With more organisations embarking on the first or subsequent stages of their digital transformation journey, there are important trends and patterns that are emerging, especially in the financial services and insurance industry (FSI). Businesses embracing these trends tend to show better results from their transformation projects, sooner, according to Empired.
There are seven key trends emerging in the digital transformation approaches of organisations within the financial services and insurance industries:
1. POC and quick wins
One of the most important and valuable trends is the move towards proof of concept (POC) and quick wins in lieu of expensive, risky, monolithic projects. In fact, over the last five years or so, there has been a dramatic shift towards this way of working and it's paying dividends for businesses in all industries.
Empired head of advanced technologies and transformation Steve Leven said, “This is an important approach because technology changes so quickly, it's impractical for an organisation to sign up for a five-year transformation project and expect that, at the end of the five years, all the technologies being used would be the same as the ones that were envisaged at the start of the project. Therefore, teams need to focus on what's in front of them, using technology to deliver quick wins and then move on to the next project. To do this, it's important to have tangible measures of success to work towards.
2. Funding and return on investment (ROI)
IT projects used to be funded directly on a case-by-case basis. Now, there are far more instances where funds have been pooled and allocated as needed to different transformation projects. This makes it even more important than ever that these transformation projects are able to demonstrate strong ROI as it lets project owners go back to stakeholders and reiterate the value of the project. As emerging technologies are applied, this is becoming essential since there is often inherent distrust of anything that hasn't been implemented multiple times successfully.
3. Managing change
Transformation, by definition, is a more disruptive change than a standard new technology implementation. Therefore, it's crucial to consider change management from the outset of any transformation project to ensure all staff members are adequately catered for.
This includes making sure systems are built from the ground up to reflect the actual needs and processes of end users, not some out-of-touch impression held by managers.
4. Bringing the legal team in early
Many industries, including FSI, are such a highly–regulated, which means that the legal and compliance teams must always have a significant voice in the development and deployment of any new technology.
Leven said, “Bringing in legal teams as stakeholders early on avoids frustration because it ensures that compliance requirements are built in from day one. Furthermore, it provides an opportunity to educate the legal experts about the technology to dispel any fears or misunderstandings that may exist. This is usually relatively easy to do, since most transformation projects actually increase security, limit corporate risk, and enhance regulatory compliance capabilities.
5. Working with regulators
In the wake of the banking royal commission, regulators are naturally wary of innovative and unfamiliar technologies and business models in the FSI industry. However, it's essential for organisations to innovate precisely to overcome some of the issues that existed previously. The industry regulatory bodies must not hold back innovation. It's therefore important for organisations to work with the regulators to educate them and make sure they understand the value of these new initiatives so they can support the industry in moving forward.
6. Leveraging Artificial intelligence (AI)
AI is still nascent but it presents enormous opportunities. In the FSI space in particular, most organisations are considering AI in terms of the value it can add to the customer experience and to the employee experience. It's about finding ways to help customers deal with organisations more easily and without friction, and to lower operational costs.
It can be helpful for organisations to think about AI in terms of augmented intelligence in that it helps take the mundane, low-cognitive requirements tasks away from staff and let them pivot towards more meaningful work. This can dramatically improve culture as well.
At this stage, standing up bots as a POC is relatively easy and can be done in weeks if not days. However, taking that to a commercial model and deploying it at scale is more complex and requires a far more strategic and considered approach.
7. No room for error
When working with board members and business stakeholders that are inherently suspicious of emerging technology, there is no room for error. It only takes on instance of a failed technology for risk-averse stakeholders to shy away from further investment or initiatives. It's important to understand this mindset and keep projects within the realm of the achievable so stakeholder's comfort with new technologies can be built slowly.