A new report has revealed that while most UK financial services firms are embracing digital innovation, many are put off by the perceived costs of failure, and a shortage of tech skills among staff is seen as a major challenge.
Fear of failure is leading almost three quarters of UK financial services companies to avoid or abandon digital transformation projects, according to Fujitsu’s new Digital Transformation PACT report. Seven out of 10 have cancelled projects in the past two years.
The report also highlights a lack of digital skills in the industry, with crucial business priorities such as cybersecurity suffering as a result.
“Financial services firms are under pressure from their customers to deliver greater speed, convenience and personalization, as well as better customer services,” said Ian Bradbury, CTO Financial Services at Fujitsu UK & Ireland.
Success can be born out of previous unsuccessful projects, as previous failures allow organizations to learn
“Digital transformation is certainly a key strategy in helping banks and insurers achieve this, however, despite the sector going from strength to strength, financial sector firms have undertaken unsuccessful projects and lost money. This has made them nervous about deploying new projects.
“But we feel that success can be born out of previous unsuccessful projects, as previous failures allow organisations to learn. In an ever-changing market, there is no such thing as permanent success. Organizations must continuously improve, learning from their mistakes along the way.”
While more than 87% of financial services organizations have a clearly defined digital strategy, 73% admit that their digital transformation projects often aren’t linked to the overarching business strategy.
The research highlights four strategic elements businesses must focus on: People, Actions, Collaboration and Technology – the Digital PACT.
People
More than 90% of the 1,600 business surveyed believed that they have a culture of innovation within their organization. However, many admitted to a problematic skills gap, with 80% saying that a lack of skills is the biggest obstacle to addressing cybersecurity.
While most (93%) UK financial services firms are taking measures to increase their access to digital skills and expertise, four in five believe attracting ‘digitally native’ staff will be vital to their firms’ success in the next three years, as well as turning towards targeted recruitment (72%) and apprenticeships (50%) to support digital transformation.
Actions
A strategy to ensure that the right processes, attitudes and behaviours to ensure digital projects are successful is seen as the least important of the four key elements of digital transformation, yet 87% are taking specific measures to support collaboration on digital innovation and more than two in five (43%) are creating networks for employees to share expertise across the business.
Collaboration
More than a quarter (28%) of UK financial services leaders believe collaboration is an important element in realizing a company’s digital strategy. While almost four in five (78%) turn to technology experts for co-creation, 67% go as far as seeking consultancy and training from start-ups and organizations outside their industry.
Technology
Many organisations are already leveraging new technology that will radically change the way they do business. A fifth of financial services leaders believe implementing technology will be the most important factor to realising their digital strategy, with cloud computing, big data and analytics playing a key role in helping drive the financial success of their organisations over the next 10 years.
According to Bradbury, “Historically, financial services firms have been cautious when it comes to innovation. They are working under strict regulations and the very nature of what they do means that a radical digital transformation project could have a detrimental impact on people’s lives – for example, negatively impacting access to bank accounts or making insurance claims.
“But this shouldn’t hinder innovation across the sector. Quite the opposite – with the help of external expertise and willingness to implement digital transformation, we can be soon pleasantly surprised at a revamp of the industry. Change doesn’t always come naturally, but the financial sector understands what’s at stake, with 86% admitting that the ability to change will be crucial for the business’ survival in the next five years.”
The full report can be downloaded here.