Paul Holland, CEO of Beyond Encryption, tells us how while some companies operating in the financial sector have benefitted from Digital Transformation, there is still significant work to be done at an industry level.
Globally, businesses are increasingly facing pressure to embrace more sustainable methods of operating. For many, this means turning to tech to enhance processes and green credentials, whilst simultaneously improving customer experience.
Looking at the financial sector, while certain areas have benefitted from Digital Transformation, there is still significant work to be done at an industry level.
The main types of technology that are building momentum and seeing increased usage are AI and Machine Learning. Within financial services, AI can be applied across multiple areas of a business and provides a significant set of benefits, including streamlining operations, cutting costs, and improving customer experience and overall functionality.
However, adopting technology comes with potential risks – specifically when looking at cybersecurity. This means that financial organisations need to ensure that they bolster the uptake of new technologies with robust digital strategies that outline how they plan to mitigate the risk of cyberattacks.
The push for paperless
The benefits of undergoing a Digital Transformation strategy, from improved operational efficiencies to an enhanced customer experience, are clear to see. By embracing the digital tools available and the latest developments offered by AI, firms can experience a transformative impact that can revolutionise their business.
One of the main ways businesses can move towards digitisation is by reducing reliance on paper-based forms of communication and record-keeping, choosing to adopt digital channels instead. With regular strike action and potential plans to reduce the Royal Mail’s postal schedule, going paperless and embracing digital solutions will soon become a
prerequisite for financial service providers who want to provide letters and documentation quickly and efficiently.
Not only does a switch to paperless incur key economic benefits, with the price of first-class stamps increasing by 45% in the past year alone – it also has profound sustainability benefits.
Furthermore, switching from paper to digital also creates space to improve the categorisation and compartmentalisation of key consumer information. Digital filing systems offer easier access for both businesses and consumers to access a backlog of important data in real-time.
Protection and security
It is important to note that Digital Transformation is not an entirely risk-free process. Only this year, IBM issued nationwide guidance on what technology trends the financial services sector needed to take up in 2024. Amongst operational resilience, the uptake of AI, cloud and the further digitisation of services, cybersecurity was listed as a key concern.
However, as this technology proliferates the market, businesses will not be the only ones harnessing the benefits, with threat actors also using these to create more sophisticated forms of cyberattacks and further power instances of black hat hacking. Quantum Computing, as one example, can crack an encryption key in a matter of hours, leaving current security approaches at significant risk.
Already, the Information Commissioner’s Office (ICO) reports that UK firms have experienced a 30% increase in data incidents between 2022 and 2023, showcasing that there is more need than ever to invest in the right technology to prevent the risk of malicious attacks and human error.
Investment must therefore be directed towards remediating legacy infrastructure for security vulnerabilities, as well as enhancing threat detection and response through improved risk analysis. For financial services companies, secure communication is also essential, and the focus must extend beyond simply storing sensitive financial data to implementing techniques that prevent this information from being intercepted in transit.
Prioritising people
As well as implementing the right technology to drive forward digitisation, the UK financial services sector must also prioritise closing the digital skills gap to stay competitive in finance’s digital future. However, making sure these technologies are correctly implemented and run smoothly relies on training and upskilling individuals accordingly.
This process requires a well-thought-out approach and should be executed as part of a Digital Transformation strategy. Appointing digital-savvy leaders to drive change forward across institutions and ensure training is carried out across all levels will further guarantee that the right approach is being taken.
Having dedicated personnel across all seniority levels to co-ordinate cyberdefence protocol also boosts the success rate when mitigating threats. Findings generated by McKinsey indicate businesses are two times more likely to succeed when those in key management roles possess a deep understanding of digital technologies and strategies and use this knowledge to foster a culture that embraces innovation, agility and continuous learning.
Embracing digital capabilities is fast becoming crucial – especially when looking to meet evolving customer expectations, enhance operational efficiency and unlock new revenue streams. Delaying this transformation only leaves businesses at risk of missing out on opportunities to cater to their consumer base, as well as falling behind competitors.