The digital revolution is well underway and over the past few years, we have witnessed many industries beginning to harness innovative technologies, such as AI. However, a significant number of businesses across financial services are ill-prepared to benefit from the newest technologies, due to a reliance on legacy systems.

This dependence on outdated software, along with the use of paper-based forms of communication and record-keeping, is holding back the industry from unlocking a realm of innovation and opportunity. The financial industry must fully embrace digital transformation strategies or risk being left behind.

Undertaking digital transformation strategies can unlock endless benefits for businesses, from improving customer experience to significantly cutting costs due to increased efficiency. Whilst adopting new technologies can open up a business to a range of risks, the sector can no longer afford to stand idly by while other industries around them begin to transform.

The power of paperless processes

With the Royal Mail providing delayed services and rising stamp prices, with the total cost of First Class post currently being £1.35, now is the time for financial organisations to consider the benefits of digital solutions to retain efficient and reliable communications with their customers. By leveraging portals and secure email solutions, therefore ditching paper-based communications in the process, businesses can benefit from an assured information exchange that is both time-efficient and secure. Supplementing paper for digital processes will also allow businesses to align with sustainability goals and reduce their carbon footprint, making the transition to digital beneficial from a business and environmental perspective. 

Switching to digital communications also allows businesses to streamline their record-keeping processes and effectively track customer interactions, enhancing the manner in which businesses can store and process customers’ data. Digital filing systems, underpinned by apps and cloud-powered portals, provide convenient access and facilitate two-way, real-time access to historical data without friction. 

Mitigating cyber threats during digital transformation processes

Although undergoing digital transformation opens businesses up to a world of benefits, it also opens the door for threat actors. With research showing that 50% of UK businesses reported cyber attacks or breaches in the past year, excellent cyber hygiene is not something that should be overlooked.

As more businesses begin to leverage AI and cloud computing, it is crucial to realise that they are not the only ones leveraging these, with threat actors also beginning to harness the same tech for malicious purposes. The NCSC reported that AI is poised to further amplify both the impact and the frequency of attacks, with threat actors increasingly launching AI-powered attacks to target consumers in more sophisticated ways than we ever thought possible - such as through deep fakes.

Considering the amount of personal data that financial institutions hold, safeguarding sensitive messages and documents that are exchanged with their customers is crucial for keeping sensitive data safe. A report from the Financial Services Information Sharing and Analysis Centre highlighted a surge in the threats posed to the sector, directly linked to the speedy and often misguided adoption of emerging technologies, neglecting to consider the threat landscape. 

The ICO also reported a 30% increase in data breaches in UK firms between 2022 and 2023, which further highlights the need for businesses to invest time and energy in formulating digital transformation strategies to prevent the threat of a cyber attack - in both a financial and reputational sense.

For financial services institutions to effectively implement digital transformation strategies, they must mitigate risks and prioritise developing a robust cybersecurity strategy to ensure that all initiatives are strategy-led, with a key focus on cultivating cybersecurity best practices across all levels.

The importance of taking time to understand the threat landscape

Throughout the digital transformation process, businesses must address all security vulnerabilities in their legacy infrastructure, whilst also working to enhance their threat detection and response strategies through redefined risk analysis procedures. Secure communications remain a vital aspect of a financial organisation's cybersecurity strategy, as they help to protect highly sensitive customer information in transit as opposed to only focusing on storing customer data safely.

Alongside implementing robust safeguarding measures and leveraging the technologies required to facilitate a seamless digital transformation process, governments and industry leaders must also do their part and focus on bridging the digital skills divide and encouraging competition amongst global markets. 

Putting people at the forefront of digital transformation journeys

In order for digital transformation strategies to be effective, businesses must upskill and train the individuals responsible for driving this change, looking to appoint leaders who have a solid understanding of digital technologies to drive initiatives forward. According to research from McKinsey, this will help processes to be more effective, as they found that businesses are two times more likely to succeed with digital transformation when those engaged in key management roles have a deep understanding of tech and strategies. 

Embracing digital capabilities is essential for businesses looking to meet the ever-changing expectations of customers, tap into new revenue streams and improve overall operational efficiencies. Any organisation that postpones digital transformation puts itself at risk of missing valuable opportunities to reach new customers and will inevitably fall behind in the race toward success against its competitors