# How traditional bank and insurance CFOs can maintain pace in a disruptive, digital-first marketplace
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-05-03
Category: INSURANCE
Category URL: https://financedigest.com/category/insurance
Meta Title: Financial Sector Shift: COVID-19 Driving Tech Transformation
Meta Description: COVID has accelerated tech investment in traditional financial institutions, driving the need for digital transformation and improved customer experiences.
URL: https://financedigest.com/how-traditional-bank-and-insurance-cfos-can-maintain-pace-in-a-disruptive-digital-first-marketplacehtml

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_By **Ronnie Wilson,** Group Executive Vice President,_ [_Serviceware_](https://serviceware-se.com/solutions/serviceware-platform/serviceware-financial)

COVID has upshifted the business landscape into turbo mode, leaving many organisations scrabbling around in its wake and trying to catch up. For the more traditional players in the financial sector, this inhalation of exhaust fumes as the new business climate drives on ahead has served as a wake-up call. Its need for digital transformation far preceded any sign of a pandemic. But COVID has finally driven traditional banks and [insurance firms into the fast lane when it comes to tech investment](https://www.financedigest.com/classic-car-insurance-broker-launches-future-classic-investment-guide.html "Classic car insurance broker launches Future Classic investment guide").

Many organisations in the [sector that had previously relied on legacy systems have had to completely restructure their services to cater for both existing and rapidly evolving customer](https://www.financedigest.com/customer-engagement-in-the-insurance-sector.html "Customer engagement in the insurance sector") needs – and a lot of finance and insurance firms have realised just how off the pace they are in terms of their internal operations. Much of this onus falls on the CFO, and a recent Lloyd’s Bank survey revealed that [two thirds (62%) of senior leaders](https://www.finextra.com/newsarticle/36644/tech-investment-top-priority-for-uk-banks) tied to outdated processes and systems plan to increase investment in technology and core systems for their respective financial institutions. Commenting on the research, Adrian Walkling, head of financial services at Lloyds Bank Commercial Banking states: “Technology is crucial to improving long-term productivity in the sector, competitiveness and creating high-value jobs.” However, this intention is tempered by research undertaken with EMEA insurance executives, where [over a third (36%)](https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/financial-services/deloitte-uk-insurance-trends-digital-disruption.pdf) cite support for technology adoption as a major challenge to such transformations.

Similarly, a report from Gartner highlights that while [82% of respondents](https://www.gartner.com/en/newsroom/press-releases/2020-11-12-gartner-cfo-survey-reveals-a-dramatic-digital-acceleration-since-covid19) indicated that advanced data analytics technologies and tools were a top priority, nearly as many, 78%, expected it to be difficult to successfully achieve their goals in this area next year.

Upon this balance of ‘want’ versus ‘can’, CFOs have been forced to carefully examine their organisation’s digital capabilities. Even if much of the wider business world has got a head start, there is still time for the [financial sector](https://www.financedigest.com/how-can-the-financial-sector-safely-use-the-iot.html "How can the financial sector safely use the IoT?") to gain momentum and to get back on track. They just [need a clearer understanding of the vehicle they’re driving](https://www.financedigest.com/reasons-you-need-a-car-insurance-when-driving-in-thailand.html "Reasons You Need a Car Insurance When Driving in Thailand") and the road ahead.

**Demand for a customer-centric experience**

In the past, efforts to digitalise customer-facing [processes may have been put on hold due to concerns around compliance](https://www.financedigest.com/solvency-ii-pushing-existing-systems-and-processes-harder-is-not-enough-for-compliance.html "Solvency II: pushing existing systems and processes harder is not enough for compliance"), organisational resistance to change and scalability. However, today’s technological capabilities are more flexible, secure and compliant than ever. The challenge now will be balancing the demand for innovation – and the need to invest – with the necessity to maintain immediate IT cost savings in a [rocky economic climate](https://www.thetimes.co.uk/article/stay-calm-recovery-may-still-be-at-risk-says-bank-of-england-chief-andrew-bailey-0r3nm6j26). For the CFO, driving the business on to compete, it’s essential to understand the value of all technology investments – legacy, new and purchased directly – to establish their role in the digital first world.

As competition hots up in the financial [services sector](https://www.financedigest.com/decline-in-german-services-sector-eases-raising-hopes-for-milder-recession-pmi.html "Decline in German services sector eases, raising hopes for milder recession -PMI"), customers are now more connected and less forgiving. Financial and insurance products that would have previously warranted an in-branch appointment can now be carried out virtually. In fact, today’s tech-savvy [customers are more engaged](https://www.financedigest.com/5-ways-a-ccm-platform-can-help-improve-customer-engagement-in-insurance.html "5 Ways a CCM platform can help improve customer engagement in insurance") and drawn to brands that can provide a positive digital experience. This is echoed in [PWC’s June 2020 survey](https://www.pwc.com/us/en/industries/insurance/library/carriers-customer-service-models-covid-19.html), which revealed that 41% of insurance policyholders who had difficulties with their insurers due to a lack of digital capabilities are likely/more likely to switch providers.

![Ronnie Wilson](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/ronnie-wilson-2-1736838396255-compressed.jpg)

Ronnie Wilson

This is putting monumental pressure on [CFOs across financial](https://www.financedigest.com/cfos-need-a-focus-on-forex-in-financial-planning-tools-accountagility-reveals.html "CFOs need a focus on forex in financial planning tools, Accountagility reveals") organisations to invest in technologies that provide the digital-first experiences that consumers expect, without compromising on physical brand offerings, and while still delivering cost savings. To do so, CFOs need to have a transparent view of their costs, to correlate [investment with the value delivered back to the business](https://www.financedigest.com/analysis-uk-crisis-forces-off-kilter-businesses-to-halt-investment.html "Analysis-UK crisis forces ‘off kilter’ businesses to halt investment").

**Chasing the digital natives**

Contemplating which areas need digital investment, while managing strained budgets and resources, is a tough [balancing act for CFOs](https://www.financedigest.com/managing-corporate-currency-risk-the-cfos-balancing-act.html "Managing Corporate Currency Risk: The CFO’s Balancing Act"). However, it is crucial in terms of gaining and [maintaining a competitive edge](https://www.financedigest.com/fintechs-should-accelerate-into-edge-computing-to-maintain-momentum.html "Fintechs should accelerate into edge computing to maintain momentum") in today’s embattled business landscape. With new, agile, online-only players entering the market such as [Monzo, Revolut, Starling](https://www.uktech.news/featured/revolut-monzo-starling-comparing-the-killer-fintechs-uk-in-2021-20210106) and Lemonade, customers now have more choice than ever before – and this should not be underestimated.

Customers are increasingly the ones in control, and choice has made them fickle: if their expectations aren’t met, they will simply go elsewhere. This means that for financial businesses to truly compete in a digital-first era, business [leaders must prioritise investment](https://www.financedigest.com/how-financial-services-leaders-can-prioritise-cybersecurity-investment.html "How financial services leaders can prioritise cybersecurity investment") in customer-centric initiatives that help improve and build on existing customer loyalty and corporate reputation.

**Technology: the CFO’s vehicle of choice**

As for the aforementioned bumps in the road ahead, [strong competition and reducing customer](https://www.financedigest.com/how-strong-customer-authentication-can-prevent-cart-abandonment.html "How Strong Customer Authentication can Prevent Cart Abandonment") loyalty are joined by the challenge of legacy technologies and outdated strategies as two additional barriers. Outdated core systems become so ingrained within these businesses that often they need complex enhancements and specialised skills in order to work around them. This is where a platform-based approach is becoming increasingly popular. [Insurers and banks need](https://www.financedigest.com/breaking-down-the-types-of-insurance-you-need.html "Breaking Down the Types of Insurance You Need") an architecture that can scale and evolve rapidly, providing the ability to add new technologies as needed without disrupting integral underlying systems.

The cloud is perhaps one of the most popular solutions for the [financial sector](https://www.financedigest.com/how-data-governance-as-a-service-can-transform-the-financial-sector.html "How Data Governance-as-a-Service can transform the financial sector") when pursuing innovation. Whilst many financial institutions already use cloud-based software for business processes such as customer relationship management, HR and financial accounting, the opportunity for cloud within core activities such as consumer payments, [credit scoring](https://www.financedigest.com/benefits-of-a-good-credit-score.html "Benefits of a good credit score"), statements and billing is endless. [Cloud-based services can reduce internal costs](https://www.financedigest.com/how-much-does-cloud-based-financial-software-cost.html "How Much Does Cloud-based Financial Software Cost?") and optimise business growth by offering a much more scalable and reliable IT infrastructure that is specifically designed to streamline performance and support development and expansion.

Automation, [Artificial Intelligence](https://www.financedigest.com/how-artificial-intelligence-is-simplifying-sanctions-screening-for-insurers.html "How Artificial Intelligence is Simplifying Sanctions Screening for Insurers") (AI) and Machine Learning are three of the technologies already identified as being crucial to the digitalisation of financial service organisations. As a prime example, automation in the insurance space can [reduce the cost of a claims journey by as much as 30%](https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/time%20for%20insurance%20companies%20to%20face%20digital%20reality/digital-disruption-in-insurance.ashx), according to a McKinsey study. By streamlining mundane administrative processes, not only can tasks be sped up, but agents can be released to provide more customer-centric care and more personal elements of operations that will also contribute to greater customer loyalty.

**A clear view of the road ahead**

To retain as well as grow customer bases, it’s clear that [financial institutions must prioritise technological investment in the year](https://www.financedigest.com/what-financial-institutions-will-be-like-in-10-years.html "What Financial Institutions Will Be Like In 10 Years") ahead. This in no mean feat at a time when budgets are constantly being assessed and under enhanced scrutiny. To combat this, organisations need to understand how their IT is being consumed and at what cost to reveal where efficiencies can be made. This is where [financial management tools](https://serviceware-se.com/solutions/enterprise-service-management/it-financial) for enterprise services can help, as they enable businesses to gather vital and real-time operational, project and vendor cost data. This allows organisations to make fact-based decisions around IT spend based on informed scenario planning, and free up liquidity that can then be invested in new digital initiatives that add significant value.

This clarity and insight of current capabilities against future strategy is the direction that CFOs need to be pointing their vehicles. [Digital transformation is no longer a future journey; it’s a race that has already begun, and one that traditional financial institutions are currently potentially losing](https://www.financedigest.com/the-journey-towards-a-digital-bank-five-major-stages-to-successful-banking-digitalisation.html "THE JOURNEY TOWARDS A DIGITAL BANK – FIVE MAJOR STAGES TO SUCCESSFUL BANKING DIGITALISATION"). To tune up their operations when resources are tight is a thin lane to drive in. However, [effective financial management](https://www.financedigest.com/how-effective-talent-management-could-disrupt-the-retail-banking-sector.html "HOW EFFECTIVE TALENT MANAGEMENT COULD DISRUPT THE RETAIL BANKING SECTOR") tools represent the sat nav that CFOs require to make positive and smooth progression moving forward.


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