Expleo’s Business Transformation Index 2021 (BTI) investigates how business and IT decision-makers across the island of Ireland are approaching digital transformation and specifically, how the pandemic has altered their strategies. From a financial services perspective, it really captured a comprehensive overview of the opportunities and challenges confronting businesses today – and there were some responses to the questions that especially caught my eye.  

The headline takeaway is that industry investment in digital-related projects accelerated in 2020. Yes, there was a slowdown in Spring last year, as stock markets crashed, and spending stalled. But that was a transient phase. Banks and Financial Institutions (FIs) soon began investing in frictionless digital solutions and their customer experience through Artificial Intelligence (AI), Intelligent Automation and data-driven insights.   

The BTI chimes with recent McKinsey research that the pandemic has fast-tracked digital transformation by as much as seven years – and put us on a one-way journey towards mass/full digitalisation. That’s good news for customers.  

Attitude Shift

Regulatory change mandates that banks keep upgrading their IT systems to ensure that they protect from external threats, so they have kept the foot down during lockdown. That’s part of the reason. But I think attitudes shifted too.  

The emergency situation flattened many of the traditional barriers that can get in the way of progress. Just like in other sectors, seismic changes were happening overnight. Firms avoided the endless rounds of bidding. They were clearly able to find the right people at the right time (although let’s not pretend the IT talent gap has gone).   

Challenger banks like Revolut and N26 have given incumbents a frame of reference for what frictionless banking can really look like – and they are following the signposts. The Bank of Ireland recently announced the closure of 36% of their branch network with more customers turning to digital-first, mobile solutions.  

Expleo’s Business Transformation Index 2021 report asked respondents how they anticipate their company’s investments have changed. 74% said that they prioritised digital transformation, as well as by-products such as automation, digital skills training and cybersecurity. I was particularly pleased to see a commitment to change management among half the respondents, as digital transformation can’t be properly delivered without it.  

There was enthusiasm for automation and machine learning among respondents of the BTI. Speed of back-office processes, cost reduction and a diversion of resources to more value-added tasks were cited as key drivers. Also, the impact of automation on business agility was clearly understood. The uptake of AI and machine learning technology is set to treble over the next three years among businesses in Ireland, which is good news for companies like Expleo that are working with customers to address both their technical and business automation needs.  

Careful reintegration  

Some of the results were to be expected. When asked how productivity had been affected by remote working, just 8% said productivity had fallen. Perhaps the more pertinent question is whether it’s sustainable. What will be the long-term psychological impact? The majority of respondents (58%) shared their concerns about the long-term impacts of remote working on their team culture.  

We may see a hybrid model taking shape, with a certain number of days in the office and the rest at home. There’s still no substitute for in person and face-to-face (although COVID-19 could spell the end of 10-hour flights for two-hour meetings). Some employees will quickly reintegrate to the post-pandemic workplace, while others will prove more change averse and need more time. How employers accommodate this transition is bound to have an impact on performance.   

We may see a hybrid model taking shape, with a certain number of days in the office and the rest at home. There’s still no substitute for in-person and face-to-face (although COVID-19 could spell the end of 10-hour flights for two-hour meetings). Some employees will quickly reintegrate into the post-pandemic workplace, while others will prove more change-averse and need more time. How employers accommodate this transition is bound to have an impact on performance.   

I was surprised when I read that 92% of respondents think they are already digitally transformed. The definition changes depending on your perspective, but I suspect that more companies are digitising than transforming. Likewise, the estimation that 60% of Irish businesses in the financial services sector are well-equipped for a more digitally enhanced world feels more rose-tinted than realistic. But the figures are what they are so I may be wrong…  

Either way, I am heartened to read that the IT leaders are pushing forward with digital transformation in financial services. A shock to the system like COVID-19 could have set the sector back, but the BTI makes clear that the opposite is true.  

Want to know more?

Read the full Spotlight on Financial Services Report, where I dive in to the sector specific data for the Banking & Financial Services sectors across the island of Ireland.

Mark Kenny, Client Director for Banking and Payments at Expleo Ireland.