Tech challenge ahead for financial services firms: Minter Ellison survey

National law firm Minter Ellison says digital transformation, crypto and big tech loom as the big challenges for financial services companies in 2022 and beyond.

Clients of national law firm Minter Ellison said in a survey that 92 per cent of customers were interacting more frequently with their digital platforms than a year ago, with one-third describing the increase as significant. Picture: Getty Images

Financial services firms have identified risks flowing from digital transformation and the impact of crypto changes and Big Tech as their big challenges in 2022 and beyond.

Clients of national law firm Minter Ellison said in a survey that 92 per cent of customers were interacting more frequently with their digital platforms than a year ago, with one-third describing the increase as significant.

“For financial services organisations, technology is fundamental in transforming and enhancing customer experiences – and the journey is only just beginning,” Minter Ellison partner Michael Lawson said.

“Key to this is driving change in customer behaviour. Building trust, protecting privacy and safeguarding against cyber risk are critical ingredients.”

However, technology risks related to existing systems were also a key concern for financial services organisations, with 70 per cent saying outdated or legacy systems are one of their firm’s greatest challenges.

About 71 per cent of companies planning to invest in new technology say they will use the funds to phase out legacy systems. Further, of those which have been through a merger and acquisition deal over the last 12 months, half say technology integration or separation posed unexpected challenges.

When asked what would give their firms a competitive advantage for consumers and investors, the largest group – equal to 31 per cent of respondents – identify service affordability and accessibility as most important.

Technology is regarded as central to that objective.

Of those looking to invest in new technology, 86 per cent say they are interested in automating processes, 71 per cent in streamlining customer experiences, and 64 per cent in making customer or employee experiences more mobile.

In last year’s survey, clients identified multiple pressures – fast-tracked digital agendas, changing workplace and macro­economic concerns, the fallout from the financial services commission, and ongoing regulatory burdens. Many of those challenges remain, with demanding and complex regulatory requirements, and the need to retain and acquire talent.

Big Tech and crypto also loom large on corporate agendas. “With the government taking steps to regulate cryptocurrencies, digital assets and fintech in Australia, they are becoming increasingly mainstream and influential in the financial services sector,” partner Richard Batten said.

Around 63 per cent of respondents say they expect to see changes and reviews in relation to payment systems and cryptocurrencies over the next 24 months. Respondents also predict that competition from new entrants such as fintech and non-financial players will increase over that period.

On workforce issues, retaining and acquiring talent is seen as a critical issue.

With the post-pandemic trend towards working from home, 35 per cent of respondents say flexible and agile working is key.

This is followed by a safe return to offices (33 per cent) and increasing employee engagement (18 per cent).

Last year, 84 per cent of respondents said working remotely had not impacted their interactions with customers and suppliers and standards of conduct.

In 2022, that success was reflected in almost all organisations having flexible working arrangements (94 per cent) as a means to attract or retain talent.

About 36 per cent of firms say they are considering downsizing offices as a result of successful agile working arrangements – up from 14 per cent last year. The changing nature of workplaces is also reflected in the search for talent, with one-third of respondents saying that hiring people with diverse skills will give them a competitive advantage.