Four trends fuelling digital transformation in financial services

01 February 2019 Consultancy.uk

Institutions in the financial services arena are spending billions on digital transformation programmes, but it doesn’t always turn out to be money well spent. In fact, according to one firm’s analysis, 80% of leaders feel that money they put toward technological advancements is going down the drain.

The drive for digital transformation is continuing apace, with no signs of slowing down any time soon. When considering what is said to be up for grabs, it is easy to see why. According to the IDC, digital transformation will generate $18 trillion in added business value for organisations, while research firm Gartner projects that digital transformation will support 36% of overall revenue by 2020.

However, for all the hype that technologies like Artificial Intelligence and Blockchain have inspired, and the plethora of proof-of-concepts and large investments from financial institutions they have prompted, only 19% of business leaders in financial services feel like they have the right technology in place now. At the same time, a similarly small 14% believe they have the right processes to execute their digital strategy, indicating that there is still a significant amount of ground to cover in approaching digital transformation.

The key question remains: how can firms be successful in digital transformation? A new report by global consultancy Synechron has provided a view into how banks, insurance companies, asset managers and other financial services can enhance their execution endeavours.A snapshot view on the state of Digital Transformation across the industry

Faisal Husain, Co-founder and CEO at Synechron, explained, "2019 will really push forward the future of financial services and see immense change take place. We expect that this year will see the start of ecosystems that bring together some key technologies that aim to provide more effective methods of engaging with customers."

In the coming years, Synechron anticipates a host of sea changes, which financial services players will need to seize upon. By 2020, the firm believes that the sector will see 36% of all its overall revenue relate to digital transformation efforts. In order to prepare for this quickly approaching future, Synechron’s paper dives deep into four areas to make an impact; Ecosystems, Technology-led Transformation, Data as a Horizontal, and Culture Transformation.

Ecosystems

According to Synechron, ecosystems are set to reshape the future of the financial services sector as banks look to change the way they engage with and support customers. As FinTechs, InsurTechs, and even traditional technology companies like Amazon, become increasingly involved in the banking sector, financial service companies must provide value-added services that reinforce their underlying business ecosystem vision, if they are to keep up.

New business ecosystems will need to bring together digital platform strategy and the Internet of Things to maximise efficiency through the interconnectedness of both planning and implementation. They will also need access to powerful analytics mechanisms to help firms in the ecosystem to move beyond traditional banking services, and enabling a better customer experience. By complimenting this with a new enterprise cloud strategy, financial services companies can shift into a successful digital business. 

Data as a horizontal

Horizontal integration is the process of a company increasing production of goods or services at the same part of the supply chain. Digital transformation has been fuelling a massive growth in data available to banks, asset managers and insurance companies available for analysis and further business value. Given the vast amount of data created each day, it is considered one of the banks’ most valuable assets - but only if it is properly mined and the value is extracted.

While 2018 moved AI strategies beyond simple automation to more complex Data Science focused use cases, Synechron believes 2019 will set the stage for the push toward enterprise-scale Business Intelligence. Given the anticipated continued exponential growth of data, firms should also start to prepare for their five- to ten-year data strategies.

Technology-led transformation

Digital transformation efforts are often flummoxed by legacy IT systems. In the coming year, then, Synechron believes that firms are broadly expecting to update systems to become future-ready with modern, flexible technology architecture. This will include accelerating the move from monolithic business systems to micro-services architecture and adopting an Open API strategy to support “beyond banking” business models. 

In terms of front-end engineering, this means ramping up design thinking for more customer-optimised, usable user interfaces that shift to AngularJS. This full-stack technology transformation to more flexible technology architecture will require a hard look at cloud strategy.

Culture Transformation

Finally, organisations will need to manage their cultural priorities moving forward. This means focusing on moving employee behaviours and assumptions from a run-the-bank way of thinking to change-the-bank modes. Agile workspaces and DevOps changes can help drive this.

Changing demographics in the global workforce mean that companies will have to adapt their offerings to attract talent, meanwhile. Ultimately, as a huge portion of society moves toward retirement, firms will need to support remote workers from anywhere and invest in diversity and inclusion initiatives to tap into previously marginalised parts of the labour pool, particularly in the majority white, male arena of finance. Sustainable finance will also be a key trend in 2019 as firms appeal to a new generation of customers with different priorities.

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How a change toolkit can help consultants deliver transformation

23 April 2019 Consultancy.uk

Changefirst is a company that provides a cloud-based transformational change toolkit to consultants and companies. David Miller, Founder of Changefirst, sat with Consultancy.uk to discuss how the toolkit known as ‘Roadmap Pro’ adds value to consultants. 

When David Miller called time on his 15-year career with American Express to found Changefirst in 1995, change management was a different animal altogether. According to Miller, even as recently as five years ago, the business of change was much more manageable. The pace of change was slower and project timescales were longer.

Since then, however, the accelerating pace of change and the widespread impact of digital transformation has completely transformed the role of change management professionals. Those working in change management now face more projects, with diversified end-goals, new ways of working (e.g. agile), and are left with shorter timescales to deliver them. The drastic alteration in the sector prompted the IT and services company based in West Sussex to develop a new SaaS-based toolkit for implementing change more effectively.

An example of this is that Software-as-a-Service (SaaS)-based services in the HR technology space have been steadily increasing in recent years, as companies explore ways in which to reduce costs and access new innovation in the space. SaaS can reduce the cost of ownership, an HR department’s dependence on IT support, improve employee experience, and increase the speed at which value is yielded by change.

How a change toolkit can help consultants deliver transformation

Speaking to Consultancy.uk, Miller explained, “The pressure from digital transformation and the race to reinvent business processes means that the sheer pace and volume of change projects can be overwhelming and chaotic. Organisations needed a whole new way to respond to the challenge – one that is quick and easy to use and supported collaborative working; one that is online and can rapidly scale across the organisation itself. We saw these trends emerging and they were the inspiration for developing the Roadmap Pro tool as a SaaS-based approach to implementing change projects.”

Consulting sector

The SaaS toolkit provided by Changefirst, named Roadmap Pro, has the potential to yield value for consulting industry incumbents, as they are so often drafted in by clients to oversee complex change programs. However, firms might still be skeptical of the need for an external tool to do something that in essence is already part of their core business, and something they theoretically know inside out.

When asked how Changefirst believes it can make inroads into the consulting sector, Miller noted that not all consulting firms have the same level of change management capabilities. Indeed, the toolkit is designed to be tailored to firms, depending on their level of know-how.

“Our solution can help and how consultants choose to use it is likely to differ based on the change management maturity of their firm," Miller explained. "The more capable firms can utilise Roadmap Pro to increase productivity, improve client delivery, consistency and to rapidly on-board new hires and contractors. Less capable firms also might want all these benefits too, but it's highly likely they also want the ability to rapidly increase their client-facing change management capabilities.”

The toolkit is an ‘Out-of-the-Box’ solution, supported by Changefirst’s service offering, which enables clients to deliver higher time-to-value returns compared to other approaches. It is mostly configurable, and the ability to customise it is increasing during 2019, with Changefirst working with new clients to make changes that ensure the software meshes with their clients' implementation methods, while giving them the advantages of the installed content. The system takes the best practice content the firm has built up since it first launched, and makes it available in a state-of-the art, SaaS-based software solution.

“We’ve spent 25 years building our ‘best practice’ model," Miller added. "We have a huge database, that we are able to query, and that tells us a lot about what is happening during change projects. We continuously synthesise that with the lessons we have learned from working with over 300 organisations around the world. This has enabled us to build a methodology which was described by Forrester Research as one of the three most used change management methodologies in the world.”

“We’ve spent 25 years building our ‘best practice’ model... We continuously synthesise that with the lessons we have learned from working with over 300 organisations around the world.”
– David Miller, Changefirst

Roadmap Pro uses this wealth of experience for three key building blocks, which integrate these capabilities: effective online learning; change management diagnostics and analytics; and pre-populated change management planning. It also creates high levels of client engagement, enabling consultants to easily collaborate with clients.

Feedback

There have been some fears in the consulting sector that the leveraging of technology could risk the cannibalisation of hourly work. However, Miller regards this more as an opportunity than a problem.

He argued, “If you look at all the reporting from the analyst community, it’s becoming clear that clients want more digital support and what is called 'Reusable Assets'. In other words, they want IP that consultants have used left behind so they can continue to use it. Consultants now have a big opportunity to create continuous revenue streams and client ‘stickiness’ by using digital tools on assignments and then letting clients continue to use their tools. These firms will also sell more hours and generate more opportunities by on-selling and supporting clients' use of the tool.”

Indeed, the benefits seem to have already been judged to outweigh the perceived risks. Roadmap Pro was only launched in early 2018, but Changefirst’s partners are already using it to deliver a variety of major projects. These include usage in a major real estate change for a European media company; in the outsourcing global IT services for a Brazilian manufacturing company; for implementing a new global HR business model for a European chemical company; and for implementing industry changing technologies for both infrastructure and for new ways of working in a major transportation organisation.

According to Miller, clients have already presented the toolkit with “tremendous” feedback. The interface and the marriage of content and software have drawn particular praise, but Miller concluded that the bigger picture here is that Roadmap Pro can help the firms looking to challenge the Big Four. Indeed, with many firms looking to leverage technology to increase their competitiveness and digital presence, technology like Roadmap Pro is undoubtedly playing a role in seeing such companies win more of the bids against larger organisations around the world.