Across all sectors of the financial services industry, it’s still too early to understand the full impact of the COVID-19 pandemic. As restrictions start to ease across Europe, albeit at varying speeds, financial institutions have decisions to make about the future of the workplace, how and where they will operate, and what their workforce will look like. They also need to understand what systems and tools will help them with the push towards an apparent “new normal,” where change is a constant.
Long before the pandemic was a glimmer on the horizon, analysts, journalists and commentators cited the financial services sector as ripe for disruption. From digitisation and automation, through to the explosion of FinTech disruptors, digital technology has promised to reinvent the way financial services organisations operate.
At Workday Industry Insights EMEA, experts, customers and industry commentators discussed how the pandemic brought about an explosive acceleration of digital within financial services that shows no sign of abating.
“Digital transformation is about having the foundation of a tool that is flexible and that businesses can bolt on new modules and processes as things change, inevitably beyond their control, in the future.”Nick Hutton-Penman, deputy CEO, Tokio Marine Kiln Group Ltd
A Digital Evolution, Executed at Speed
Thomas Merry, managing director, banking strategy, Accenture has a background in large scale growth, transformation and platform investment within financial services. At Workday Industry Insights EMEA he discussed why organisations in the sector pressed the button on digital and what is different about their approach today.
“If we flashback five or 10 years, banks realised that the imperative was digital transformation but it is such a hard thing for them to achieve. COVID-19 hasn’t turned the whole digital strategy upside down, it’s just reinforced and accelerated it. In terms of digital strategy, whether you're an insurer, a bank, or a capital markets player, the “why” or “what” of digital transformation have not changed much. it's more about the “how” they can get value out of digital transformation,” he said.
For Workday’s Viren Patel, strategic industry advisor for financial services, the pandemic brought about a sharpened awareness of the disparity between customer-facing front office digitisation and the need to transform and connect back-office systems in the same way.
“Traditionally, we’ve seen huge investment in the front office, with customer-facing technology, while the back office is still running on legacy systems and old data models. Financial services organisations suddenly saw the need to digitise the back office during lockdown, to get more value from the whole enterprise-wide system and to connect those processes and the data that underpins it,” Patel said.
Accenture’s Merry drilled down on the unprecedented surge in innovation across financial services and the way in which businesses have seen the light on digital.
“In just a year we flashed forward five years in terms of innovation and how we want to work. The important thing for leaders of financial services clients was to avoid knee-jerk reactions and going back to the previous ways of working. There’s a lot of choice about how business will look moving forward, but one thing is clear, there is a lot of choice when it comes to technology and that optionality will really help them decide how they want to operate.”
“We’re now entering an era of possibly the never normal and that's exciting and I think technology does give a lot more choice and optionality. So those who can stay ahead and kind of are bold about using agile technology are going to be at the vanguard of this evolution.”
Thomas Merry, managing director, banking strategy, Accenture
Transformation During a Global Crisis
Making the decision to accelerate digital transformation is not without its own challenges during normal times, yet, during the lockdown, necessity compelled many financial services firms to grasp the nettle. In a panel session with Claer Barrett, editor of FT Money, Nick Hutton-Penman, deputy CEO, Tokio Marine Kiln Group Ltd discussed his firm’s need to make the shift even with the majority of his workforce working remotely.
“We hadn’t really transformed our technology for 10 years, so we had an ageing platform. The core part of transforming our operations was our people. And most of what we were doing on the HR side was driven by spreadsheets. From holidays, to sickness and onboarding, everything was a spreadsheet. The original brief was transforming HR, but we quickly saw the benefit of a system that could bring expenses and our general ledger under the same roof,” Hutton-Penman said.
“We wanted to deploy everything in six months, but then came the pandemic. Everybody was working from home from March 12th, so the entire deployment was completed remotely. It took eight months in the end, but it was such an impressive feat that was only made possible through cloud delivery.”
“Traditionally, we’ve seen huge investment in the front office, with customer-facing technology, while the back office is still running on legacy systems and old data models.”Viren Patel, strategic industry advisor for financial services, Workday
Joel Ripley, CFO, Schroders Personal Wealth has a similar story. Through the amalgamation of various parts of its wealth businesses, the company needed a single system for its procurement, financials, financial planning, and HR processes. Ripley explains how COVID-19 was a challenge, but not enough of a barrier to prevent the company’s Workday deployment.
“As a business, we were born straight into a pandemic. So, going fully digital in six or seven months was pretty challenging, but actually having the technology in the cloud really made that pretty fast and straightforward. We did the entire implementation during a pandemic, so end-to-end, we didn't have a single face-to-face meeting. The entire thing was done digitally. That was down to a combination of our people, our knowledge with the skills that Workday brought, and an excellent integration partner,” Ripley said.
Operating in the “Never Normal”
Business leaders recognise the importance of having digital systems in place to make informed decisions as they look to unlock value and growth in what is being dubbed “the new normal.” But, how should financial services firms prepare for a business environment that threatens to be anything but normal? Accenture’s Merry points to being built for change and ready for disruption as key elements of the “never normal.”
“Technology has blown open the opportunities for financial services. Because, we're going to see disruption and change again. I love Nassim Taleb's work around antifragile, and how you set up an organisation that actually thrives when it's put under a stressful situation or faced with elements that it couldn't predict. COVID has been a great example of that,” Merry said. “We’re now entering an era of possibly the never normal and that's exciting and I think technology does give a lot more choice and optionality. So those who can stay ahead and kind of are bold about using agile technology are going to be at the vanguard of this evolution.”
A clear example of this agility in practice came from Schroder’s Ripley who highlighted the importance of having the right data available on-demand to make decisions as circumstances change.
“One of the things that we've been able to do is react really quickly to the changing environment. We have really gone a step beyond what's normal in a finance team and we actually produce all of our financials every day. Concepts like a month-end close, which will be familiar to many finance colleagues, didn't really exist in our world. Now we close the books every day, so we have up-to-date information. We understand the data, both in terms of our financial performance and in terms of the assets that we're looking after for our customers.”
Preparing Financial Services for the Unknown
Even if the phrase “normal” still needs to be fully defined, Workday’s Patel summed up the compelling need for financial services organisations to embrace digital technology. He discussed how financial institutions require systems that are built to flex with the changing needs of customers.
“It's about having a system that's going to give you the ability to react, to be agile and to be resilient to all those changes in the industry. With financial services, there's regulation coming in. There are new disruptors. So the ability to bring in new measures, to add new dimensions as the market changes with a flexible data model is key. Technology should give you all of that, not just for now, but for the future as well,” Patel said.
Data is key for most financial services businesses, but there is now a stronger emphasis on what organisations are doing with this data. As businesses prepare for more uncertainty, Schroder’s finance leader Ripley pointed to the importance of data in helping to visualise and create narratives to gain fast actionable insights.
“Analytics is hugely important in terms of bringing together different sources of information from outside Workday, and integrating them to give a more cohesive and rounded set of data to enable decision making. That’s important as things change fast. We've used that then to create dashboards and make data visual. Having a visual dashboard in front of key stakeholders is a really powerful tool and it's brought some immediate insights into our business,” Ripley said.
The last word goes to Hutton-Penman, deputy CEO, Tokio Marine Kiln Group Ltd, who outlined the role of back-office systems that can swing 180° to support change.
“You can’t underestimate the need for adaptability, because, right now, all financial services businesses are going through a huge amount of change very, very quickly. Digital transformation is about having the foundation of a tool that is flexible and that businesses can bolt on new modules and processes as things change, inevitably beyond their control, in the future.”
Learn how businesses in the financial services sector have accelerated their journey to becoming a digital enterprise.