The financial sector in Europe is undergoing a profound transition. Over 52% of the surveyed firms intend to tackle full-spectrum innovation projects within the next two years to remain competitive.
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Over 52 percent of the banks and wealth managers surveyed stated that they intend to tackle full-spectrum digitisation projects within the next two years in order to remain competitive.
The study “Unlocking opportunity in challenging times: innovation in European Financial Services” commissioned by Objectway to GlobalData shows that the private wealth sector’s earnings forecasts for 2023 point to another year of stagnation. To overcome this stalemate, banks and wealth managers increased their investments in technology by 8.5% last year and will probably increase them to 9.2% by 2023. The aim is mainly to improve the customer experience, optimise processes, and evolve the offering.
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Almost 40% of respondents cited customer experience as the most important priority. “Increased competition between players, digitisation and the ability to guarantee the results of investments are the biggest challenges,” comments Luigi Marciano, Objectway’s Group CEO. A lasting relationship with increasingly demanding customers is the key factor. Artificial intelligence (AI) is the big issue here, with almost 50% citing AI and machine learning as the biggest changes in customer experience strategies over the next two years, followed by expanding the number of customer-facing channels (35.6%).
When it comes to offering evolution, ESG investments take the lion’s share. Across the industry, 84.5% plan to add or expand ESG investment options in the next three years. “Sustainable investing is on the rise in Europe and globally, as awareness of positive social and environmental impact combined with improved financial returns grows,” Marciano said. There are several ways to develop or sharpen an ESG-compliant profile: creating new investment solutions is the natural response, according to 73% of respondents. Other important means of developing an ESG brand included asking clients about their ESG views (64.7%) or providing support and resources for financial education (48.5%).
Regardless of the company’s priorities, successful strategic innovation requires a coordinated approach and shared goals among all stakeholders. “Companies are recognising the benefits of having an ecosystem of skilled partners to outsource aspects of their business,” Marciano explains. Flexibility is the top reason for outsourcing. This is especially true in large companies (47.6%) that don’t want to use internal resources exclusively for what could be a critical modernisation. The other key factor, at around 40%, is clearly cost, especially for smaller companies, because it is usually not cost-effective for them to develop software internally.
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