DevOps, FinTech

This blog is part 2 of a series of 7 on the results of our inaugural research report The State of DevOps in Financial Services. 


Earlier this year Contino reached out to IT professionals in financial services to gain a greater understanding of innovation and DevOps in the industry.

We received responses from 165 professionals, ranging from engineers to CTOs working at a range of financial services organizations from FinTech startups and investment funds to insurance firms and the biggest global banks.

This culminated in our research report The State of DevOps in Financial Services. For an introduction to our findings, check out an earlier article here. This blog series will take a closer at each chapter of the report in turn.

Here are the top three things that we learned about the state of innovation in financial services.

1. Digital innovation is crucial, but business strategy isn’t following suit

64% of respondents stated that digital innovation is “very” or “extremely” important to their business model. Only 4% found it to be “not very” or “not at all” important.

Digital innovation, then, is a foundational aspect of most organizations’ business models.

But the purported importance of digital innovation is not reflected in companies’ digital innovation strategies themselves. The most common objective of digital innovation strategies is to increase efficiency (65% of respondents included this as an objective). But transformation is about more than just efficiency, it’s a root-and-branch change.

This suggests that digital innovation strategies have yet to be properly aligned to the self-reported importance of innovation to the business.

Want to get the whole story on the state of DevOps in financial services?

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2. Increasing competition is the principal driver for digital transformation

What’s driving digital transformation?

“Increasing competition” was cited as the number one driver for digital transformation by 43% of respondents. Followed by rising customer expectations (22%), with all others lagging far behind.

Intriguingly, the cited drivers of digital transformation are at odds with the most-cited objective of digital innovation strategies (see previous section), namely, increasing efficiency. It seems that while competition and customers are the main drivers, by the time these translate into a defined strategy, simpler and less ambitious objectives (efficiency) are in the foreground.

It’s noteworthy that “driving new revenues” and “reducing costs” are the two lowest scoring drivers for transformation. This is not a financial matter. It’s about something bigger than that: transforming the business model of the organization to focus on innovation and customer expectations to ensure long-term survivability. It’s a paradigm shift, not a short-term win.

When asked specifically about born-in-the-cloud competition, 78% say that it is to “some extent”, “a great extent” or “completely” a driver for digital transformation, with a majority (45%) plumping for “a great extent”. The new FinTech wave is very much in most people’s sights and having a definite impact on company strategies.

3. The main barrier to innovation is too little time, not too little money

By far the most-cited number one barrier to the execution of a digital innovation strategy is “too many competing priorities” (50% place this at number one, far ahead of the second-most cited barrier [lack of agility – 19%]).

This confirms the presence of the classic contradiction of digital transformation: trying to keep the lights on while carving out space for transforming how you work.

Importantly, respondents state that a lack of investment is the least important barrier overall. This supports the findings on p.10 suggesting that the objectives of digital strategy are nothing to do with money. It’s neither the primary goal, nor the primary hindrance.

Digital transformation is motivated by something more fundamental than next quarter’s revenues and looks to change something more fundamental also.

Conclusion

The results from this report suggest that for most FSIs DevOps and innovation are fundamental to developing the competitive edge necessary to thrive in the modern marketplace. They are not quick wins to cut costs or boost next quarter’s earnings, but a strategic response to rising competition.

However, while innovation is deemed to be a crucial aspect of most organizations’ business models, when it comes to transforming the business to be fit for purpose, digital innovation strategies - once they have been formulated - have often been watered down and are too reformist. They are too focused on cost and efficiency and not enough on fending off the competition and meeting customer demands.

There’s loads more details in the full report! Check it out here.

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  • Ben Saunders

    Client Principal

    Ben is a highly motivated, professional consultant with a proven track record of delivery across the financial services, media, retail and energy sectors. Having managed project teams of up to 30 resources, with budgets of £5m, he has forged a reputation as a driven and focused professional with exceptional leadership skills, paired with significant experience of communicating with C-Level executives, at a strategic level.

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