While the financial services and insurance industry has, as a whole, been faster to adopt digital transformation than other industries, it still has its fair share of laggards. While many are looking to modernize, not all are considering agility as an end goal. However, in the financial services industry, agility is more critical than ever. Financial services and insurance businesses that aren't prepared to adapt may find that it's more difficult than ever to meet the changing demands of their client base. Take a look at the future of financial services and some of the driving factors that have moved the industry in its current direction.
Challenges That the Financial Services Industry Faces Today
Various forces, both internal and external, are prompting financial service companies to become more agile. Today, the industry is facing new, dynamic challenges that need to be addressed more quickly and without losing focus on larger organizational goals. As a result, financial service providers need adaptability and agility to help them better navigate these challenges.
These are just some of the challenges faced by financial services and insurance organizations:
A Rapidly Changing Global Environment
There have been immense challenges across the globe in the course of the last few years. Security concerns have become a steadily increasing issue for many providers. People now expect a higher level of convenience and service. Mobile-first is the rule, rather than the exception. Not only has the global environment already seen many of these shifts, but there are also other shifts on the horizon. As a result, financial service businesses must be prepared to pivot quickly.
Constant Regulatory Shifts
In addition to the environment itself changing regularly, there are constant shifts in modern regulatory requirements, due in part to those increased cybersecurity threats and the challenges faced by many businesses and industries. Those constant regulatory shifts mean that financial service providers must be prepared to adapt both processes and technology to meet new regulations.
New, More Nimble Companies
As new companies enter the financial services sector, they are already prepared to be nimble and adaptive. New companies can leverage modern technology to better meet the changing needs of customers as well as leverage totally new business models (such as operating entirely online) that allow them to scale up quickly. In many cases, older, larger, or more established providers may have a harder time keeping up with those changes, which may attract their existing customers to those newer providers.
The Hybrid Workforce
Across many sectors, employees have shown their preference for a remote or hybrid work environment. Employees want flexibility with their hours and their working locations. In the financial services industry, many vital jobs can be performed from home.
However, many companies weren't prepared to make that change, which may have made it more difficult for them to keep up with the changing needs of their employees. Even as many employees look for a work-from-home environment, however, others are returning to the office in person, making it essential that businesses offer services that are suitable for both types of employees.
Quick Adaptation and Scaling of New Revenue Sources
For many financial service providers, maintaining a steady stream of revenue has become more complicated. Many of today's customers are shifting away from traditional investments and other sources of revenue for providers, who may find themselves looking for additional options to keep their businesses moving smoothly. In addition, they may need to quickly scale up their new sources of revenue in order to keep everything flowing smoothly through the business.
The Future of Financial Services Is Agile
Greater organizational agility can help address many of the challenges that the financial services industry is facing today. Without agility, providers will focus most of their energy on reacting to change and putting out fires. By focusing on overall organizational agility, financial services companies don't just better prepare themselves for potential challenges, they also can be more proactive and address challenges before they happen.
Increased Technology and Digital Transformation
Over the last several years, technology has grown in unprecedented, unexpected ways. As a result, there are more technological options available than ever—and many businesses, including those in the financial services industry, are undergoing the digital transformation process. By 2024, customers expect that around 61% of their business with banks will be digital. Branch usage continues to decline. Younger customers, in particular, expect a mobile-first banking experience.
Not only does that technology benefit customers—which, in turn, makes them more likely to choose your organization—but it also improves agility. With a technology-based perspective, financial service providers can easily shift to offering the latest tools and options for their clients. Solutions may include:
- Updating legacy systems
- Adapting to modern tools
- Automating common processes
- Utilizing AI for a better overall customer experience
- Creating an environment where innovation is embraced and accepted as the norm
By utilizing technology effectively across the organization, many financial service providers will find that they are in a better position overall to continue to adapt and grow.
Choosing the Right Tools
When it comes to keeping up with the latest changes in the financial services industry and maintaining overall agility, it's critical that providers choose the right tools and solutions. Modern financial service providers need modern technological solutions, including smooth integrations and multi-purpose platforms that can help them achieve their goals. Moving business-critical tools, such as an organization's human capital management or financial management platforms, to a solution like Workday gives financial service companies the means to be more flexible and quick to respond to a changing world.
To find the ideal tool for their needs, financial service providers may find that they benefit from a tailored solution that fits their specific needs.
Get the Help You Need to Adapt
If your business has struggled in the current climate, you aren't alone. At Collaborative Solutions, we can help you find more effective solutions that will help keep you agile and prepared for whatever challenges may come your way. Contact us today to learn more about how we can customize solutions to the unique needs of your business.
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