The Fintech Revolution: Digital Innovation and Transformation in Financial Services
Excerpt: Download the full report.
Digital transformation, the change associated with applying digital technologies to all aspects of a business, is beginning to impact financial services organizations in a big way. Following years of dominance by large institutions, the industry is undergoing incredible disruption in the form of nimble, tech-savvy startups. Well-established financial services companies are increasingly finding themselves confronted with fast-moving fintech disruption.
To better understand these challenges, we surveyed 95 middle- and senior-level managers in the financial services industry to learn about their organizations’ attitudes and progress when it comes to digital transformation. The findings reveal changing mindsets, but also many opportunities for improvement as organizations embrace the shift to fintech.
REALISTIC ASSESSMENTS OF PROGRESS, BUT UNDERSIZED EXPECTATIONS FOR INNOVATION
Unlike their counterparts in other industries, financial services companies seem to take a very realistic view of where they stand when it comes to implementing new technologies. When asked to rate their companies’ digital transformation initiatives compared to others in the industry, almost exactly half of respondents (49.5%) say they’re average, with the remaining respondents evenly split between saying they’re ahead (27.4%) or behind (23.2%) on the digital curve.
23% SAY THEIR COMPANY IS BEHIND THE DIGITAL CURVE.
Even with a seemingly solid understanding of their positing in the technology continuum, however, the organizations that participated in our survey reveal some potentially damaging attitudes towards innovation. Some 47.4% of respondents say they’re currently working to implement new technologies, and an additional 12.6% are looking to do so, but haven’t gotten started yet. That’s a total of just 60% of organizations looking to innovate through technology.
In an innovate-or-die world, this should come as a shock. It’s no secret that consumers want more, better, faster. As financial organizations find themselves competing with digitally-native counterparts—online services such as Circle, Mint, PayPal, and Venmo, as well as a plethora of smaller emerging firms—innovation through technology is a vital component to staying competitive. In fact, consumers today expect the agility of smaller fintech companies from longer-running financial institutions, who they perceive to have more room to experiment and evolve.
47% ARE WORKING TO IMPLEMENT NEW TECHNOLOGIES.
Confronted by fresh challengers, financial services organizations must modernize their digital strategy to remain (or become) market leaders. Yet only an additional 11.6% of respondents took a stand to say that their organizations were not currently working to implement new digital technologies, but that they think they should.
Also significant is the alarming 16.8% of respondents that were unsure of whether their organization is looking to implement new digital technologies. Digital transformation is a company-wide effort that should involve every facet of the business, so having upper-level managers that are unaware of digital efforts is a major problem.
Before any digital transformation can start, a culture of innovation is vital. For financial services organizations, which often default to risk-aversion, the uncertainty that comes with experimentation and innovation can paralyze digital efforts to the point of inaction. It can feel like the safer road forward is the right path, but in reality, it’s the riskiest long-term strategy a business can take. Making the decision to move forward with innovation and digital transformation is a first step towards finding stability and success.
So, what’s holding digital transformation efforts back? Download the complete, 13-page report, to learn more about our findings and how to overcome common challenges.
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