Digital transformation has long been a buzzword in the boardroom, but the global COVID-19 pandemic significantly accelerated the need for companies to implement digital plans. As many business sectors build upon the digital strategies they implemented during the pandemic, the financial services and insurance (FS&I) sector needs to fully embrace digital transformation, or risk being left behind in an ever-more digital world. And that means recruiting and developing the talent that can plan and implement strategies that will take FS&I into the future.
The FS&I sector has been slow to adopt digital transformation as a key strategy. According to research by BDO, 68% of financial services companies have developed a digital transformation strategy, yet only 14% are actually in the process of implementing said strategy. Meanwhile, McKinsey’s Digital Disruption in Insurance report states that ‘those insurance companies with the most advanced management practices related to digital strategy, capabilities, culture, and organization outperform their peers. Yet relatively few incumbents have so far defined a comprehensive digital strategy.’
Digital transformation in other sectors has also raised expectations in terms of customer experience, with existing and prospective customers demanding levels of digital integration similar to their experiences elsewhere. And while any form of digital transformation within regulated industries like FS&I is a more complex endeavor than in non-regulated environments, customers are unlikely to consider that when comparing experiences across sectors. Whether it’s mobile apps, online chat functionality or simple digital applications and approvals for finance or insurance products, modern consumers expect to interact with businesses digitally.
However, organizations in the FS&I sector are often reliant on core legacy systems, which can hold back the execution of a digital transformation strategy. Adobe’s 2021 Financial Services & Insurance Trends report found that 53% of executives within the sector cited ‘modernizing core legacy systems’ as the number one priority, while ‘enabling frontline staff’ came a close second. This highlights that within FS&I, it’s the digital transformation of those core systems that in turn will form the foundation for the wider digital strategy.
The potential benefits of digital transformation within FS&I are significant. Cloud-based data storage coupled with AI-enabled analytics platforms and tools can deliver actionable insight, based on real-time data – whether that be effective risk analysis, or tailored marketing strategies. Digital process automation can streamline workflows, reduce cost and improve customer experience – according to McKinsey, automation can reduce the cost of insurance claim journeys by as much as 30%.
Deloitte’s 2022 Insurance Industry Outlook estimates that, this year, 74% of insurance companies will increase spending on AI systems, while 72% and 67% will increase spend on cloud compute/storage and data analytics respectively. And, tying in with the potential cost reductions flagged above, 63% of insurance companies will be increasing investment in robotic process automation.
Demand for tech talent
All these revolutionary benefits rely on the FS&I sector being able to create and deliver an effective digital transformation strategy, and that requires the right talent and resources. The digital explosion across all sectors has resulted in extremely high demand for those who can deliver the strategies, platforms, and tools to transform a business. For the FS&I sector to truly embrace the digital age, it needs to attract and develop the talent necessary to undertake that digital transformation journey.
The demand for digital talent is incredibly high, and because those digital skills can be applied in almost any industry vertical, the FS&I sector must put the tools in place to attract that talent. However, it’s also important to remember that developing existing talent – helping incumbent staff learn new skills and take on new roles – can also be integral to a successful digital transformation. Additionally, an environment where internal talent is invested in and developed will appear more attractive to external candidates.
The right approach
The first step along the road to digital transformation is fully understanding both the needs of the business and the talent required to deliver on those needs. Adopting a Talent Lifecycle Management platform like Beamery will help FS&I companies better understand their workforce, identify skills gaps, and address those gaps through internal development or external recruitment.
So, when it comes to digital transformation in the FS&I sector, the cornerstone of any strategy should be bringing HR into the digital age, with a platform that delivers the necessary insight and understanding. After all, planning and executing a successful digital transformation requires talent with the requisite experience and skills.