To succeed in today’s markets requires investment firms to act upon and digitise their businesses. Being agile and willing to experiment with new digital concepts – even if it ends in failure – will become part of the course for many firms.
Adapting to fast-moving digital change requires an effective customer strategy, regular and meaningful investment, a deep talent pool, and thoughtful risk management.
Investing in technology will be key
Investing in new technologies will be important if firms are to develop. Forty-one percent of digital leaders surveyed by State Street concurred, stating that investing in new technology such as cloud technology and artificial intelligence (AI) was critical to future growth.
This may entail building powerful digital platforms that integrate vast volumes of data in real-time, or operating off a cloud-based system. Integrating siloed data streams can be transformational for businesses operating models.
A migration to a cloud-based system allows firms to achieve scale at a reduced cost, enabling them to focus on product development and service delivery. Cloud deployment can also make re-engineering technology a simpler process.
For example, upgrading an inflexible software system can be a long-term, costly project. Individuals need to identify if any upgrades could have downstream/upstream consequences, and this would, no doubt, delays proceedings.
Cloud-based architecture allows firms to break software down into a series of connected modules or microservices which can be rapidly improved and updated without impacting the overall system.
Harnessing a talent and customer strategy
An organisation looking to expand its capabilities in any field needs to hire quality individuals with proven and necessary skillsets. If an investment firm seeks to build-up its digital strategy, it needs to hire the appropriate talent and provide opportunities for tech-savvy finance employees.
Mining the talent pool for younger professionals who have grown up with technology is also important. Hiring younger people and educating them about capital markets in a structured environment will help firms deliver a quality service.
Creating a digital environment from scratch is not an easy undertaking and will consume significant internal resources. Some question whether it makes more sense for established financial institutions to engage in strategic partnerships or simply acquire fintech firms.
Fintechs have the individuals with the skillsets to innovate, and merging with a financial institution could help bring about positive disruption and wide-reaching cultural change in the latter. However, banks and large investment firms are subject to stringent regulation, and this can at times be an impediment to innovation.
Having talent in harmony with customer strategy is key. Approximately 31 percent of respondents in the State Street study highlighted the importance of having the right talent in place in combination with a strong customer-centric focus.
Research by State Street’s Center for Applied Research proposes that organisations create opportunities for investment professionals to understand how their actions impact their clients’ lives. By demonstrating how digitisation and customer-centricity go hand-in-hand, firms can offer more meaningful and desirable careers — and attract a broader range of high-calibre talent.
Riccardo Lamanna is Country Head Italy, State Street Global Services