A World of Transformation
Whether it is due to geopolitical events, customer demands, disruptive competition, or governance (ESG) priorities, the world is changing rapidly with the added emergence of central bank digital currencies. With such dramatic shifts in mind, the top 5 challenges for financial services and insurance 2024 include:
- ESG requirements
- Everything-as-a-service (XaaS) adoption
- Meet growing customer expectations
- Operate more securely and sustainably
- Cyberthreats
Layered across these top 5 challenges for financial services and insurance 2024, is the burden that these demands will force traditional banks and insurance firms to evolve into “techfins” – traditional organizations that are harnessing the technologies of fintechs to compete more effectively.
This requires seamless connectivity to support flexible, transparent, and end-to-end processes (such as hire-to-retire, design-to-operate, source-to-pay, and lead-to-cash processes). They will also require data-driven process intelligence so that everyone understands how work actually gets done today, where bottlenecks and inefficiencies are, how long steps take, and more.
Plus, financial services and insurance 2024 will need to make process changes that increase operational effectiveness. Leadership will also need more effective financial insight and risk controls – specifically, end-to-end and granular visibility into how work gets done. After all, You can’t improve and transform what you don’t understand.
Top 5 challenges for financial services and insurance 2024 broken down
Below, we take a closer look at each of the critical challenges in 2024, as well as solutions that can support transformation while maintaining compliance.
Challenge One: ESG requirements
Balancing the needs of the investor, the transition to carbon neutrality, and the advancement of social goals while grappling with regulations and data gaps isn’t easy. No one really knows what global ESG regulations are coming, and unlike previous regulations, they will vary hugely by country and region. Fintechs without an industry-standard back-end system for finance and compliance will struggle in this area.
Challenge 2: Everything-as-a-service (XaaS) adoption
Businesses are moving toward XaaS IT strategies rather than traditional on-premise hardware, software, and data centers. As new offerings are created and supporting processes are operationalized, you will need to determine what makes sense to buy, rather than build, to speed time to market and deliver exceptional customer experiences.
Challenge 3: Meet growing customer expectations
Now, customers expect every interaction to be fast, omnichannel, and hassle-free – and increasingly, embedded into the Web sites where they already are, such as digital marketplaces. They also expect the companies they do business with to innovate more customer-centered loan types, insurance plans, and digital payment services.
Challenge 4: Operate more securely and sustainably
Sustainability is no longer just a footnote in a company’s report – and security is now topof mind to protect brand reputations and intellectual property. Today, banks, financial services companies, and insurance stakeholders are responsible for driving accountability and change and securing processes. Innovating solutions and processes to address climate change, the circular economy, ESG reporting, and emerging security threats can help companies achieve sustainability and safety at scale.
Challenge 5: Cyberthreats
Cyberattacks, data breaches, and other security-related events are increasing as threat surfaces grow and banks and insurance companies adopt more digital technologies to enable new business models, products, and customer experiences. To keep systems and data secure in an ever-changing environment, you will need to continuously evolve cyberthreat monitoring, data controlling, identity and access governance, and privacy management processes and enable powerful, flexible monitoring, detection, and response. Again, this is an area where fintechs without an industry standard back-end system for finance and compliance will struggle
The new horizon: continuous business process transformation
Despite being very different in the risks they pose, the top 5 challenges for financial services and insurance 2024 make one thing clear: companies need to stay resilient and agile. Plus they need to do this while continuously transforming and improving their processes. These process changes will play a vital role in enabling the innovations required to address the trends and disruptions discussed above.
Neglecting the powerful role of process in business transformation is where many firms can get into trouble, because it is an essential framework that drives business change. A weak process culture in an organization means it is difficult to scale and grow, adapt to changes in the market, make customers happy, comply with regulations, or tackle any of the challenges above.
... and the power of people
Success also requires a holistic approach and effective change management approach. Now this isn’t a simple thing to do – in large part because of the complexity of businesses today. Successful transformations address four layers of this complexity in a holistic way:
•Processes, including process management, analysis, modeling, mining, monitoring, governance, and automation
•Operational systems, including business applications, enterprise architecture, application lifecycle management, and system configuration
•Data, including data from operational systems, sentiment or engagement surveys, and advanced analytics
•People, including change management focusing on user behavior and user adoption to ensure that implemented processes are adapted by end users and that change is managed in an understandable, consumable way
Scaling up with the right tools
Scaling without a strong process framework is like scaling up from home cooking to a restaurant without recipes or a menu — the larger the endeavor, the more important documentation becomes.
The right suite of process management tools can ensure banks, insurers and financial services organizations can leverage their advantages in size, institutional maturity and name recognition to fend off digital challengers, while adapting to customer needs and the new opportunities represented by rethinking their business models.
SAP Signavio Process Transformation Suite is a comprehensive, cloud-based process management portfolio, and enables companies to understand, improve, and transform their business processes – quickly and at scale– to become more resilient and sustainable businesses.
It acts as a continuous “X-ray” for how business processes are performed, capturing time-stamped data for each step. It then applies intelligent process mining, reporting, modeling, and monitoring capabilities, enabling you to understand how your processes work today. You can then design, simulate, and optimize new and improved processes (or journeys), roll them out efficiently, and monitor and improve them over time.
Learn More
To learn more about how you can operationalize continuous business process transformation for your business, request a demo of SAP Signavio Process Transformation Suite.