Digital transformation is considered by many to be the holy grail of innovation. You only need to walk into the boardroom of a top company, an innovation brainstorm, or a client meeting to hear just how often the term is bandied around – big businesses within the finance sector are no exception to this.

During the last 5 years or so, there has been a huge increase in the number of FinTech companies setting up shop and providing innovative new solutions. This has been responsible for completely transforming the landscape of the finance sector. Over recent years, there has been a real push towards innovation and reinvention thanks to various different factors, including the changing expectations of customers, a more cutthroat level of competition, the streamlining of operations, and with regulations becoming much more complex. 

As a result of this, a brand new age of open banking has been established, which allows for the quick and seamless integration of new financial applications and platforms. Brick and mortar bank branches and antiquated paper systems, therefore, are being replaced by low latency private network ecosystems that are completely digital.

A Leading Business Imperative

Across all sectors and industries, including financial services, digital transformation is one of, if not the, leading imperative for businesses. However, the stages where these businesses are at differ greatly, with some already making significant inroads into the process of digital transformation, whereas others are within the early stages around strategy and implementation. 

So whereas many banks have not changed what they have been doing for the past 100 years or so (e.g. investments, loans, payments, safekeeping etc.), the way in which they now manage their transactions and activities is rapidly changing and to a significant degree. Part of this is due to the increasing expectations of their customers. 

Proven Return On Investment

It is quite clear as to what exactly the benefits of implementing digital transformation are for business, especially within the finance sector. The two main ones being greater operational efficiency and a better overall customer experience. Because of this, those businesses that are making significant inroads into the process are anticipating a high level of return on the investment that they have put into digital transformation – as greater as 10 percent or even higher for some businesses. 

It is no surprise then that more and more businesses within the finance sector are putting more time, money, and effort into digital transformation. In fact, around 65 percent of businesses within the sector are planning to up their spending on the process by as much as 10 percent, with some planning on committing even more than this in the years to come.

Conclusion

Businesses within the finance sector, including FinTech firms all the way through to start ups, are facing new challenges on a daily basis. The main challenges, however, come from concerns over data privacy, the requirement for increasing levels of cybersecurity, greater expectations of customers, and increasing regulation. Digital transformation is a process that can tackle all of these issues for businesses.