Digital transformation has become the most important strategic initiative for many financial services firms, with innovative technologies underpinning core business strategies.
The third-annual Broadridge Digital Transformation and Next-Gen Tech study surveyed 500 C-level executives and direct reports across the buy- and sell-sides from 18 countries to understand where they stand today, and what they expect in 2023 and beyond.
The findings of the report highlight how digital transformation is changing the business landscape in Asia Pacific.
Firms classed as leaders in Broadridge’s digital maturity framework were 11 times more likely than other companies to be at an advanced stage of applying AI, blockchain, cloud, and other emerging technologies, and more likely to have advanced integrated data platforms across business departments.
These firms were also replacing legacy systems with cloud-based IT platforms, increasing spending on next-gen tech by 25% in the next two years compared to 18% for non-leaders.
Digital Transformation is Now Mainstream
The report’s findings highlight how digital transformation is changing the business landscape in Asia Pacific. According to the study, 27% of IT budgets are now spent on digital transformation, up from 11% in 2021.
Almost half the firms in Asia Pacific surveyed (48%) indicated that digital transformation is now seen as part of business as usual. Furthermore, digital transformation has risen to become the most important strategic initiative for almost half of financial services firms.
Firms also recognise that falling behind in digital transformation may negatively affect their ability to hire and retain talent.
The report highlights the importance of companies continuing to invest in digital transformation initiatives, particularly in transformative technologies like artificial intelligence, blockchain, and cloud.
By doing so, they can achieve higher levels of efficiency, productivity, and revenue growth. Additionally, digital transformation helps firms to build a more resilient and agile business model, enabling them to adapt more quickly to changes in the market and customer needs.
Asia Pacific Firms Will Need to Play Catch Up with Western Peers
Financial institutions in Asia Pacific were more likely to report being at an earlier point of their digitalisation transformation journey than firms in Europe or North America, leaving room for improvement.
Sixteen percent of firms in Asia-Pacific were classified as digital leaders, based on their progress in ten key areas of digital transformation. This compares to 18% of firms in Europe and 21% in North America.
Despite recognising the benefits of digital innovation and next-gen technologies, financial institutions in Asia Pacific still face several challenges.
The top three challenges inhibiting digital transformation among firms in the region include inflexible legacy systems and inadequate IT infrastructure, insufficient budget for investment, and major talent shortages in the digital and technology skills firms need.
Additionally, the top three mistakes identified with regards to digital transformation, include not taking digitally native competitors seriously enough, lack of a clear digital strategy and implementation plan, and maintaining a culture that makes innovation difficult.
Asia Pacific firms that are ahead in their digital transformation journey are reaping the benefits, however, with cost savings and efficiencies being the most significant benefit.
Companies in the region also report experiencing higher revenue growth, improved customer acquisition and retention and more effective regulatory compliance as a result of their transformation.
Other benefits include reducing the time to market for new products and business lines, increased business agility and resilience, improved employee recruitment and retention, and increased employee productivity.
Business and IT Functions Need to Work Together to Drive Digital Transformation
Digital transformation has become a critical initiative for businesses across various industries, with innovative technologies underpinning core business strategies. The success of this transformation journey, however, is dependent on how well the business and IT functions within a firm work together to drive the change.
According to the study, business and IT leaders agree that both parties must align on a collaborative, shared role in driving digital transformation across the firm.
Business and IT leaders agree that they need to better understand each other’s functions, and how they can support each other. This understanding is crucial for creating a cohesive working environment where business and IT functions can work in unison towards achieving a common goal.
It sometimes seems like IT and business leaders speak different languages. Technology leaders must translate complex technical concepts in ways business leaders can understand, while business leaders need to gain greater technical literacy.
In addition, 50% of business leaders wished for IT leaders to provide greater clarity about IT’s role in driving transformation. Similarly, IT leaders want business leaders to communicate the firm’s long-term strategy and IT’s role in it more effectively, with 43% of IT leaders indicating this.
These findings suggest that communication is critical for successful digital transformation. Both parties need to understand each other’s roles and responsibilities and work together to achieve the company’s goals.
The results are clear that firms embracing digital transformation are gaining a competitive advantage in the market. Companies that continue to delay their digital transformation may find it increasingly challenging to keep up with the competition and risk falling behind.
To learn more on the study and where senior executives are placing their bets for the future, click here to view the full report.