Prior to the COVID-19 pandemic, most financial services might have felt upgrading their technology and adopting more digital tools was optional, with most financial advisors reluctant to use technology very extensively.
Fast forward a few years and pushed by the pandemic, digital finance transformation has accelerated and the financial sector has pivoted quickly to meet demand.
Digital transformation is no longer just a buzzword. It’s the new normal. Every business needs to digitally transform to remain relevant, competitive and profitable in the long term.
What is digital transformation?
Put simply, digital transformation is the integration of digital technologies to modernize financial services business processes. Using technology, finance and accounting functions can be restructured and reshaped to create efficient operating systems and processes.
Why is digital transformation in finance necessary?
Today’s business world is evolving faster than ever before. Greater competition, tighter margins, and more stringent regulatory policies have all led to the necessity for the finance services sector to evolve. Digital transformation makes the following benefits possible:
To remain competitive, finance leaders need to take a strategic approach to digital transformation that includes five key principles:
1. Define your digital transformation strategy
The first step in any transformation initiative is defining a strategy. First, you need to understand the current state of your organization and what goals you have for the future. Having a clear understanding of what you want to achieve through your digital transformation is critical to its success.
If you’re unsure about setting goals, then think about the pain points or areas of your business that exist and the solutions that could form part of your digital transformation strategy. If your financial services business has too many manual processes that are time consuming, or there is too much work to be done and not enough resources, or even areas the business is wasting money, then these pain points can form goals:
2. Review existing resources
Once you have a clearer idea of your digital transformation way forward, you need to consider what systems are in place currently and might be holding your business back. Some examples of this are:
Digital transformation requires a mindset shift and the understanding that how things were done may no longer serve your business growth, and accepting digital tools will play a major role in your firm’s future.
3. Leverage technology to enable transformation
The next step in the digital transformation journey is to select the technologies that will enable transformation. There are many technologies that are disrupting the finance industry and enabling digital transformation. For instance, artificial intelligence, cloud computing, blockchain and robotic process automation are enabling new business models and helping existing businesses become more efficient.
For example, let’s say your company handles millions of accounts daily and the process is plagued with errors caused by human mistakes. You can use robotics process automation to replace the manual process with an automated system that is less prone to mistakes. You can also use AI or machine learning to create an algorithm that can correct the errors and eliminate the need for a human to correct them.
4. Establish a governance and standardization process
You need to create a standard process for any new initiatives and technologies. This will ensure that every initiative meets your company’s standards. For example, let’s say your company has multiple divisions and each one uses a different technology stack. This creates inconsistency across the organization and makes it difficult to transform the company. By centralizing your technology and implementing a standardization process, you can unify your technologies and drive transformation across your organization.
5. Measure results
After going through the process of creating a digital transformation strategy and then carrying it out, you need to know if it has achieved your goals. Measure this by considering:
Make your financial digital transformation happen with the experts
Digital transformation is the process of investing in new technologies, creating new business models and re-engineering your company to compete. It enables organizations to be more efficient and drive more value for their customers. To succeed in the digital transformation journey, talk to the IT consulting experts at Aquarius. Through our IT strategy consulting services, we will assist you in identifying opportunities for technology improvements in your financial services company so that any new initiatives are not only cost-effective, but also provide you with the greatest possible return on investment.