Survey of UK & Ireland financial services sector reveals companies are set to spend as cost-cutting moves down the agenda and customers become priority
A study investigating the priorities for the UK and Ireland’s top banks and insurance companies has revealed that increasing and improving customer experience is now the number one priority for organisations. This overtakes cost-cutting, 2012’s main priority, with a quarter (27%) of IT decision makers from retail/investment banks and insurers now stressing its importance compared to over half (52%) two years ago.
Furthermore, 37% of respondents expect to have more budget in three years’ time to address this focus. The findings from the survey of 176 organisations across the retail banking, investment and insurance sectors reveal that the market is gearing up for sustained growth with a focus on the customer and achieving competitive advantage.
Top four IT decision maker priorities in 2014:
- Increasing / improving customer experience (28%)
- Improving efficiency (27%)
- Reducing costs (27%)
- Maximising growth (26%)
The shift continues as innovation, which has typically taken a back seat during the recent economic difficulties, is now receiving much warranted attention. Less than half (47%), of the IT budget within financial services organisations is currently spent on maintenance and a healthy 28% is now invested in innovation. More than two thirds (70%) of respondents want IT staff to focus on more value enhancing IT initiatives rather than resolving issues created by legacy systems.
“The findings reflect a sector that understands what it needs to do, and is poised to make the leap to invest,” said Anne MacRae, Head of Financial Services, Fujitsu UK & Ireland. “Focus on enabling growth and driving innovation are crucial in organisations moving forward in an increasingly competitive market under threat from technology-led entrants. It’s exciting to see the beginning of trends that could lead to a significant change in the role IT plays within financial services.”
The research also highlighted continuing obstacles to the full effectiveness of the IT department. More than half (56%) of the time something is standing in the way of financial services IT teams delivering to their optimum ability. 44% noted that they ‘tend to frequently’ meet objectives and goals however, most had at least one issue to contend with. Lack of labour resources was the main issue (18%) followed by lack of financial resources (14%) and internal politics/decision making (14%). As the role of IT changes, IT departments will need to undergo significant change in order to best serve the business.
Commenting on the research, Matthew Oakeley, Head of Group IT, Schroders said: “I don’t think that the reason that IT doesn’t “deliver” is that the resources aren’t there. Even if you had an infinite supply of resources, I just don’t think that it would be possible to deploy them. There’s a tolerance threshold for change in any organisation, and I think that there’s a balance that needs to be struck between doing more and the level of concurrent change that the organisation can actually sustain successfully.”
Just as budgets, priorities and obstacles continue to change, so does the overarching nature of IT within financial services. When questioned in 2012 the focus was on drawing financial support from the wider business. IT decision makers predicted that two years into the future almost half (42%) would expect the same budget centrally and more funds would come from the rest of the business, reflecting optimism when it comes to rallying funds from the organisation. Two years on just 13% expect to see projects funded by the wider business in the next year, rising to a more realistic 22% in three years’ time. This is because departments other than IT are driving the agenda and IT departments need to continue to gear up for change.
“In the next three years team members could be spread across the company, each delivering different products and services. The IT department must redefine its role recognising the contribution it must make to ensuring consistency, driving efficiency and achieving compliance, as financial organisations embrace the opportunity of business led transformation.” concluded Anne MacRae.