Trust and sustainability are seen as the foundation for successful digital transformation in the financial sector.
As a society, we are increasingly demanding more sustainable and socially responsible business models from the companies we interact with - whether that’s as consumers, employees, partners, or investors - making sustainability an important goal for all industry sectors. While the concept of sustainable, responsible business is relatively recent, it’s gaining momentum as organizations work towards contributing to the UN’s Sustainable Development Goals (SDGs).
Within Fujitsu, our purpose-led strategy to deliver long-term sustainable performance and accelerate social value in areas where we can make a meaningful contribution remains firmly at the heart of our global organization. While we’re not alone in ranking sustainability as one of our highest priorities - are financial service organizations on the same page?
Where do financial services ICT decision-makers rank sustainability in their list of priorities?
Today, businesses have an ethical responsibility to contribute to the societies in which they exist, and the financial sector’s role in the transition to a more sustainable future is critical. As well as managing their corporate impact, their influence as financial service providers perfectly positions them to integrate long-term sustainability criteria into global business and investment.
Within the financial services sector pressure is being brought to bear by customers, investors, and regulators - who are all pushing for higher sustainability standards – the question is are financial services organizations listening to these demands?
To find out, we recently commissioned research by the advisory firm DataDriven who surveyed over 150 financial services IT decision-makers across 14 countries on our behalf. Our study ‘Digital Transformation Trends Financial Industry’ highlights a range of ICT issues, including sustainability through the eyes of financial services ICT decision-makers.
In line with our own approach to sustainability, our study highlights the prominence given by financial services organizations to responsible, sustainable business practices, and the central role being played by digital transformation (DX) in achieving goals in this area.
Operating sustainably is a big driver of DX in financial services.
In our survey, 16 potential drivers for DX initiatives were ranked, with 2 of the top 4 focused on sustainability. Almost three-quarters of survey respondents cited “reduced waste and improved quality” as their number one driver, with 73% of respondents advising that it’s of high or very high importance. 71% of respondents also ranked a “purpose-driven sustainable business approach” as the fourth most important DX driver.
DX initiatives are delivering on both sustainable business and financial goals
The finance sector is very focused on the use of DX to develop and maintain responsible banking into the future. Most respondents advise they are co-innovating with suppliers for the development of sustainable supply chain management, working on ensuring safe data flow, and focusing on employee wellbeing.
DX initiatives have produced results in increasing revenues (85%) improving risk and security (84%) and strengthening customer relationships (84%). They have also met or exceeded expectations in creating purpose-driven sustainable business approaches for 82% of respondents. This demonstrates that investing in sustainable approaches in a balanced way does not detract from achieving hard financial goals – indeed it can support such achievements.
Many DX initiatives can have dramatic effects on both sustainability and business performance – for example in the food industry, McKinsey expects the potential value unlocked by AI in helping design out waste in a circular economy for food will be up to $127 billion a year in 2030. This viewpoint is echoed in the financial services industry, with over 60% of respondents surveyed advising that DX projects are a bridge to a more purpose-led and sustainable future.
ICT investment plans for 2021 further demonstrate the determination of financial services organizations to leverage DX in creating a more sustainable future - almost 60% of survey respondents say they’ll increase spending on sustainability initiatives this year. Out of the 20 ICT budget categories surveyed, this is the fourth-highest budget increase in 2021.
Financial services organizations are also prioritizing DX initiatives that focus on employee well-being, which underlines the strong desire to improve employee experience (EX). Responsible, sustainable business practices are seen as having a positive effect on EX because employees want to feel good about the organizations they work for and want to feel they are part of something that treats them, their teammates, society and the planet with respect and care.
Climate change is of great concern to the financial services sector
The insurance industry is already feeling the pain brought on by unpredictable and extreme weather events, and for this reason many financial services organizations feel compelled to take action. More broadly, the financial services industry as a whole is making strong commitments to meet the challenges of climate change.
Science-Based Targets, one of the leading organizations helping businesses set and publish climate-relevant goals, has nearly 100 of its 1,700 businesses recorded as financial services organizations. However, there is still much to be done as there are an estimated 25,000 banks worldwide. This is a point echoed in our survey, with just 25% of those surveyed advising that they are actively responding to climate change.
According to our survey, while a percentage of businesses surveyed are now taking investing in ethically sound companies seriously, the number still sits below 50%. Reasons for this include not having fully transparent, standard and objective measures in place for what constitutes an ethically sound business, and this is an area currently under review by regulators.
Sustainability needs a digital business foundation
Looking at our survey results there’s no doubt that organizations within the financial services sector take responsible, sustainable business seriously - many of those organizations surveyed report that they have already delivered a range of DX initiatives that have produced positive results. However, there remains some way to go in building sustainability and outcomes across the sector as a whole. That said, the planned investment in DX-led sustainability initiatives of those surveyed for 2021 clearly shows that the industry is moving firmly in the right direction.
Help is needed to implement the right strategy. For financial services organizations, it’s crucial to work with the right digital partner to co-create a purpose-led ICT strategy that enables sustainability. By implementing a sustainable ICT strategy financial services providers can not only fix their IT, they can also focus on material issues and improving business outcomes. With a digital business foundation that includes technologies such as automation, Cloud, IoT, analytics and AI, financial service organizations can gain the insight they need to act on change through data collection, analytics and reporting.
As a world-leading digital transformation and ICT solutions provider, Fujitsu can enable your financial services organization to develop a purpose-driven DX strategy that can help you to meet your sustainability goals both now and into the future. Contact us to find out more.
Download our Digital Transformation Trends Financial Services Industry report to find out where financial services organizations are on their sustainability journey.