Digital technology has transformed just about every industry, changing the way we interact with products and services across the board. That same disruption is happening in financial services, with digital rapidly becoming a key driver of value for financial services (FS) firms. As consumers increasingly interact with tech in other parts of their lives, their expectations of financial services are also changing. They want more integration, efficiency and enhanced experiences from their providers and firms should move quickly to maintain competitiveness in the digital age.
In Accenture’s Technology Vision 2019 report, 96% of both banking and insurance executives surveyed said the pace of technology innovation in their organizations had either accelerated or significantly accelerated over the past three years. However, many firms are struggling with transformation.
Accenture Financial Services Technology Advisory is uniquely positioned to help firms extract value from digital transformation, joining complex ecosystems and helping the workforce adapt inline. Through a four-point holistic approach, we help position companies for sustainable growth.
The Global Context: Everyone is going digital
Digital tech has disrupted and redefined the entire business landscape, blurring the lines between structures, products and services. It offers FS firms that embark on their journey to digital transformation a unique opportunity to improve margins and generate new revenue streams. With this in mind, we have recently outlined how Accenture can help firms navigate this change.
According to IDC Research, Inc., by 2024, over 50% of all IT spending will be allocated to digital transformation (DX) and innovation (up from 31% in 2018). With this in mind, we strongly encourage FS firms to adopt digital technologies. Consumers want it and for firms that choose not to adopt digital, the risks are real –– and growing. According to Japan’s Ministry of Economy, Trade and Industry (METI), if companies cannot overcome the challenges of DX, Japan may suffer an economic loss of up to 12 trillion yen per year after 2025, three times larger than the current loss due to the failure to achieve DX.
Tackling the Challenge
Of course, if digital transformation was easy all firms would have tackled it already. The fact is that transformation in financial services is complex and several barriers exist that can slow or even halt it.
According to Accenture research, FS firms find legacy systems, along with tech literacy and lack of relevant skills to be the biggest obstacles to digital transformation in FS. 42% of FS firms report poor comprehension of digital innovation on the part of financial professionals to be a leading barrier to change, while 44% added difficulty integrating new technology into existing structures as being a barrier. Another 42% identified a lack of skilled workers as a significant challenge as well.
Adding to the challenge is mergers and acquisitions (M&A). 2018 was a record year for M&A in the insurance industry, with 626 deals in Canada and the U.S. Technology consolidation following an M&A is complex and often results in siloed, inefficient processes and a workforce culture that is “stuck in the mud” and unable to collaborate. In other cases, proprietary or inhouse solutions created to address problems can further exacerbate them.
All of this combined requires a holistic, strategic approach to transformation that allows firms to remain competitive while navigating change.
Four-Point Framework for Digital Transformation
We work with our clients to help them adopt digital ways of working and implement supporting technologies, such as cloud, microservices and real-time architectures to maintain a competitive edge in a constantly transforming landscape.
Our pragmatic, four-part framework helps pinpoint and define a roadmap for digital transformation based on each client’s needs:
- Identifying Business Directives: We align business and IT strategies, define competitive advantages and recommend the target operating model and culture change functions required to support it.
- Assessment: We assess our clients’ business directives and existing technology portfolio, functions and architecture to provide detailed recommendations for improvement.
- Shaping: We identify key insights to leverage business growth and mitigate risk. These insights consolidate enterprise architecture preferred practices and are applied to transformation goals.
- Value Realization: We identify opportunities for legacy and new technologies to co-exist in a way that creates business value, while building maintenance protocols, engineering models, new ways of working and environments required to implement them.
Accenture’s FS Technology Advisory’s mission is to help financial services clients transform their core technology systems, unlock hidden value and position themselves for sustainable growth. Using a pragmatic, comprehensive approach, we offer transformational, industry-specific experience that delivers sustainable change.
If you want to learn more on how Accenture can help you transform your firm to deliver future growth please contact me directly.