Financial organisations must adopt a proactive digital strategy or risk wasting millions, Couchbase warns.
Despite spending double what most other industries do on digital transformation, an inability to meet digital goals is endemic across the financial services industry, Couchbase has stated. Recent research found that financial services firms are well aware of the digital imperative, spending an average of $42m on digital transformation in the year to July 2018, with a further $45m to follow over the next 12 months. Yet for all their digital ambition, financial services firms still struggle to deliver. Almost nine in ten (88 percent) have seen a digital project delayed, reduced in scope or even fail outright. And at a time when the pressure on CIOs in the financial services industry to digitally transform is greater than ever, throwing money at the digital problem doesn’t seem to be working.
“As the research shows, financial services firms are clearly feeling the pressure, and are prioritising their digital investments as a result,” commented Jes Breslaw, senior director at Couchbase. “But without a clear plan in place, the reality is that much of this money is being wasted. Our research found that a quarter (26 percent) of financial services firms believe digital transformation to be an insurmountable task, while more than half (58 percent) even said that fixation on digital has raised the risk of rushing into ill-thought out projects that just won’t deliver. Without a clear idea of what success looks like, it’s impossible to put the digital pounds to good use”.
Reliance on legacy technology is largely to blame. Two-thirds (66 percent) of financial services firms consider new customer facing innovations to be the main purpose of digital transformation. Yet their reliance on legacy technology makes these innovations almost impossible. CIOs across the financial services industry struggle to deliver projects on time or according to the original scope – if they deliver them at all – because their legacy database technology can’t support them. Indeed, almost a third (28 percent) added that they’re adopting new database technologies more slowly than they should, since they rely on legacy databases so heavily.
“This should be a wake-up call for CIOs across the financial services industry,” Breslaw added. “They need to take a step back and evaluate where they are and refocus their digital projects. Digital transformation involves a lot more than customer-facing innovations at the front end. In fact, more should follow the likes of Wells Fargo, and build a scalable and automated infrastructure in the backend that unlocks innovation for the rest of the business. It’s encouraging to see that four percent of financial services firms have in fact completely revolutionised their end user experience, with many others making great progress towards this goal. There’s no reason why the rest of the industry can’t continue to improve and make the most of its digital investments, if it can shake its reliance on legacy technology.”