Digital transformation in financial sector

 

Financial services companies face unique challenges in adapting to the rapidly changing customer expectations and market conditions of an increasingly digital world – such as the consolidation of complex legacy systems, IT security challenges and an increasingly strict regulatory environment – but those who succeed stand to tap into unprecedented opportunities for growth.

 

Overview

 

Digital transformation has become the defining issue of the business environment as a whole, with IDC anticipating that by the end of this year two-thirds of the world’s top 2,000 companies will have it at the centre of their corporate strategy (1).

The analysts estimate half of organisations’ IT spending this year will be on digital transformation technologies and services, rising to more than 60 percent in the next three years.

The financial sector recognises the importance of this trend, with European banks ranking it as their top business priority last year, ahead of security, data protection and regulatory compliance, IDC found.

 

Digital transformation in financial sector

 

For banks, as for other kinds of business, digital transformation is about maintaining relevance to customers by prioritising the technologies they’ve come to rely on for their engagement in all areas of life, such as social media and mobile platforms.

The financial sector’s embrace of this trend is clear from a recent IDC survey of Italian banks (2), which found their top three applications of large-scale data analytics were all aimed at engaging customers, ahead of services such as fraud prevention and data management for compliance.

Banks are equally clear on the steps they need to take for digital transformation: the same study found banks ranked the development of mobile banking as the top priority in this area, followed by the digitisation of branch offices, the improvement of digital customer engagement and the implementation of video banking.

 

 

Virtualisation and cloud delivery are key

 

For organisations to achieve such a focus, however, it first requires them to first consolidate existing back-end and front-end systems, something that holds a particular challenge for the financial sector – but a challenge for which solutions are readily available.

Banks are keenly aware of the technologies they need to turn IT from a cost to an internal service provider – IDC’s study found their IT departments see the virtualisation of IT infrastructure and the adoption of private and public cloud delivery models as a major driver of future growth.

Financial organisations know they need to be more flexible and to take more initiative to meet the demands of the market, and that they must move to an IT infrastructure capable of interacting with the external ecosystem.

To do so they’re shifting their priorities to embrace more agile project management, better use of resources, more resilient and secure infrastructure and standardised IT, IDC found.

 

Huawei Enterprise and Omni-Channel Banking

 

Huawei is building on its success as a carrier to become a “one-stop shop” vendor of ICT, including hardware, software, data centre offerings and cloud services.

The company has invested significantly in digital transformation products, services and solutions, and success stories in China and Europe have shown it’s capable of linking ICT efficiencies to business outcomes.

Its Omni-Channel Banking portfolio draws on offerings including mobile marketing, telephone marketing VTM remote banking, standard outlet management, remote wealth management and enterprise office collaboration, allowing banks to provide all-round services that improve interaction with their own customers.

Huawei aims to enable banks to better segment consumer markets to deliver more efficient and effective marketing, with front-end service transformation and extensive marketing services to help banks achieve significant improvements in key performance indices and improve efficiency using new sales models.

In the face of strong competition from market leaders and the rapid saturation of enterprise accounts, Huawei is in a strong position thanks to its range of enterprise product offerings, multiple customer successes and an elaborate and constantly developing partner network.

 

Chasing opportunities

 

For banks, improving the customer experience means transforming back-office processes, information and architecture. Financial firms need to become data-driven organisations, forcing them to develop new skills in data management and the administration and maintenance of large-scale data analytics IT infrastructure.

These changes are expected to see banks’ chief information officers shifting from primarily managing IT toward executing a high-level organisational strategy, making them increasingly reliant on third-party IT partners.

Such conditions make choosing the right partners increasingly key to managing the transition to digital business and tapping into the opportunities for growth offered by the new digital world.

(1) The Banking Sector in the Age of Digital Transformation, white paper published by IDC Italy in May 2016.

(2) Ibid.