Why a digital transformation might benefit financial services and health care companies
Among the 4 priorities that drive digital transformation, personalizing customer experiences is a top priority for many firms, according to a Broadridge survey.
A new study explores the financial, operational and strategic benefits of digital transformation, identifying ways that next-gen technologies create value for companies and analyzing the biggest challenges companies face with adoption and implementation.
The 2022 Broadridge Digital Transformation and Next-Gen Technology Study is based on interviews with C-level executives from 750 firms worldwide, focusing on subsectors in financial services and health care. Of respondents, 47% came from North America, 28% from Europe, the Middle East and Africa, and 25% from Asia. Broadridge, which partnered with Thoughtlab Group on the survey, generated a digital transformation maturity score for every firm, dividing respondents into four categories ranging from beginners to leaders.
According to the survey, those firms in the leaders category – which represented 21% of all firms surveyed – reported “significant advantages” over their peers, including being 1.5 times more likely to report increased revenues from digital transformation than their counterparts.
The chief investment officer of a leader U.S. asset management firm summarized the benefits their firm was seeing.
“We have streamlined a lot of internal systems to reduce long-term costs and are also realizing incremental revenues, improving investment performance and enhancing the customer experience,” they said.
Digital maturity corresponded closely with size. Of the firms responding with more than $250B in assets, 55% qualified as leaders, while just 3% of firms with less than $10B in assets and just 2% of those with between $10B and $49B fell into that top category. During the pandemic, 62% of larger firms accelerated their digital transformation, while just 34% of the smallest firms did the same.
Both leaders and non-leaders report that they expect to increase their digital investments in the near future. Leaders said 9% of their current IT budget was invested in next-gen technology solutions, and they expect that number to grow to 12% in the next two years. Non-leaders, meanwhile, project their investment in next-gen technology solutions to grow from 12% of their IT budget to 14% in the next two years as they attempt to close the gap with the top performers.
Among the areas where digital maturity is showing the most benefits, 62% of firms in the leaders category said an increased focus on data and analytics was improving planning and decision-making. However, strategic planning was the lowest of four top priorities cited for digital transformation. While 43% of firms pointed to strategic planning as a digital transformation priority, 62% named sales and marketing, 64% cited operations and 74% listed customer interaction.
Leaders leaned even more into the customer-related benefits with 83% saying it was an emphasis for their digital efforts. Key activities tied to digital transformation of the customer experience include shifting from paper to digital communications, an omnichannel client experience across devices, digital interactive documents, micro-personalized marketing and communications, and data-driven continuous improvement of client experiences, according to the report.
“We are able to gain a 360-degree perspective of all customer interactions across all channels, allowing us to accelerate the shift to a customer-centric operation,” the chief financial officer/financial director of a U.S. hedge fund said.
Personalizing customer experiences is a top priority of digital transformation for many firms, according to the survey. Among leaders, 91% are in the mid or advanced implementation stage of micro-personalized marketing and communications to customers, while 44% of non-leaders are.
Among financial services firms, the most aggressive in embracing digital transformation are investment and asset managers (41% leaders) and universal banks and full-service financial institutions (40% leaders), while those moving the slowest are private equity and private debt firms (12% leaders) and retail banks (11%).
Sophisticated, rapidly evolving tools are at the center of digital transformations. According to the report, “firms are increasingly turning to AI, blockchain and the cloud to drive their digital transformation.” In fact, 91% of firms expect to be either mid or advanced implementation of the cloud next year, while 78% of firms expect to be at the same stages for AI and 69% for blockchain.
The rapid pace of technological change was most frequently cited as the biggest challenge to digital transformation by respondents. More specifically, beginners pointed to common challenges tied to insufficient budget, a struggle to modernize the IT infrastructure and the lack of a roadmap to innovation.
“Firms must continually evolve their business models and value propositions with next-gen technologies,” according to the report. “But this requires a culture of innovation that enables rapid adaptation.”