4 Ways Digital Transformation is Affecting Financial Services in 2021

The phrase “digital transformation” is so widely used these days that some people go so far as to say that the term has become essentially meaningless. While the term may be a bit overused, facts on the ground speak to a reality where many areas of financial services are indeed being transformed by the adoption of digital technologies, practices and orientation. Specifically, examples of how digital transformation is growing revenue, reducing cost, managing risk and driving efficiency abound.

Reducing Cost

Like it or not, the first steps most often taken by management to increase profitability is to reduce cost. While this can be short-sighted in some cases, it’s no accident that firms that keep a close eye on the expense side of the enterprise often have the best chance at long-term success. Fortunately, there are a number of useful digital transformation tools available to make this happen. For example, it can be possible to address the datacenter as a way to attack fixed costs and digital transformation tools can be used to manage variable costs such as in a customer service call center. 

Growing Revenue

Conditions for incumbents to grow revenue have been a challenge as the threats from new, emerging fintech competitors have been further amplified and accelerated by the COVID-19 pandemic. However, expanded capabilities that are available from the public cloud allow access to the best, new tools and services and these, in turn, drive innovation in developing new products and services as well as the insights that enable improvement in existing services. Enhanced analytics help to improve existing products and services, for example, or generate the insight that leads to profitable new initiatives. 

Managing Risk

Security is always important in our digital economy, but even more so in financial services and insurance. Sensitive personal information is being handled and the very issues involved are people’s assets and livelihoods. On top of that, regulation is extremely high and the costs for fines and penalties can be extreme. In this environment, new and innovative solutions are always welcomed if they can deliver enhanced performance at a reasonable cost. Public cloud is particularly well suited to enhanced security because digitally native technologies are generally engineered from the ground up to deliver a superior security profile at each and every stage. 

Driving Efficiency

Increased efficiency fits in the sweet spot to support reducing costs, raising revenues and managing risk, often as a result of the same effort. In many ways, the new digital tools, products and procedures that are available from the public cloud are the perfect embodiment of all of these tenets and are purpose-built to address the needs of the modern enterprise. Importantly, the enhanced collaboration helps to unlock the value of the workforce and, at the same time, increases their satisfaction, making them more likely to stay and grow their careers in a way that is beneficial to the enterprise.

In our white paper “Why Digital Transformation is More Relevant Now Than Ever Before,” co-authored with Google Cloud, we go into specific detail on ways that these four areas of digital transformation can benefit the financial services and insurance industries. Download your copy below, and if you’re interested in discussing how we can help you implement digital transformation at your company, contact us now!