The UK’s financial services businesses continue to operate in a challenging environment.
On top of working in a highly regulated and increasingly competitive sector, firms must navigate significant uncertainty post-Brexit and keep pace with an ongoing shift towards greater digitalisation.
The pandemic has also pushed the sector further into the national spotlight. Financial services providers are under pressure to support businesses and individuals in distress, while facing increased scrutiny over customer experience – particularly when it comes to vulnerable customers.
In this climate, firms must continue to invest in their operations if they are to remain competitive, protect their reputation and meet the constantly evolving demands of customers.
By transforming inefficient processes, firms can develop more productive operations and free-up funds to help drive new investment in the year ahead. Here, the support of an expert partner can be key.
It is encouraging to see that financial services executives already have transformation firmly on their agendas.
At Parseq, we recently surveyed more than 50 C-suite executives at some of the UK’s largest financial services firms for our inaugural Big Business Efficiency Report to understand their plans for the next 12 months when it comes to transformation and efficiency.
Four in five executives (84%) plan to transform their business operations over the coming year, and every executive we spoke to is planning to make their business more efficient.
When it comes to transformation, executives’ focus areas are diverse.
In the front office, marketing (44%), sales (37%) and customer experience (19%) are priorities. In the back office, finance and administration (35%), IT (30%), compliance (26%) and HR (26%) top the list.
The use of AI and machine learning (41%), digital channels for internal and external communications (35%) and new workflow management software (33%) are the most popular steps executives will take to help increase business efficiency in 2021.
When asked how they would use the capital unlocked through efficiency gains in the next twelve months, more than half of respondents said they will invest in new technology (57%), while almost two fifths said they would improve customer experience (37%) and expand into new markets (37%).
These findings highlight the broad range of efficiency and transformation strategies financial services executives are formulating.
However, executives also highlighted several barriers when it comes to putting efficiency measures into action.
Our respondents cited cost (37%), complexity (35%), a lack of time (29%), a lack of knowledge (29%) and a reliance on legacy systems (29%) as their biggest hurdles.
And, while 71% of executives who said they were planning to use outsourcers over the next 12 months were more likely to do so after the UK’s first lockdown in March, a fifth (20%) said a lack of awareness of available third-party support was a factor currently holding them back.
From our 40 years of experience at Parseq, we know that outsourcing to a third-party can achieve permanent efficiency savings of at least 30%.
However, while outsourcing partnerships can return impressive cost savings and help executives directly tackle issues such as complexity and time, its benefits can extend far beyond this. Through their expertise and experience, outsourcing partners can also play a key role in helping firms deliver long-term transformation in their operations.
Looking ahead, financial services firms that successfully enhance their efficiency and enact transformation will be well placed to overcome any obstacles that may arise this year.
Through transformation, and by utilising third-party support, businesses will be able to unlock the capital that will be key to helping them thrive in a challenging and competitive environment.
Craig Naylor-Smith is the managing director of Parseq. Parseq provides a range of bespoke business processing services, including digital mailrooms, data hosting, payment processing and allocation and document management, digitising more than 70 million customer correspondences every year and handling over £36bn in payments annually.