How are FIs doing with digital transformation?

Report finds a widening gap between the leaders and the laggards

How are FIs doing with digital transformation?
Steve Randall

Digital transformation passed the ‘to do list’ stage years ago and financial institutions that have failed to embrace the technology revolution are being left behind.

A new report from Broadridge Financial reveals a growing gap between the leaders in digital transformation and the laggards. Although most (75%) executives who took part in the survey said they were confident in their digital transformation roadmap.

However, despite more than two thirds of respondents saying they have made progress on updating their core IT platforms, there is work to do to leverage the potential of emerging tech such as generative AI, to meet cybersecurity challenges, and to ensure a seamless digital customer experience.

Amid growing threats, 80% of executives said they are prioritizing day-to-day investment towards cybersecurity and building out their cloud platform, but AI, quantum computing, crypto/digital assets, and blockchain are all slated for investment over the next two years.

Chris Perry, president of Broadridge, commented that it’s no surprise that firms are prioritizing solving their most pressing business challenges with the tech investments they are making.  

“Focusing on the human aspect of digital transformation – attracting and retaining digital talent and fostering a culture of innovation – has proven to be just as critical to ensuring these initiatives succeed. Our study also revealed that firms with a decentralized approach to innovation are more likely to be leaders in transformation,” he said.

Customer focus

A key takeaway from the study is how customer service is paramount with strong digital offerings expected.

It found that 70% of transformation leaders are focusing investment in AI on providing better customer engagement and these leading firms are more than twice as likely as the rest to be making large or moderate investments in this technology.

Low cost of generative AI does at least allow the laggards to get on board and catch up some of the lost ground.

But with greater tech implementation comes greater requirement for digital skills and only 28% of respondents said they have an advanced strategy in this regard, although this is heavily skewed towards the leaders (70%) rather than the rest (12%).

Boosting cybersecurity is a priority for FIs with an average 28% increase in investment planned over the next two years.