforms to AI, NLP, and blockchain.

The survey responses highlight those leaders’ successes and how companies are implementing advanced technologies to manage increased competitive pressures, develop insights, reduce costs, solve business challenges, and digitally energize the customer experience. These findings lead the way for other organizations during or beginning their digital transformations.

Challenges

As our research shows, the opportunities presented by implementing advanced technologies—as well as the risks of doing nothing—are evident. Yet just one in three financial industry executives (34%) feels highly satisfied with their firm’s approach to technology. This figure falls to 18% among those whose primary role is in technology.

This low satisfaction rate indicates that much more must be done before digital transformation can gain its needed momentum. The survey highlights three key inhibitors of progress:

  • Inadequate funding of technology initiatives: Three out of four executives (75%) believe their firm needs to expand its investment in technology—a figure rising to 88% among leaders.
  • The skills/talent gap: Fifty-eight percent of executives overall—67% among leaders—are experiencing a significant skills talent gap.
  • A tendency to treat IT as a support—not a value-adding—function: Sixty percent overall and 65% of leaders recognize that to attract top technology talent, IT must be seen as a more critical role within the industry.

The Way Forward

But firms are now taking steps to address these and related challenges. For example, 46% are currently training staff to embrace new technologies with 32% planning to in the near future. Similarly, firms are expanding their technology budgets, hiring technology talent, and collaborating more closely with providers and partners.

Key Steps for Enabling Digital Transformation

While technology leaders are in all instances significantly ahead of the pack—both today and in the near future—there is one step forward that stands out in particular. They are significantly more likely to have taken steps to expand the prestige, prominence, and role of their technology talent. While only 35% of the overall sample have already taken this step, more than half (51%) of technology leaders have. This is a significant and effective step within an industry where other roles—for example, research, sales, trading—tend to hold the limelight.

In general, executives within financial services realize that for digital transformation to succeed, the entire organization must embrace it. A key outcome from this attitude is that it changes the very nature of work. Here, 71% agree—25% strongly—that digital transformation means fewer routine tasks and more high value-added roles.

But executives also realize that moving from vision to reality requires considerably greater effort than is evident today. Specifically, 73% agree—28% strongly—that their firm needs to take more action to ensure their workforce is positioned to embrace leading-edge technologies. In general, the way forward requires close attention to people and the overall management of talent.

Download the eBook to continue reading about how your peers are taking digital transformation head on.

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