By Phil Hingley, Head of Financial Services, UK
The recent pandemic has thrown some bewildering curveballs at capital market firms. The sudden shift to remote working has added to the challenges for enterprises that were already struggling under the weight of traditional processes, legacy infrastructure, and limited ability to harness their data.
The huge economic disruption caused by COVID-19 has accelerated firms’ realisation of much needed change and adoption of the new technologies they so desperately need.
Organisations that had a five-year plan for enterprise modernisation have had to fast-track their transformation initiatives. The lightning-fast decision-making that relied on instant access to real-time data sources on a bank of screens and on-premise communication to coordinate deals must be replicated in a new working environment. But locally installed legacy applications with no API integration capabilities make that a tough challenge.
It all amounts to a lot of additional disruption in a sector that was already evolving beyond the capabilities of monolithic legacy infrastructures and processes.
Leaders under pressure
For IT and business leaders in capital markets, even before COVID-19, the pressure was immense. The pressure to respond to changing market conditions and the subsequent demand on finding the technology, processes, and budgets to modernise systems that were designed for a different world. The pressure to extend the enterprise’s reach into new digital ecosystems. The pressure to remain competitive and not get left behind as the sector evolves.
In response to this, most organisations have undertaken some kind of digital transformation initiative, with varying levels of success. They’ve attempted to jettison their legacy systems and replace them with modern alternatives, thinking that’s what it takes to stay competitive.
It’s true that a strong technology strategy sits at the heart of a sound digital transformation strategy, and through enterprise modernisation, technology leaders can help increase operational efficiency and productivity, reduce costs and risk, uncover new opportunities – and directly contribute to value creation.
But becoming a modern digital business is about much more than just technology.
Technology gives organisations powerful tools, but they must change their values to realise the full benefit of those digital investments. Otherwise, they’ll simply create the legacy systems of the future while the supporting systems and processes remain firmly in the past.
Transformation must go deeper
In too many transformation initiatives, the end state is just the old end state with a digital veneer. Take automation, for example. Over time, large organisations have built a Jenga tower of processes and workflows, then they’ve started to remove blocks and plug the gaps with automation. While that can increase speed in some areas, the outcomes remain the same, they just get to the bottlenecks faster.
Meaningful transformation – the kind that will help leaders compete with new digital entrants – requires more fundamental changes to deliver new outcomes. For example, an organisation that sets out to embed new core principles in its brand positioning to grow in key markets, invests heavily to plot a course to change. However, if the underlying values don’t change – those that drive the internal reward and measurement policies – then change will fail; the purpose of the technology and the value the business expects are at odds with each other.
So, what can be done to balance the change in values with modernising systems and processes? How can we give digital transformation initiatives a better chance of success?