Navigating Disruption & Digital Transformation in Finance
The role of leadership & company Culture
| White Paper
Disruption and digital transformation in finance are inevitable. Our latest research looks at how leadership and organisational culture can make or break digitalisation efforts.
For financial services disruption is the new normal
Disruption is the new normal in the financial services sector. The global FinTech market is expected to grow at a rate of 25% annually and InsurTechs, the challengers in the insurance space, are set to almost double their revenue by 2025. Tech giants, such as Amazon, Apple, Google and Facebook are also rapidly disrupting the financial services space.
There are several factors driving FinTech success:
- New tech, like AI and blockchain, are separating the winners from the losers.
- Ultra-personalised tech services that FinTechs offer are driving demand.
- Digital payments are becoming increasingly popular, as the move towards a cashless society is fast-tracked by the Covid-19 pandemic.
Covid-19 widens the Digital Divide
Covid-19 pandemic has accelerated the disruption, and customers now increasingly expect competent online and mobile services, fast and secure access to funds, protection, assurance, and financial information. Ernst and Young survey shows that for over 50% of customers factors such as greater flexibility, eagerness of companies to provide support to individuals and the community, as well as better transparency, will impact their future purchasing decisions.
The Digital Leadership Gap
Despite the disruption, only a quarter of financial services FTSE 100 companies have a technology expert on the board as a non-executive director. A digitally savvy board can make a significant difference and should not be underestimated. Companies with a minimum of three digitally savvy directors had 17% higher profit margins than those with two or fewer, 38% higher revenue growth and 34% higher return on assets.
Tackling diversity and inclusion is a digital and commercial necessity
Whilst technological advances are vital, these are short-term gains. Focusing purely on digital transformation is not sufficient. Companies also need to create an environment that attracts talent and where innovation can thrive. PwC’s survey shows that of companies with a formal diversity and inclusion strategy in place, 79% said it has helped them to innovate. An inclusive environment is also crucial for attracting the top talent in the first place – 80% of millennials reported inclusion as an important factor when choosing an employer.
Moreover, the Financial Conduct Authority (FCA) are recognising the importance of diversity and inclusion and are extending their definition of non-financial misconduct to include the organisational culture. The bottom-line is that diversity & inclusion have become a commercial necessity.