By Chitra Baskar, Intertrust Group

While technology has been the dominant driver of growth and innovation in the financial services industry for decades, its impact is getting deeper and more profound.

In short, financial services technology is currently in the midst of a profound transformation, as CIOs and their teams prepare to embrace the next major phase of digital transformation.

However, those teams are facing a significant challenge. In the current ultra-competitive environment of rising cost pressures, where rapid action and response is paramount, the financial services sector and its institutions must further adapt and modernize their technology function to support growing consumer demand and expanded digitization of both the front- and back ends of their businesses.

The Covid-19 crisis has resulted in an unexpected pressure and value drivers that has led to greater levels of innovation of technology capabilities – such as remote working tools and further innovation in cybersecurity. This new landscape requires internal technology teams to anticipate and prepare for a ‘new’ new normal while accelerating the shift towards digital channels.

The technology shift is paramount for businesses

Most major financial institutions are well aware this technology shift is paramount for their businesses and are embracing this transformation.

However, it is still early days and, we believe, most are only scrapping the surface of the transformation they need to undergo. Some of this hesitancy is down to a range of external factors such as a challenging funding landscape, talent availability and most important of all, complexity.

In among this market evolution, we have seen the rise of fintech companies and solutions that have further catalysed the development and growth of a completely new and transformed financial services landscape.

The digital transformation journey can be challenging and here is where these new fintechs fit in. While some organizations have digital transformation in their DNA, the majority will need considerable foresight, planning and external help.

They will need to shed old habits, update cultural norms, upskill their employees, and adjust their ways of thinking to become a truly digital business. In our view, learning to connect the dots between digital initiatives, strategy, and business enablement will be critical.

Middle market financial services companies, especially, have a unique challenge: They must learn to navigate the landscape without the more robust resources of their larger peers, or the same level of flexibility and agility as their smaller ones. They must start the journey today—or risk being outranked by the competition or losing industry relevancy.

Banking at the forefront of digital transformation – but others will follow

Generally speaking, the banking industry is at the forefront of digital transformation within financial services, and this can be seen among consumer-facing banks and their digital, mobile banking offerings. But now the tech revolution is channelling down to the investment banks and eventually will travel to both to capital markets firms and the private equity industry.

As fundraising and investing become more demanding, asset managers are becoming more comfortable with outsourcing rather than doing everything in house and focusing instead on what they do best – investing. The asset management world which is typically the follower to all transformation journeys and is at the cusp of having to make that change.

Over the course of the pandemic, technology has become a critical factor in bringing people together across time zones and allowing them to work on the same documents and transfer data internally and externally.

Digitisation has facilitated workflow but also revolutionised the way managers invest and opened up a world of possibilities for investors. Firms are using portals and dashboards to display data, and software to manage accounting and perform fund tasks such as setting up numerous entities and making the investments.

Investors are also able to digitally reach out to managers, make their investments and obtain their ownership statements all with increasingly complex calculations. We also see the adoption of cloud services, which are becoming increasingly relevant when employees are working remotely.

Keeping in line with the challenges and opportunities, at Intertrust Group we have embarked on a transformation and digital journey and data management sits in the core of the initiative. As economies become squeezed and industries evolve, companies will look to improve cost efficiencies. We firmly believe that tech is the key to do this.