Brand Insights

Six ways to achieve long-term fintech success

Overview

The finance sector has moved forwards in leaps over recent years. Banking can now take place wholly on mobile devices, there are apps to manage credit agreements, to pay off debts and even for investment management, and financial institutions can service their customers with little to no human intervention. Digital transformation has the power to reshape finance businesses, helping them to deliver better customer service, streamline their processes, reduce costs, and add value in every area of their enterprise.

Scope

This article will explore how finance companies can harness the power of new technologies and digital transformation to realise the full potential of the transformations. Long term success when implementing technology and innovation requires bringing your workforce and your consumers along with you, and here we'll explore six crucial principles for success.

The finance landscape looks unrecognisable today compared to a decade ago. The way financial products and services are delivered, the way finance companies interact with their customers, the way data is gathered and used by financial institutions have all been transformed. Digital transformation is gathering pace across the finance sector.

Driven by the rapidly changing financial services landscape and emergence of FinTech companies, it’s estimated that in 2023, finance firms will spend almost a third of their IT budget on digital transformation[i].

They're hiring data scientists, using artificial intelligence and implementing technology that is helping to generate revenue, create operational efficiencies, and leave behind the poor reputation of traditional banks and bankers.

 It’s not hard to see why. The introduction of new digital technologies and upgrading of legacy systems is essential if traditional finance companies are to even survive, let alone thrive, in today’s competitive marketplace.

Successful digital transformation has the potential to improve both customer experience and profit, creating value for customers and stakeholders alike - but only if it’s implemented properly. And those that get the rollout wrong join the estimated 70% of projects that fail to meet their objectives[ii].

So, what do finance companies need to consider if they are to make digital transformation effective in the long term? Here we look at six things that can make the difference between success and failure.

1. Have a clear vision

One of the most important elements of a successful digital transformation is a clear end vision. It’s crucial to establish this at the start and keep it front of mind throughout - as plans change and project deadlines shift, there needs to be a well-defined goal to help prioritise initiatives and investments and keep efforts focused.

Setting out your objectives also helps to identify the problems and pressure points that stand in the way of reaching them, so you can develop strategies that address these as well as support the overall vision.

2. Adopt agile

Successful digital transformation is an ongoing process of innovation, and adopting an agile approach can help to keep activity on track when working over an extended timeframe. Agile methodologies break a task down into smaller, more manageable chunks, making it easier to oversee complex projects, especially those that require buy-in from multiple parties.

Central to the concept of agile is flexibility. Working in short, productive sprints not only allows adjustments and changes to be made but actively encourages them, with teams constantly reviewing, testing and gathering feedback on what is working well or needs to be refined, to ensure the project continues to progress towards its end goal.

3. Create a digital culture

For digital transformation to succeed in the long term, a purposeful cultural shift is required. The purposeful element is important: since COVID, many financial services have digitised but they’ve been driven by necessity, customer demand and competition from disruptors in the market rather than desire. Genuine, long-term transformation needs to be engineered and reinforced to endure, and that requires strong leadership and an integrated approach.

Leaders need to share their vision for financial digital transformation and its role in the future of finance as a whole, communicating the benefits and engaging employees. It’s important that everyone is involved and has a voice; this ensures buy-in and support but also helps to demystify digital technology in finance and create a culture that embraces innovation and learning.

4. Hire and retain the right people

The success of your digital transformation efforts has as much to do with people as it does with technology; any technical developments are redundant without the skilled personnel to operate them. Therefore, it’s essential to identify where the gaps in capabilities and expertise lie so you can work out the best way of plugging them, either with new employees or by redeploying your existing workforce.

With technical skills and knowledge in high demand (only one-third of finance leaders think their teams have the competencies required for a digital finance function[iii]), reskilling and upskilling employees has never been so important. Organisations should encourage knowledge sharing within teams and provide employees with the resources, training and development opportunities they need as their roles evolve.

5. Encourage collaboration

Having a diverse range of skills and expertise involved is central to making digital transformation a success and one of the best ways of achieving this is through collaboration. We’ve already touched on how employees can work together to enhance their knowledge and the same applies externally too.

Technology partnerships bring together the best talent from other organisations to help enterprises scale faster, address complex problems and disrupt the industry. They allow you to tap into specific areas of expertise as and when you need it and keep pace with developments. Even competitors can offer opportunities to grow, learn and expand, creating stronger products and services, and driving change.

6. Use data-driven decision making

We talk about data a lot. And that's because the power of data cannot be underestimated. It can be the difference between a digital transformation strategy that succeeds and one that fails. When owned and analysed properly, the data collected from digital technology enables more accurate decision-making, identifies where value can be added, drives insight, validates business strategy and supports competitive advantage. The result of all this is higher confidence in the entire process.

With access to more actionable insights, business leaders are able to make better decisions, faster. The more they understand their customers and products, the better they can adapt to changing market needs and enhance their competitive edge. And the more they evaluate their business processes, the more efficient and agile they can become.

How digital technology can be used to transform the finance sector

One of the most prominent examples of a financial company that has undergone significant digital transformation is JP Morgan Chase [1]. By investing billions of dollars in technology, digital innovation and fintech innovations, the company has become a market leader in the financial sector. One of the key factors that contributed to their success was the implementation of artificial intelligence to improve customer experience and automate routine tasks [2].

For instance, the company's virtual assistant, COiN, can analyse legal documents and extract important data in seconds, a task that would take hours for a human to complete. Additionally, the company has leveraged big data and analytics to gain insights into customer behaviour and preferences, which has helped them to develop personalised products and services [1].

By embracing digital transformation and investing in technology, JP Morgan Chase has uncovered new opportunities to serve their customers, and find operational efficiencies that reduce the cost to serve their consumers. Digital has helped them to provide better customer experiences, which in turn has transformed their profitability and market share.

Digital transformation efforts in the UK

It's not just huge enterprises like JP Morgan Chase that can benefit from digital transformation. Small businesses can achieve huge growth by embracing technology to disrupt the market. Starling Bank became a market leader and a transformation leader in the finance sector through its digital transformation [3].

The bank was established in 2014 as a mobile-only bank, and it has since grown to become one of the fastest-growing banks in the UK. Its innovative use of new technologies has secured its place as an innovative player and market leader in recent years. Its powerful mobile app offers customers a range of features, including facial recognition and biometric security, real-time spending insights, instant transaction notifications, and intelligent budgeting tools [3].

Starling also uses AI and machine learning to provide customers with personalized product recommendations and fraud detection. Additionally, they've embraced open banking, allowing customers to connect with third-party financial services, which has helped to attract a new generation of customers who are looking for more convenient and personalised banking services. By leveraging digital technology and data, Starling Bank has been able to offer customers a seamless banking experience, which has helped to differentiate it from traditional banks and drive its growth. 

An ongoing commitment

Done properly, adopting digital transformation can bring a host of benefits. But successful implementation isn’t inevitable, it requires a culture shift, a comprehensive strategy and a tacit understanding that you’re embarking on an ongoing process of improvement and change - from your day-to-day tools right through to your business models.

For those that get it right, however, it encourages innovation, improves operational efficiency and can enhance the customer experience – everything that financial organisations need to stand out and stay relevant in today’s fast-paced world.