State Street Corporation (NYSE: STT) has identified three elements leaders in financial services will need in order to excel in the new digital era.
In its latest report, “Finance Reimagined: Finding Long-Term Value in a Digital Age”, the findings result from a global survey of 2,000 investors and 500 investment providers.
State Street argues leaders - defined as those using digital technologies to transform their businesses - are excelling in the “three I’s of data”: integration, integrity and intelligence: integrating internal and external data; drawing new intelligence from it to improve decision-making, agility and client-centricity; and then safeguarding the integrity of this data with the highest levels of cybersecurity.
Despite the quickening pace of digital innovation, many investment firms are characterised as “digital laggards” having moved slowly to embrace new technologies when compared to their “digital leader” peers. The research further reveals:
• 64% of leaders are applying robust cybersecurity measures to ensure data integrity (22% of laggards)
• 63% of leaders are aligning front, mid- and back office functions to better service clients (30% laggards)
• 63% of leaders are fully harnessing data and analytics to improve decision making compared with just 24% of laggards
• 63% of leaders have identified future areas of growth and new segments compared with 35% of laggards
• 52% are focused on building an integrated, omni-channel approach, compared with just 24% of laggards
Firms in Europe identified the following as the most important success criteria for digital transformation:
• 35% of firms value maintaining a culture that encourages innovation and collaboration (North America: 27%, Asia Pacific: 30%)
• 29% of firms think organising a high-performance digital team with dedicated digital champions (North America: 18% percent, Asia Pacific: 27% percent)
• 34% believe acquiring the right talent and technical knowledge is critical for success (North America: 33%, Asia Pacific: 27%)
Of the investment providers surveyed - a group ranging from universal banks and mutual funds to alternative investment firms and fintech start-ups - almost half (49 percent) say technology is redrawing the marketplace. Eight in ten (81 percent) say digital transformation is important for the future of their organisation.
In light of the clear understanding of the importance of digitisation, the report outlines a number of steps digital laggards need to take to accelerate their journey to a digital future. These include:
• Redefining technology talent by looking outside of their industry for the right skills, and creating meaningful career opportunities that attract high-calibre talent by demonstrating how digitisation and customer-centricity go hand-in-hand
• Challenging the operating model by adopting an agile, fail-fast approach to innovation, considering partnerships with technology firms or acquisitions of start-ups that can help organisations move toward a more inventive culture
• Future-proofing the digital architecture by instilling an IT infrastructure that can withstand increasingly complex investment portfolios and regulatory requirements while saving money, and
• Acting as a trusted partner for the digital age by developing a broad set of policies that entrench the right protection for customer data across every process and level of the organisation
“Digital transformation is driving a seismic shift in the investment industry,” said Lou Maiuri, head of State Street’s Global Markets and Global Exchange businesses. “We’re focused on how deep-rooted digital innovation can generate new value for our clients. The three I’s of data enable financial leaders to develop highly personalised, data-driven products that appeal to a broader range of investors. By increasing the ability of institutions to understand and act on their investors’ needs, the three I’s enable the financial leaders of the future to create transparent, flexible services that increase trust and confidence in the sector - redefining stewardship for the digital era.”
“New digital technologies will enable firms to provide a more fluid, dynamic and interactive investment experience for clients,” added Antoine Shagoury, chief information officer, State Street.
“Moreover, they will help the industry to deliver the type of personalisation investors are increasingly demanding, at scale. Firms that neglect to understand and embrace emerging technologies from Blockchain to artificial intelligence will also fail to remain competitive in this new era of finance, while those who live and breathe the digital revolution will be those who define the future of the sector.”