Financial service boards of directors have complex and contradictory views of digital transformation and the effect of it on the industry. CIOs have to align themselves to companies’ digital initiatives with director’s strategies and communicate better with their clients.
CIOs driving digital transformation business strategy
- The role has been reinforced as a trusted partner of the board of directors for addressing concerns and developing realistic expectation of emerging technologies and digital transformation. This role has the focus of making digital business a success.
- The CIO gives a realistic and accurate view of enterprises digital maturity by analyzing current business capabilities and value contribution.
- The CIO also has to understand the firm’s appetite for risk and change by developing a clear and comprehensive road-map along with strategy
Get a free digital maturity assessment for your organization
By FY2022, less than 30% financial service organizations will be pursuing digital transformation strategies.
Situational Analysis for CIO in Digital transformation
Digital transformation is the most critical issue faced by the banking and financial service industry. Senior decision makers in banking, investment and insurance sector are struggling to understand the paradigm of digital transformation. The complex and changing factors are the major cause of this. With our communication with CIOs who are driving digital strategy, the following are the impacts and recommendations.
The part to understand from this is that board of directors have mixed and even sometimes contradictory views in terms of digital transformation connecting to products and services. On one hand, they consider digital transformation disruption as critical business challenge for their firms and see immense opportunity in technologies like Artificial Intelligence (AI). On another hand, the stakeholders become unsure whether digitalization and business transformation will cause their companies higher risks in terms of profits and impact.
The view from the board is very important to the CIO because they are the final decision makers. Our communication has led to scenario where CIOs are not considered yet to be the trusted allies when it comes to transformation. Still, there lies a great opportunity for financial services CIOs to influence digital business transformation and role IT modernization can play in banking and financial transformation.
Digital transformation in Banking and financial industry: Impact and recommendation
Among Banking, finance and insurance industry (BFSI), digital and technology disruptions are the most common challenge, leading to over-belief in emerging technologies
Two thirds of company leadership believes digital transformation disruption will be on top as a business challenge over the next 2 years even above talent acquisition. The interesting part is 72% leadership believes in digital transformation but only 11% expect transformation in their company to be complete. Eighty-nine percent of leaders also believe companies like amazon, paytm etc. will have an effect on them.
The varied perceptions about the emerging technologies and roles are creating havoc in terms of digital business transformation. But, this brings about risks and opportunities both. The threat that arises is board of directors will be more excited about the promises from the vendors. This might even create a greater risk if the CIO is not considered as a trusted ally. The seemingly worrisome part is only 39% of users consider CIO’s role in complete leadership of digital business and IT issues. And yet, this is a blooming opportunity for the CIOs to perform and claim ownership for some of these technologies. One of the most important examples is ‘Blockchain’ which is already an important part of Gartner’s Hype cycle 2020.
Recommendations for CIO in Financial Digital Transformation
- Understand and map the emerging technologies by developing tangible use cases
- Establish as a trusted partner and synchronize the IT department with all units
- Conduct competitor analysis of digital giants by analyzing their business and operating models and their digital transformation initiatives.
The satisfaction dilemma | Many banking and financial services leaders are satisfied with their organizations progress in Digital Transformation
Most of the digital transformation expectations from banking and finance organizations is bullish when it comes to achievement. A combined of 67% of leaders believe their organization have reached the peak digital transformation in their current needs. But, this achievement is in terms of digital optimization rather than digital transformation. As focus on emerging technologies and robotic process automation is division driven.
Various opinions about the level of digital maturity lead to conflicts for prioritization of new technology investments and the overall IT transformation roadmap. Key metrics showcases that 70% of the budget is spent on running the business as per laggard market need.
Recommendations for CIO to cross the digital satisfaction route
- Adjust the current perception of the board through digital maturity assessment and analyze the current business needs
- Arrange an interview with board members to match expectations
- Schedule IT discovery phases to communicate tangible contributions to company business goals
Fear of disruption and complacency in Digital transformation
Despite the fact that digital transformation is top priority for digital giants, they also bring about the worry of serious impact on the business. Forty nine percent of companies like to take a conservative approach towards transformation when it comes to budgets and new implementations. And only 20% of companies have expressed a desire to take a high-risk approach for digital disruptions. Being aware of these reservations will be crucial for financial services CIOs who are explaining the impact of their IT roadmaps on digital business and justifying the implementation of certain technologies.