As the digital revolution accelerates, financial institutions are racing to create enterprise value by investing heavily through the economic cycle, according to a new study by Broadridge Financial Solutions, Inc. The study found that 75% of executives are confident in their tech transformation roadmap, but a digital maturity gap is growing between leaders and non-leaders. While more than two-thirds say they have made meaningful progress in modernizing their core IT platforms, organizations must make progress against multiple tech and talent frontiers as they grapple with new technologies like GenAI, rising cybersecurity challenges, and accelerating needs for seamless digital customer experiences.
The 2024 Digital Transformation and Next-Gen Tech Study gauges the perspectives of 500 global C-suite and senior executives across the buy side and sell side, illuminating the forces driving the industry’s technology modernization. The study categorized firms as digital “leaders” versus “non-leaders,” based on their advancement levels across ten essential aspects of digital transformation, including modernized core IT, the use of automation tools, innovation culture, data management, and digital customer experiences, among others.
When it comes to areas of focus, more than 80% of all executives indicate that they are making the biggest day-to-day investments in cybersecurity technology and building an advanced IT cloud platform. Meanwhile the majority also expect to maintain or increase their investment in next-gen technologies like AI, quantum computing, crypto/digital assets, and blockchain over the next two years.
“It’s no surprise that we are seeing significant momentum in the adoption of next-generation technology like GenAI from financial services firms looking to solve their most pressing business challenges, while they’re also gaining measurable value from more established technologies including AI, blockchain, cloud and core infrastructure platforms,” said Chris Perry, President of Broadridge. “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.”
AI-Centric Customer Experiences Anticipated to Be the New Norm
Personalized and seamless digital customer experiences have become an expectation in the financial services industry. In fact, 40% of respondents indicate that being customer obsessed with priorities deeply rooted in client needs is the top accelerator of digital transformation.
Fueling many of these changes in the customer experience paradigm is AI. Seventy percent of leaders (52% overall) indicate that they are prioritizing their AI investments in customer interaction to fuel stronger and more meaningful customer engagement. When it comes to Generative AI, leaders are more likely to be making large or moderate investments in the technology (44%), more than twice the level of non-leaders.
Despite the higher levels of investment by leaders, the lower cost of entry to deploy GenAI may allow non-leaders to get in on the action more easily, enabling them to catch up in their efforts to deploy the technology to both customer-focused and internal use cases.
Focus on Talent and Culture for Innovation Initiatives to Succeed
There have been significant IT advancements year-over year, however there is still work to be done in enterprise-wide skills development. Only 28% of all executives surveyed have reached the advanced stages of implementing a digital skills and talent strategy, a year-on-year increase of 4%.
In addition to the technology aspects of transformation, digital leaders have not neglected the human side. Seventy-one percent of leaders have reached the advanced stages of implementing digital skills and talent strategy, compared with 12% of non-leaders. A further 85% say they have created an advanced innovation culture versus 24% of non-leaders.
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