Perspectives / 2021. The state of play in digital transformation
What senior financial services executives can do now to take advantage of the current opportunities and mitigate the potential threats of digital transformation.
April 2021. Interview with Charles Rustin, Director at SH Consulting
Sheffield Haworth have been working with NextWave over the last year to address the digital and tech-enabled transformation agenda with many of our financial services clients. NextWave is a digital transformation and technology consultancy for financial services firms with extensive experience of enterprise delivery at some of the world’s largest banks, asset managers and fintechs.
I sat down with NextWave UK CEO Tony Clark to discuss some of the key trends emerging from this work. What does NextWave see as the biggest challenges and opportunities for digital transformation in the financial services industry?
Research suggests that tier 1 global financial services firms are already using 200-300 FinTech products and services on average
Q: Thank you for joining me, Tony. What are the top digital transformation challenges and threats for the C-suite in financial services today?
A: From our perspective there are huge opportunities for those firms that can take advantage of the new market dynamics. That will fuel positive excitement for some. However, there are also business risks and threats at levels not seen before.
On the positive side there’s the potential for firms to dramatically improve customer service and take new products to market at an unprecedented rate. What’s driving this? A networked customer base coupled with platform-based business models powered by technologies such as cloud, data, APIs, low-code automation, and AI.
On the threats side, operational resilience and cyber security are number one. When it comes to cyber, the threats of system outages or data loss are ever present. The instant broadcast effect and huge potential damage to a client’s customers, brand, and regulatory compliance means that cyber has to be high on the agenda.
Finding the right people and skills is also top-of-mind for our clients. There’s all this potential to take advantage of more powerful digital architectures. The same is true when it comes to adapting to new ways of working and fostering innovation, remote leadership, and delivery. However, without the right skillsets to engineer and operate effectively, companies could struggle to make the most of these opportunities.
Q: What are the enablers for financial services executives to succeed in this new environment?
A: Firms need to recognise that fundamentally every company is now a software and a data firm to some extent. This is very much the case for financial services. Challenger firms see this and are taking advantage of digital capabilities to improve their place in the market. The same is true for incumbents who want to thrive in the modern environment.
There is only one direction of travel, which is effective digitisation. Not at the expense of the human element, but rather to focus and augment this element. For example, automating repetitive tasks frees up resources to focus on high value advisory, client relationship, or expert services. The tech handles things like origination, onboarding, customer ops, reporting, and control.
The technology tools to do this already exist and are hugely powerful when deployed in the right way. Some of the tools we see as key are:
- Process mining, low-code automation, and workflow technologies. These digitise end-to-end processes. When used well they can be the backbone for transforming entire functions and businesses. Platform firms like Appian, Celonis, and Genesis fit here.
- Cloud platforms. These offer scalability, security, and the instant availability of data, compute power, processing, and analytics. Amazon Web Services (AWS), Microsoft Azure, and GCP fit here.
- Data management, lineage, and governance. Data needs to be horizontal across the business. It must be normalised, understood, and instantly accessible to leverage for the business. This makes it vital that data be accurate, integral, traceable, and immediate. There is a new crop of enabling technologies in this area also. Of these, Solidatus is our pick for solving complex data lineage and governance challenges.
- Data intelligence. In this space there are now tools that can take multiple data sources and resolve them into a single networked view. You can view all the people, companies, and transactions in one place. This surfaces previously unseen risk, fraud, and customer behaviours. Quantexa is leading here.
- We are on a journey from open banking to open finance to open everything. Data connectivity and access are fundamental to this. Apigee and Mulesoft are prominent tools in this space.
Of course, effective digital transformation is about more than just the technology tools. On the people side, firms know they need to support the emotional resilience and engagement of their teams. Leadership skills are critical to achieving this.
This is why coaching and training are important in an area that is often overlooked. We are working with clients on embedding touchline coaching strategies in their leadership and delivery teams. We use coaching methodologies such as Goleman El.
Q: How do you think firms should react?
A: Well clearly there’s a lot to consider. Firms need to shape target business models and digital maturity levels. They then need to draft the architectural blueprints and roadmaps that will get them there. They also need to work out how to select, deploy, and manage the many fintech tools and service available.
Research suggests that tier 1 global financial services firms are already using 200-300 FinTech products and services on average. That represents a lot of power but also requires a real focus on coordination and integration.
In setting business strategy boards need to understand the art of the possible when it comes to technology. Knowing what technology can do for you is fundamental to coming up with a future-proofed business strategy. This is why there’s a major overlap between business and digital strategy today. The two go hand in hand and really need to be considered together.
There is so much firms can and should do in this area that we would always suggest they work with advisers they can trust to provide guidance. Practically speaking, at NextWave we start with a Digital Maturity Assessment using a maturity benchmark model. We then help clients refine a business vision and build out the target and roadmap from there.
When it comes to execution, there are several key considerations:
- Focus on the people aspects
- Start with an end point in mind (your target vision and roadmap)
- Build with agility at pace, delivering small steps towards the goal with an attitude that is open to failures and course corrections along the way.
I hope you found Tony’s insights useful and that they resonate with your experience of Technology Transformation and the importance of keeping pace in an increasingly digitised and automated financial services sector.
- There are huge opportunities for those firms that can embrace new technologies and take advantage of the new market dynamics.
- Finding the right people, skills and delivery partners is crucial to take advantage of new digital architectures whilst adapting to new ways of working and remote leadership.
- It’s important to recognise that every financial services organisation is in some way now a software and a data firm and must take advantage of digital capabilities to improve their place in the market.
- A Digital Maturity Assessment can be extremely beneficial in helping organisations to benchmark their position in the market and to build out a target state and roadmap.
If you would like to discuss your technology transformation agenda or digital maturity – or require support to design and implement your strategic transformation plans, please get in touch.
About CharlesRustin – Charles has 20 years’ experience of consultancy, business and technology transformation in financial services. As co-owner of S&H Consulting, Charles guided the strategic growth and management of the business while working with clients on cross-function change initiatives. Since acquisition by Sheffield Haworth in 2019, Charles has been closely involved in the integration of the two businesses. He has developed a number of strategic partnerships in order to provide clients with innovative, best in class consultancy services and technology solutions for process efficiency, automation, and digital transformation. Charles is passionate about helping clients to solve complex problems and deliver successful outcomes and is an advocate of coaching as an integral component of successful change management.
About Tony Clark – Tony is the founder and CEO of NextWave Consulting in the UK and has 30 years of big-firm consultancy, startup, and enterprise experience across business, digital and technology, working with some of the world’s leading banks and financial institutions. Tony has worked at Accenture, m.a.partners, and was a founding team member at Crossbridge. More recently, as Synechron MD and Head of the UK business, Tony ran the UK Consulting, Digital and Technology practices, growing the UK regional business from 60 heads in London in 2015 to $70m revenue and 950 heads across UK and India today. He is a passionate advocate and industry speaker on all things digital and has a strong industry network. Tony is a board advisor to two London fintechs and a mentor to aspiring professionals at Generation Success events.