Digital Transformation in Capital Markets

Digital Transformation in Capital Markets

By Christina Churchill, Principal, RSM US LLP

Christina Churchill, Principal, RSM US LLP

In today’s society, users expect immediate access to their accounts and services when and where it is convenient to them. However, it is difficult for organizations to prioritize their resources to support safe and efficient digital channels, while rapidly evolving technology and increased competition offer a variety of choices. This dilemma has forced capital market organizations to begin taking action on long-term strategic plans around digital transformation, automating the totality of the trading cycle. It is the only way to meet user’s rapidly changing expectations in a digitally-focused world. In the past, capital market organizations have largely been focused on speed-to-transact and providing data; but today, organizations are requiring increased profits, reduction in costs and improved efficiencies.

"A digital roadmap that supports goals serves as the basis for prioritizing future investments and managing the implementation of new digital services"

Digital transformation is more than simply mobile options or omni-channels. It is evaluating the people, processes and technology to enhance both the customer-facing and operational side of the organization to create innovation and efficiencies.

Transformation must be driven from the top, with the CEO and CIO working in tandem, as well as from the bottom. An organization’s people are the key in its ability to transform––from innovative ideas to simple execution. Your staff best know the customers, industry and needs. However, to move toward transformation, organizations need to step away from the “way we’ve always done it” and look toward to “how do we best use our people?” Are there ways to automate daily tasks, to free up time to create efficiency and bring better value to the organization? Invite innovation and open communication. Welcoming the “WHY?” is a powerful step in transformation.

To reach the goal of increasing margin, digital transformation and to create time to be innovative, organizations must understand the current processes and how data is used and stored. Being agile and making iterative change will allow for immediate payback.

Workflow tools will speed processes, enforce controls and reduce risk for organizations. Developing KPIs around key activities will help highlight the goals.

Big data is not a new concept. Organizations house a lot of data, but the ability to transform it to usable actionable information isn’t prevalent. Using data for development of products, drive investment strategies, and better serve customers or internal operations, is a differentiator for capital market organizations.

Modernize finance departments to provide timely actionable data, decreasing administrative time across the organization.

Outdated core applications limit an organization’s ability to interface with ancillary products needed to bring customer’s digital offerings.

Outsourcing infrastructure can be an uncomfortable discussion, but if done correctly, it will meet the regulatory requirements, reduce costs and typically will increase service levels. This has been in the marketplace for a number of years; stable and largely used.

Managed services for commodities, for example: patches and security monitoring, allow organizations to have a specific expertise at a lower cost, enabling employees to focus on their strengths, thereby increasing value to the organization, rather than attempting to be experts at many technologies.

Evaluate Fintechs. They have spent the dollars on technology and innovation. Can they be leveraged rather than competitive?

Develop a roadmap that focuses on the right strategy for your organization. What are the delivery channels, products and services that your customers want? What operational areas need to be streamlined to meet the overall margin goals and support new products? Recently speaking with a CIO, he shared it felt as if his organization can’t move forward as the “plan is never done”, as digital technology continues to evolve it can feel as if the plan is ever changing. As you begin your process of digital transformation, it is best to work on your plan in pieces.

• Identify goals. It is important to align digital initiatives with the overall strategic plan. Target market segments, growth goals, and product strategies must be considered when evaluating and prioritizing digital options. A digital roadmap that supports goals serves as the basis for prioritizing future investments and managing the implementation of new digital services.

Assess the competition. Customers have an increasing number of service providers. Developing an inventory of competitors and their digital offerings allows for strategic analysis.

Evaluate your capabilities. Assess the digital systems in place today. Identify gaps in the services that have been deployed compared to the competition and with how they support your strategic goals. Identify potential system providers for needed solutions. Review the organizational structure to determine if appropriate management, oversight, roles and responsibilities are in place to support the digital strategy.

Planning and developing a strategy is important, but execution is the key. Execution phases to consider include: selecting the right vendor, deploying project and change management, marketing and communicating, training and ongoing monitoring. Limiting disruption to customers while providing additional service is the goal. Without investments in digital transformation, capital market organizations will continue to fall behind the more adept competitors.

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