Innovating on a budget: how FSI organisations can remain agile in the face of adversity 

Source: Finance Derivative

By Charlie Thompson, Vice President EMEA, Appian

There’s little doubt that tough economic times will necessitate difficult business decisions. Gloomy forecasts from the World Bank predict just 1.7% growth this year, forcing businesses to reevaluate their operations as they navigate this flux – all whilst protecting the bottom line. Remaining agile is imperative for any business. The cost of doing nothing and simply adopting a ‘wait and see’ approach to ride the economic storm will lead to stagnant business growth.

But how can those in heavily regulated industries, such as financial services and insurance (FSI) companies, continue to innovate and grow in this economic environment? How can they remain agile in adversity whilst managing the increased risk from a downturn? Not only are they contending with protecting business performance in a turbulent economy, but they are also facing increased regulatory compliance when it comes to being held accountable for their environmental, social, and governance (ESG) practices. This is all come at a time when customer expectations are higher than ever. Staying ahead of the curve – especially given the number and success of many fintech disruptors – has to remain paramount. Thankfully, constraints offer ample opportunities for technological innovation.

When it comes to planning for the year ahead, there are three main areas that FSI business leaders should embrace to enable agility and remain competitive.

Managing increased regulatory reporting

This year, there will be increased scrutiny of process controls and higher regulatory enforcement from governments and agencies. Transparency around the reliability of digital currencies and open banking will heighten as the industry looks to adopt an appropriate framework to manage and mitigate the risks around these new paradigms. The focus on ESG will also lead to the need for more comprehensive reporting, which will become even more critical this year with more emphasis on climate change and the requirement for companies to demonstrate their commitment to operating with purpose.

Recent news also confirms this, with the World Economic Forum citing that the failure of climate mitigation is the number one long-term global risk facing the planet today. As the public sector and investors require more accountability in this area, we can expect compliance around ESG reporting to increase substantially.

Whilst further regulatory measures are inevitable, the good news is that technology can help companies stay compliant and enable them to stay competitive, helping them not to lose ground as a result of increased regulatory controls. For example, organisations can deploy solutions to monitor and report ESG activities with a process automation platform and data fabric. This innovative technology helps companies manage their data easily in one place, regardless of where the data resides. A virtual data layer can help unify information across systems and quickly build enterprise applications. In doing so, integrated data will lead to better insights, enabling organisations to simplify and accelerate all their critical processes. Ultimately, this makes compliance monitoring and reporting easier and faster, thus allowing businesses to meet requirements whilst remaining agile.

However, despite the value that technology brings, there is a need for FSI organisations to strengthen their ability to adapt rapidly to change by using these digital tools to gain a competitive edge. In a recent survey, 81% of European IT leaders in financial services and 73% in the insurance sector said they are concerned the transition from the pandemic to an economic downturn will see businesses freeze IT budgets and headcounts. It is critically important that business leaders take the advice and use the digital solutions available to help them to innovate and remain competitive in a challenging environment.

Designing, orchestrating, and optimising processes

These challenges are inevitably creating a pressure cooker, where businesses are tasked with cutting costs, yet remaining agile in the meantime. This may mean that the ability to innovate could be short-lived. This is also supported by the research study that shows that eight in ten (81%) developers and software engineers across Europe in the FS industry say their organisation is already shifting focus away from innovation projects towards cost-cutting initiatives.

So, could this present a Catch-22 situation, where the troubled economy requires ambitious innovation, yet tight budgets prevent companies from carrying out that innovation?

This may not be the case. What remains important during uncertain times is that FS firms streamline their IT stack to focus on time-to-value, maximise return on investment, and stay competitive in an increasingly recessionary global economy. Process automation on a low-code platform is one solution organisations have used to design, orchestrate, and optimise critical processes. By leveraging the right technology, business leaders can increase productivity, and boost profits and savings, thus putting them in a stronger position to remain innovative even in the face of economic adversity.

Using technology to bridge the skills gap

Nevertheless, whilst FSI organisations must ‘do more with less’, we should not look exclusively at the impact of budget shortfalls in 2023; we also have to navigate the talent landscape. If organisations have not recruited the right technical skilled workers to keep up with increased business and regulatory requirements, then growth will ultimately be affected.

To address these issues, a multi-pronged approach is needed. Firstly, FSI organisations need to make better use of innovative solutions, without heavy lifting from coders who have exclusively and painstakingly written applications in the past. Low-code development is helpful here as it enables those with no coding background to support, building robust business applications efficiently and quickly.

This will likely become a critical skill in the future, helping reduce the sole reliance on IT. Not only can we take advantage of low-code to develop applications faster, which is vital in the battle to be agile in the financial services industry, but we can also train more people to create these solutions. For example, business analysts without years of technology experience would be able to create a simple app with mobile forms and automation features; then collaborate with more technical engineers to ensure enterprise readiness with security, compliance, and data integrity.

Upskilling and reskilling existing talent will be particularly important for organisations during the downturn when budgets do not allow for new hires. Low-code platforms powered by process automation lead in this approach, empowering a broader set of users to participate in digital innovation.

In times of economic adversity, businesses must continue to build and innovate. An increasingly complex compliance landscape lies ahead, and this is why the FSI industry must embrace digital solutions to enable them to grow and not stagnate. Demand for automation and low-code development – which makes it much faster to build, modify, and execute enterprise applications – continues to surge as organisations seek new solutions to help them remain agile. The ability to stay ahead of the curve lies at its core in technology, and those that embrace it will ultimately have the competitive edge in uncertain times ahead.