Author: Sarah Britton
While some financial service providers are already investing heavily in digital finance technology; others are holding back. But why? And how can they move forward?
In my earlier blog post, I briefly discussed why decision makers in financial services might be holding back from investing in digital financial solutions. In this post, I’ll explore the hurdles they’re facing – along with approaches to overcoming them.#Financial service providers are already investing heavily in #digital #finance #technology Click To Tweet
Access to expertise
The capacity and capability of an organisation’s resources – predominantly its people –affects not only its investment decisions but also its ability to bring that investment to life. With expertise around newer technologies relatively scarce, companies may hold back from investing.
So why is expertise scarce? Fundamentally, it’s because that expertise is in high demand. And with those that have the expertise often facing a choice between working for a large corporate or a nimble FinTech start-up with a potential IPO at the end, the large corporates all too often lose out. When talent is acquired, often multiple projects find themselves competing for the same expert.
In this case, external vendors, who have the resources and whose bread and butter is providing digital financial solutions, are a good option. These vendors can often transfer their expertise to your internal resources (or SI partners) following the initial implementation, giving the business greater ownership of their digital financial solution going forward. This also has the added benefit of a solution with an upgrade path and roadmap that ensures the business continues to enjoy a ‘best of breed’ solution into the future.
Changing legacy mind-sets
No matter how fast the financial services market is moving in terms of innovation and customer expectations, if the decision-maker doesn’t understand the place of digital in their organisation, or they are focused on short term returns, they may resist investing in digital financial solutions.
For banking in particular, the starting point for the journey to digital often lies with the traditional branch-based services that have been at the heart and soul of the bank for many decades. A reluctance to move away from the branch can lead to legacy thinking as digital pushes banks away from their traditional territories.
Mind-sets, however, are changing naturally as digital adoption and innovation on that digital adoption increases in the financial services sector. Education and sharing stories that show how digital has been successful in improving customer engagement and ROI will help to advance mind-sets further.
When exploring the case for investing in digital financial solutions, examining the positive impact of digital beyond the initial outlay is essential. Demonstrating the ROI is key.
The ROI from such a solution– cost savings and increased turnover in particular – can easily be proven by simple analysis of the readily available management information.
Take headcount: Analysis of management information can demonstrate that a digital finance platform cuts costs. It allows options to reduce customer services headcount, or simply reassign the team to focus exclusively on more complex customer requests, for instance.
And new applications: Analysis of management information can also help demonstrate how digital investment increases turnover. The number of people completing a loan application increases when given access to a channel they want to use, for instance.
When you can demonstrate a clear ROI, the decision to invest in digital becomes easier.
Time is of the essence
As the saying goes, “time is of the essence”.
With sceptics, legacy thinkers and shareholders keeping a close eye on the progress of investment in digital financial solutions, it’s important to generate some discernible value as early as possible. Rather than focusing on delivering the solution as a whole, it’s often preferable to put in place milestones for delivering discernible, measurable, value to both end users and internal stakeholders at regular intervals along the journey.
External expert vendors can help identify digital functionality that can be implemented within a short space of time to demonstrate the value of the digital financial solution – and deliver it. After all, they don’t need to ramp up their skills and won’t be starting from a blank sheet of paper.
We can’t escape regulation, particularly now with the likes of PSD2 and GDPR on our doorstep. Compliance with each of these can be significantly assisted by digital – supporting the case for investment.
From the other side, however, it may be that the business is required to comply to with the financial conduct agenda, for example. This need for compliance shouldn’t prevent businesses implementing digital financial solutions. It does, however, mean you need to work with your vendor, or an internal team, to tailor your solution to those requirements.
Integrating with legacy
You’ll not disagree with me if I say larger financial services companies are often not as agile as the new startups; they have to integrate any new solutions with their legacy infrastructure.
But digital financial solutions often don’t need the most up-to-date back end systems. In fact, they can often be used to deliver a great customer experience on top of, and despite, this existing legacy kit. Legacy infrastructure and modern digital experiences aren’t mutually exclusive.
I hope this blog post has given you some deeper insight into the hurdles businesses may encounter when starting out on their journey towards a digital finance solution. Equally, I hope it has given some comfort in the knowledge that those hurdles aren’t insurmountable. And, as I rather cheekily mentioned in my first blog in this series, Intelligent Environments are always here to help!