Financial Leaders Say They Lack Tech Capabilities to Drive Growth

New research released today from FIS reveals that only a quarter (25%) of senior executives at global financial institutions believe they have the technology capability to support their firms’ growth ambitions.

The FIS study also reveals a “tech-readiness dividend” for financial services investing in technology. Firms with the strongest performance in key operational growth areas such as automation, data management, emerging technology and innovation significantly outperformed their peers on revenue growth and in growing their assets under management over the past year.

The findings are part of the first annual FIS Readiness Report, “The Hunt for Growth”, which surveyed 1,000 C-level and senior executives across buy-side, sell-side and insurance firms. The report found senior executives are split on the prospects for growth over the next three years, with half (47%) saying the economic outlook will create growth opportunities.

Major barriers to growth highlighted in the report, alongside lack of technology capabilities, include regulation, with more than half (59%) of respondents saying this will hinder their growth plans, while more than a third (34%) say the global political outlook represents a threat to growth.

Among the findings of the FIS 2017 ‘Hunt for Growth’ report:

• Global political uncertainty, cited by over a third (34%), exceeds Brexit as a perceived threat to growth with just under a third (30%) citing Brexit as one of the top 3 external threats to growth
• Sell-side financial service firms are leading the buy-side in automation of the transaction lifecycle
• Growth leaders are early adopters of emerging technologies, with over a third (37%) of growth leaders having implemented AI or machine learning versus just 6% of the rest of the industry
• Two-fifths (41%) of growth leaders are currently testing blockchain solutions versus under a fifth (19%) of other institutions
• Industry appetite for outsourcing is set to increase over the next three years, including middle and front office functions, as well as back office. Back office operations are the areas of heaviest outsourcing today (42%) and will continue to be so with nearly half (45%) of back office operations planning to increase outsourcing in the next 12 months
• Growth-readiness leaders are revealed to be more advanced in their outsourcing strategies than other firms, with nearly half (48%) having already outsourced a high level of middle office operations versus just 8% of others in the industry

Martin Boyd, Executive Director and Head of Institutional & Wholesale Strategy, FIS said: “Despite all of the headlines around fintech disruption and the need to automate, financial institutions are still not where they ought to be when it comes to embracing technology and operations. With only a quarter of respondents believing that their current tech capability is strong enough to fully support growth ambitions, firms can no longer take a wait-and-see approach to growth.”

“Those firms who are investing for the future by taking a lead in automation, data and emerging technology are outperforming their peers in revenue growth, pointing to a ‘tech readiness dividend’ for those planning ahead. This doesn’t have to be delivered through in-house capabilities, as growth-ready leaders are also adopting more advanced strategies than other firms in outsourcing.”