Traditional banks and insurance CFOs are under fire that’s coming from all angles. From COVID on one side, to increasing consumer expectation on the other, to an internal balancing act of investment versus savings, and the rise of online-only competitors from the parapets. With enemies at every door, it would be easy to freeze and surrender in battle. Instead, CFOs need a clearer understanding of where and how to fire back. With this in mind, effective financial management tools can be both the CFO’s shield and their greatest weapon.
The past year’s events have shone extra light on where organisations in this space are falling behind. Reliance on legacy systems, under any circumstances, would put them at a disadvantage. A recent Lloyd’s Bank survey revealed that two thirds (62%) of senior leaders tied to outdated processes and systems plan to increase investment in technology and core systems for their respective financial institutions. Adrian Walkling, head of financial services at Lloyds Bank Commercial Banking, comments on the research: “Technology is crucial to improving long-term productivity in the sector, competitiveness and creating high-value jobs.” But such foresight and expenditure is now having to take place upon a backdrop of tighter budgets – an expectation to achieve more, with fewer resources.
This is leading to internal conflict, according to Gartner – 82% of respondents indicated that advanced data analytics technologies and tools were a top priority, however, nearly as many (78%) expected it to be difficult to successfully achieve their goals in this area over the next year. To turn this company-based stalemate into a wider industry fightback, businesses need stronger insight into their cost data, and a better aim when it comes to investing in their digital futures.
An expanding list of rivals
Exploring the pressure points more closely, the need for digital investment in this current, rocky, climate is clear. At first glance, while the impacts of COVID have made investing harder, the need to become more automated, efficient and streamlined following potentially lost business requires a level of investment in itself – the ultimate catch-22.
Then comes stronger demand from customers. They now expect digital-first experiences, following a year of remote working and tech convenience. But they demand this service without compromising on traditional, physical, brand offerings. Failure to meet this need is likely to result in lost custom, as epitomised by PWC’s June 2020 survey, which revealed that 41% of insurance policyholders who have had tech-based difficulties with a provider are likely to switch to a different organisation.
And they’re not short of options if they do look elsewhere. Firstly, there’s the threat of traditional competitors, who may have already got a better grip of their cost data, made the transition and met this consumer demand. In addition, however, exists an ever-growing group of online-only players such as Monzo, Revolut, Starling and Lemonade. Customers not only have more choice than ever before, but they have a ready-made digital alternative if their priorities aren’t immediately met.
A data-driven transformation from victim to victor
But how can the CFO balance the need to invest with the need to safeguard and protect? The answer: it’s simply knowing where to attack. When automation can reduce the cost of a claims journey by as much as 30%, the cost of not investing in that technology is likely to be far greater than the initial transformation.
Freeing up resources to begin the process of investing in new tech, however, is easier said than done when you have numerous sources of cost data both internally and externally. Not to mention the cost data for IT services that are not being purchased centrally via IT. This is made harder still when managed via a series of spreadsheets, prone to human error and likely out of date as soon as they’ve been shared.
Financial management tools are the best way to deliver that real-time insight across operational, project and vendor cost data. Not only will they give you a shield against outside influences, but they will help to present a roadmap – an optimum plan of attack as you free liquidity, find allies in tech, and become a victor in the digital world.
For further insights on this topic, including how financial CFOs can manage the cost and complexity of legacy systems and effectively level the digital playing field, why not take a look at our digital disruption webinars?