Financial services firms that invested in next-gen technologies and continued their digital transformation push in 2021 are already experiencing the positive effects of these investments, according to a new global survey conducted by Broadridge Financial Solutions.
The survey found that of the 750 financial service firms asked last year, around 75 per cent were in the mid-to-advanced stages of digitising and transforming their client experiences, with approximately 25 per cent agreeing that they still had work to do to keep up with industry leaders.
Broadridge’s Next-Gen Technology Survey scored firms on progress in three key areas of digital transformation: experiences, workflows and analytics.
It also evaluated progress in developing the strategic and organisational components of transformation, as well as use of next-gen technologies such as artificial intelligence (AI), blockchain and the cloud to categorise firms as beginners, implementers, advancers or leaders in its maturity framework.
The survey highlighted that financial service organisations, for the most part, continued to invest in digital channels to stay in touch with clients last year, with the majority of respondents citing the need to enhance the customer experience as a key driver for their digital transformations.
Digital communications became more vital during the COVID-19 pandemic, with firms looking to offer a more seamless, personalised and interactive experience across channels to keep up with changing customer expectations — as a result, three-quarters of firms are prioritising digitised customer experiences now.
In terms of the top three priorities for digital transformation in the next two years, the survey found that customer interaction was the highest priority (77 per cent), with operations (69 per cent) and sales and marketing (68 percent) following closely behind.
In terms of next-gen technologies that underpin digital transformation, AI experienced the biggest jump in implementation levels at financial services firms. It increased from 25 per cent of firms at mid-to-advanced levels of implementation in Broadridge’s 2020 survey, to 61 per cent in this year’s survey.
The study also found that firms plan to continue to fast-track their AI journeys – more than three-quarters of firms expect to be in mid-to-advanced stages of implementation over the next two years.
Additionally, the study found a steady increase in interest in the cloud and blockchain among financial services firms.
The survey highlighted that while 78 per cent of firms have already made considerable progress in their use of the cloud over the past year, the number of firms reaching mid or advanced levels of implementation increased to 80 per cent in 2021 and is expected to jump to 91 per cent over the next two years.
When it comes to digital ledger technology, a similar trend emerges. Over the past year, the percentage of firms at the mid-to-advanced stages of implementation more than doubled from 15 per cent to 37 per cent, the survey found.
Broadridge predicts that the use of blockchain will only widen, with more than two-thirds (69 per cent) of firms planning to reach the later stages of implementation in two years.
Though the study showed an increase in implementation and interest in AI, the cloud and blockchain, challenges remain. The top three obstacles firms face in implementing these emerging technologies and accelerating digital transformation include the rapid pace of technological change, the lack of a roadmap for innovation, and the struggle to modernise IT infrastructure.
Firms categorised by Broadridge as leaders in the maturity framework are making good progress in their use of data and analytics. 95 per cent are at a mid-to-advanced level of implementation. However, only 11 per cent of beginners in the maturity framework are at mid-to-advanced levels of implementation, suggesting a need to focus additional efforts on this critical capability.
The study also revealed that two-thirds of firms have already begun setting up a centralised data platform with access to data across divisions, enabling them to serve customers more holistically and make better strategic decisions.
