Despite the challenges and disruptions of Covid-19, the regional Financial Services Industry (FSI) has continued to forge ahead and accelerate the pace of digitisation in response to the pandemic, according to Microsoft-IDC’s latest findings.
Unveiling the FSI findings of the culture of innovation study in conjunction with Singapore Fintech Festival 2020, the Microsoft and IDC’s study found that more than 6 in 10 (66%) FSI organisations are accelerating digitisation of their businesses. This figure rises to 86% amongst FSI Leaders, organisations who have the most mature culture of innovation, defining their ability to drive sustained innovation.
Based on the survey of 597 regional business decision-makers in FSI across 15 markets in Asia, within a 6-month period, before and since Covid-19, the sector was found to be ahead in its ability to innovate in response to challenges. Specifically, 70% of all FSI organisations in Asia Pacific say that innovation is now a “must” and almost all FSI Leaders (96%) agree and are actively putting this into practice.
“One thing is clear: the industry’s rapid response, reflected in the increase of maturity in adopting a culture of innovation, across people, process, technology and data practices, has paid dividends,” said Connie Leung, Regional Business Lead, Financial Services, Microsoft Asia.
“FSI Leaders, in particular, expect to thrive amid the crisis, with 53% of them expecting to increase their market share despite the pandemic and 86% further accelerating digitisation in response to the crisis. We are definitely seeing this take shape within the industry, with organisations like Bankwest investing in self-service solutions to improve the customer experience at a time where **customers are expecting meaningful connection despite social distancing.”
Apart from relying on innovation, the study also revealed that FSI organisations are deriving high revenue shares from digital products and services – this stands at 39% currently and is forecasted to rise to 52% in three years. This is much more so for FSI leaders, where this stands at 47% today and expected to rise to 57% in three years.
This is evident in the examples of Indian fintech start-up, Paisabazaar, which introduced a new digital service to digitally overhaul the personal loan application and approval process amid the pandemic, as well as banking groups like Standard Chartered Bank and National Australia Bank which have taken steps toward a cloud-first digital strategy, to make virtual banking, next-generation banking and payment services a reality for customers.
Assessing the innovation maturity of FSI organisations
During Covid-19, FSI organisations matured in their approach toward innovation. This has included the swift pivot of business processes to raise customer experience and centricity and embracing data management insights to enhance the speed and quality of decision making. In addition to that, FSI organisations have integrated cloud technologies to ensure business continuity during a time of remote working and living.
The study confirmed this, and found that in the span of six months, Asia Pacific’s FSI organisations have matured in the culture of innovation by 12%, which indicates an increased ability to drive sustained innovation.
FSI organisations have improved their sentiments on innovation with 61% of FSI leaders agreeing that innovation is easier since Covid-19. Other FSI organisations have also embraced a more positive stance, with 52% agreeing with this statement.
“FSI has maintained its lead, based on our findings, and was assessed to be the most innovative vertical with the highest culture of innovation maturity score, and the highest proportion of leaders and verticals,” said Michael Araneta, Head of IDC Financial Insights, Asia Pacific.
“What has been most interesting is that large FSI organisations – the incumbents – are not necessarily laggards in the space but on occasion, credible leaders with a mature culture of innovation. On the flipside, the prospects of some challenger banks are already dimming in some markets, as they have not been able to address sources of funding despite previously having good prospects when it came to their services in payments, and lending.”
The study revealed the best practices that organisations can adopt, referencing the culture of innovation framework, for progress across people, process, data, and technology.
Specifically, organisations are encouraged to:
- Leverage platforms to drive transformation
- Enhance People’s capabilities through enterprise-wide skilling initiatives
- Utilise Data for extreme personalisation and rapid value creation
- Integrate automation within Processes to empower continuous innovation
“As FSIs continue to forge ahead in a post-pandemic world, lasting transformation will only take place if FSIs alongside investments in technology, prioritise people and culture, as they are key to ensuring greater collaboration and continuous transformation. At Microsoft, we are committed to working with the regional FSI ecosystem to unlock the value of innovation, and reimagine the industry for the future, together,” added Leung.