New ways to manage money are coming as most financial services firms now view digital transformation as essential to their business and already looking to the next wave of technology to help get ahead, according to new research.
The findings emerged in a new report by Broadridge Financial Solutions. In their 2023 Digital Transformation and Next-Gen Tech Study, 71% said artificial intelligence is significantly changing the way they work, and 60% agree that within 10 years, blockchain and distributed ledger technology (DLT) will become the core of financial markets infrastructure.
Despite a more challenging economic environment, firms are also accelerating their funding of digital transformation initiatives as they anticipate further widescale adoption of new and more powerful technology. Firms now spend 27% of their overall IT budget on digital transformation – a 16 percentage point increase versus the 2022 study.
"A new chapter in digital transformation is emerging," says Tim Gokey, Chief Executive Officer of Broadridge. "In our work with clients across the financial services industry, we see leading firms are already reaping the benefits from digitalisation and the use of technologies such as AI and blockchain/DLT, as they adapt to economic headwinds and new competitive dynamics. Firms are now looking ahead to what their customers will require five to ten years from now, and how technology can help them to deliver that vision."
Higher revenue from digital transformation
The study categorised firms as digital Leaders versus Non-leaders, based on how advanced they are in 10 of the essential aspects of digital transformation. These aspects include their innovation culture, use of emerging technologies, seamless customer experience (CX), internal skill-building, and adoption of security and privacy protocols.
Adapting to a digital world and embracing the potential of new technology now underpins organisations' core business strategies, with more than half of digital Leaders (53%) viewing higher revenue growth as one of the most important benefits of digital transformation.
Investment in next-gen technology is now understood to be essential in preparing for the future. Fifty-seven per cent of firms agree that falling behind in digital transformation will hurt their ability to attract and retain talent, further impeding their ability to unlock new and innovative tools and platforms.
Advances in AI, data analytics, and real-world applications for blockchain and DLT are driving momentum and optimism among leading financial institutions, the study found, and 80% of survey respondents say the industry will have modernised its tech stack in around a decade.
Respondents expect more nascent technologies to make significant progress as well. Firms classified as Leaders plan to increase investment in quantum computing by 16% on average over the next two years; however, firms are only increasing investments in the metaverse by five per cent on average, indicating more of a "wait and see" approach before committing funds.
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