What’s Driving Digital Transformation in the Financial Services Sector?

Through strategic outsourcing, companies in the financial services sector can improve the quality of services they offer to clients and increase internal operations by reducing inefficiencies—all while saving costs in key areas. Companies are increasingly focusing on technology enhancements and driving the adoption of digital transformations. By taking a closer look at outsourcing market trends in financial services from 2022, an outlook for next year or so becomes clearer.

What the Numbers Say

According to ISG reports, information technology outsourcing (ITO) had the second-best year ever after 2021, and business process outsourcing (BPO) and “anything as a service” (XaaS) markets are up significantly.

Technology’s Continued Impact

• Quantum computing is a new approach founded on quantum mechanics principles to perform calculations that allow for exponentially faster problem-solving through technology.
  • Quantum-computing startups are proliferating, and finance is estimated to be among the first industry sectors to truly benefit.
• Companies are driving digital transformation through the implementation of digital technologies that can reduce costs and improve organizational growth. Platform transformation has the potential to do the following:
  • Engage with a new platform through a third party or build a new one within the business.
  • Redesign the entire IT operating model.
  • Transform back-end technology to power key business functions.
  • Decommission legacy architecture or incorporate a new platform.
• Artificial intelligence (AI) is here to stay.
  • Generative AI can be used to create new content informing the online customer experience, including audio, code, images, text, simulations, and videos; financial services companies can accelerate their digital transformation efforts by investing in this area.

How Fintechs Impact Financial Services

Originally some may have viewed fintech companies as disrupters, but their impact on the industry is being embraced. Banks are looking at how they can offer their own solutions or partner with fintechs, among other activities, with the goal of improving customer experience.

Regulations Affecting the Industry

Around the globe, regulations that could impact outsourcing in the financial services sector are being proposed, are under review, or are being enacted. The EU Digital Operational Resilience Act (DORA), passed in December 2022, is binding, while the US Securities and Exchange Commission has proposed a rule regarding outsourcing by investment advisers. As discussions take place and new or amended regulations are proposed, the financial services industry should remain aware of how these could affect the sector.

To learn more about how XaaS products, AI, automation, blockchain, the cloud, digital assets, and the metaverse can create opportunities for companies, please visit our Global Digital Transformation webinar series page.