Magenic-Sponsored Forrester Study Highlights the Struggle Financial Services Firms Have with Digital Innovation and Transformation

Study leads to key recommendations to enhance digital innovation

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Nov 29, 2016, 12:11 ET

MINNEAPOLIS, Nov. 29, 2016 /PRNewswire/ -- Magenic, a business technology consulting company, today released the results of a Forrester Research study it commissioned to better understand the extent to which financial services firms are embracing digital business offerings and the barriers they face in doing so. The study overwhelmingly concluded that while many financial services firms are on the right path, the majority of firms surveyed lack digital transformation readiness, best practices and processes. The study also found that those firms that do adopt digital innovation strategies achieve significant organizational benefits.

"Our lifetime of personal experience and nearly 10 years of professional experience with insurance, banking and wealth management firms suggest that they are slow to fully embrace digital transformation," said Heather Zimmerman, Magenic's Financial Services Practice partner. "The results of this Forrester study confirm that belief but, more importantly, they provide us with key insights into why, and they highlight recommended steps those firms can take to improve and accelerate their digital innovation going forward."

Magenic's Forrester study included in-depth online surveys with 201 decision-makers involved in or responsible for digital transformation at their financial services firm. Questions focused primarily on how ready respondents believe their firm is to transform digitally, what digital transformation best practices they employ, what barriers they face in pursuing or achieving digital transformation, and what benefits they achieve as a result of digital transformation. The responses to those questions led to three key findings, including:

Financial services firms are unprepared for digital innovation.
While 98 percent of respondents stated that they had budget allocated for a digital strategy, 95 percent indicated that they had staff dedicated to it, and 100 percent rated their firm's digital maturity as 3.3 out of 4.0, only 32 percent of firms acknowledged consistently using digital transformation best practice innovation techniques—techniques related to idea generation, incubation and implementation. According to the study, this sporadic implementation of best practice innovation techniques indicates that "most financial services firms are not as mature as they may think" when it comes to digital transformation readiness.
Structural, procedural and cultural barriers lead to a lack of digital innovation.
All respondents to the study indicated that structural, procedural and cultural barriers inhibit their ability to fully embrace digital innovation and transformation, with cultural barriers proving the most challenging. One quarter of respondents stated that they lacked innovative staff to drive initiatives, 26 percent stated the corporate culture was too risk-adverse to support digital innovation, and 67 percent indicated that the culture was too insular, thereby preventing them from looking to other industries for inspiration.
Digital strategies drive organizational benefits.
Although digital innovation is in its infancy among financial services firms, 58 percent of study respondents stated that the digital strategies they did employ had a significantly or moderately positive impact on driving better customer engagement, 51 percent said those strategies positively impacted customer satisfaction, 50 percent said the strategies helped drive positive financial outcomes, and 49 percent said they helped drive revenue for the company. With that said, however, these positive outcomes were not necessarily aligned with a digital strategy's priorities, suggesting that financial services firms do not understand the role of digital innovation within the organization as a whole.

In addition to identifying these three key findings, Magenic's Forrester study also provided a number of recommendations for financial services firms as they look at creating or improving their digital innovation strategies. Among those recommendations is to take a disciplined, consistent approach to digital innovation to help drive success; to identify the key barriers to success and strategically work to overcome them; and to consider working with an external partner who can guide the digital transformation from start to finish.

"No company and no industry is pursuing digital transformation flawlessly," said Zimmerman. "I think what this study ultimately shows is that financial services firms want to transform, they recognize a need to transform, and they are, in fact, on that journey toward digital transformation. They just need a bit of guidance and support to make the journey a success."

Magenic's Forrester study, "Digital Innovation: The Readiness of Financial Services Firms," is available in its entirety on the company's website.

About Forrester Research
Forrester Research is one of the most influential research and advisory firms in the world. The firm works with business and technology leaders to develop customer-obsessed strategies that drive growth. Forrester's unique insights are grounded in annual surveys of more than 500,000 consumers and business leaders worldwide, rigorous and objective methodologies, and the shared wisdom of its most innovative clients. Through proprietary research, data, custom consulting, exclusive executive peer groups, and events, the Forrester experience is about a singular and powerful purpose: to challenge the thinking of its clients to help them lead change in their organizations.

About Magenic
Over the past 20 years, Magenic has earned a reputation as a leader in business technology consulting. The firm is recognized for its premier technical talent as well as its proven project management and delivery processes. Magenic prides itself on transforming businesses through technology, moving companies forward with quality and speed. To learn more about Magenic, visit magenic.com.