Half of Financial Services and Insurance (FS&I) businesses are missing the opportunity to implement technology which is vital to supporting risk management and compliance in line with regulatory standards, new figures from Atos reveal.
A new report based on an in-depth, independent survey of 800* senior decision makers reveals how leaders in the FS&I industry widely acknowledge the importance of modernizing and transforming their approaches to risk management and compliance, as well as cyber security, business model reinvention, and environmental, social and corporate governance (ESG) – but that many are still deciding how to approach these challenges.
Opportunity to embrace digital risk management practices
The report, titled ‘The realization for change: accelerating action now’, found that 79 per cent of leaders within the global FS&I industry view technology investments as the most important contributors to business resilience, while a similar percentage (80 per cent) view digital activity as key to risk management, recognizing that the right technologies enable better monitoring of regulatory compliance and enhance the quality of risk decisions.
About half of businesses could still benefit from adopting tech solutions, however, with 51 per cent having so far developed digital products and services and 50 per cent having moved data and processes to the cloud, while almost half (48 per cent) have changed how they store and process customer data.
This suggests that business leaders know the benefits of digital risk management practices, but many still need to invest in the necessary tools in order to ensure business resilience and enable growth.
Meeting cyber security challenges
Cyber security is a major current focus for FS&I businesses within the area of risk management with 70 per cent of those surveyed agreeing that cyber security is the single biggest component of their risk management strategy. While almost half (44 per cent) have automated security and compliance policies, and 41 per cent have undertaken a threat assessment of existing or potential compliance risks, a majority of businesses still need to improve their technology in these areas.
Business model reinvention is a low priority
For years, the financial services and insurance market has faced constant digital disruption with new competitors emerging. Over half (55 per cent) of those surveyed named innovation and competition from challengers/disrupters as their greatest threat, yet fundamental change to business models is unlikely, with 42 per cent of leaders citing this as their lowest priority for the next year.
Asked about the difficulties business leaders face in accelerating business transformation, over two fifths (42 per cent) cited a lack of customer insight and a similar proportion (41 per cent) listed difficulties innovating and developing new propositions as a barrier to transformation – a sign that many business leaders are still deciding on the best approach to protecting their market share from disruptive competitors in the future.
Untapped digital opportunities to meet ESG goals
In recent years, ESG issues have become an increasingly important area of focus for business leaders, with 8 in 10 (81 per cent) viewing digital transformation as an opportunity to meet ESG and sustainability goals and almost three quarters (74 per cent) planning to stop investing in or lending capital to brown assets.
There is clear ambition among business leaders to meet decarbonization goals, with over half (54 per cent) citing difficulties reducing their carbon footprint or meeting ESG targets as a key threat to their business in the next two years.
At the same time, many recognize that there is much more to be done to tackle these issues, with a large proportion of insurance (69 per cent) and financial (68 per cent) businesses acknowledging that their current workplace processes and operations practices – fundamental to the employee experience – are not environmentally sustainable, showing that adoption of low-carbon digital strategies can still improve substantially.
Adrian Gregory, SEVP, Global Head of Financial Services & Insurance at Atos, said: “Most businesses acknowledge the vital importance of digital transformation, but ambition needs to be matched by action. A significant number of financial business leaders are seizing the advantage of technological solutions to industry headwinds, but others know they still need to make fundamental changes to reduce risks, ensure regulatory compliance, and keep up with digital-native competitors and net-zero initiatives.
“With inaction no longer an option, investment in digital technologies and partnerships with like-minded organizations will help to counter these threats.
“The financial services and insurance industries are facing a growing number of complex challenges, including cyberattacks, disruptive digital-first competitors and of course Covid-19 to name just a few. With ESG objectives increasingly on the agenda of companies as part of broader climate goals to be achieved by 2030, it has never been more urgent for businesses to address decarbonization issues.”
Digital services are a key enabler of decarbonization, and Atos has developed unique expertise to shape new decarbonization value propositions to customers ranging from decarbonization assessments to the introduction in large contracts of CO2 reduction commitments through Decarbonization Level Agreements to reduce the impact of business processes, supported by Atos OneCloud.
*The survey in this press release was independently carried out over May and June 2021 by Atos. There were 800 respondents, all of whom are senior decision makers within the global financial services and insurance industries across eleven countries including USA, Canada, France, UK, Germany and Italy.