Survey: Tech underinvestment among financial services firms

Financial services providers rate themselves only average when it comes to digitalisation, according to a survey by technology company TrustQuay.

Around 100 corporate services, trust and alternative fund administration firms scored themselves only five out of 10 in terms of converting information into a digital format, according to the 2021 Future Focus Report.

Half of this industry believes it does not invest as much in technology as other sectors of financial services.

Almost all (92%) said technological innovation in the industry needed to accelerate and eight out of 10 firms believe they could do better when delivering a digital experience for their clients.

Half of the firms said they are planning to digitalise their business models and client engagement in the coming two years.

The top three areas of innovation identified over the next five years were automating manual processes and workflows, improving client reporting and increasing engagement with clients through portals.

Nearly all respondents (95%) agreed that technology should be viewed as an investment in growth, but only a third said their own firm spends enough on technological innovation.

Compared to last year’s report, the main challenges for the industry remain the same.

The strain of meeting regulatory requirements tops the list, cited by 78% of firms, followed by the need to increase efficiencies and cut costs (66%).

Solutions to both can be related, TrustQuay noted, for example through the automation of know-your-customer and anti-money laundering processes, as well as the workflows around economic substance reporting.

Poor data quality, named by 44%, is another tech issue the report highlighted, as it often stems from firms relying on unautomated functions combined with numerous, fragmented and poorly connected legacy systems.

This was often greatly exacerbated due to mergers and acquisitions.

Consolidation remains a continuing trend in the corporate services, trust and alternative fund administration sector, the report found, with 81% of respondents expecting industry consolidation to increase over the next two years.