Digital maturity gap in financial services has grown wider

Firms that are leaders in technology transformation are breaking away from the pack on generative AI and skills development, Broadridge survey shows.

As the pressure for financial service companies to increase their digital capabilities continues to rise, leaders are pulling further ahead of the pack on multiple fronts, according to new research from Broadridge.

The research, which surveyed 500 C-suite and senior executives globally, from firms representing anywhere from $1 billion to over $250 billion in AUM, highlights the strategic investments firms are making in technology and talent to enhance their enterprise value.

In Broadridge’s 2024 Digital Transformation & Next-Gen Technology Study, 75 percent of executives expressed confidence in their technology transformation strategies, with more than two-thirds saying they’ve made meaningful strides in modernizing their core IT infrastructure.

The survey – which sorted firms into leaders and non-leaders based on their progress across ten key aspects of digital transformation – showed more than 80 percent of executives are channeling investments into cybersecurity and advanced IT cloud platforms. Moreover, a substantial majority plan to maintain or increase their spend on emerging technologies such as AI, quantum computing, and blockchain in the next two years.

“We are seeing significant momentum in the adoption of next-generation technology like GenAI from financial services firms looking to solve their most pressing business challenges, while they’re also gaining measurable value from more established technologies including AI, blockchain, cloud and core infrastructure platforms,” said Chris Perry, president of Broadridge.

About 40 percent of respondents believe a customer-centric approach is crucial for accelerating digital transformation. Seventy percent of leaders, compared to 52 percent overall, are prioritizing AI investments in customer interactions to foster deeper engagement.

While 44 percent of leaders are making moderate-to-large investments in generative AI – more than twice the effort non-leaders are exerting – Broadridge says laggards may still gain ground given the lower cost of entry to deploy GenAI.

Despite the technological advancements, there’s still a gap in enterprise-wide digital skills development. Only 28 percent of executives reported advanced stages of implementing digital skills and talent strategies, although this represents a year-on-year increase.

The study also found a stark contrast between leaders and non-leaders in developing an innovation culture and implementing digital talent strategies, with 71 percent of leaders having advanced digital skills strategies compared to only 12 percent of non-leaders.

As firms enhance digital customer experiences, they’re also ramping up their cybersecurity, with plans for increased investment by 28 percent on average over the next two years.

Cybersecurity challenges continue to be the top barrier to firms’ digital transformation, according to executives. In line with that, they’ve ranked cybersecurity as the top capability they expect from their tech vendors, ahead of delivering projects on time and on budget and enhancing their solutions with next-gen tech.