Capgemini: Insurers underestimate digital challenge

Research from Capgemini suggests that financial services firms are lagging behind in digital transformation compared with other industry sectors. The sector reports falling confidence in its digital capabilities and a shortage of the leadership and collective vision needed to shape the digital future.

The report examines sentiment on digital and leadership capabilities among bank and insurance executives, comparing it to an equivalent study from 2012. Over 360 executives were surveyed from 213 companies whose combined 2017 revenue represents approximately $1.67 trillion.

CEO of Capgemini’s financial services team, Anirban Bose says the industry has had something of a "reality check", as incumbents now understand the true extent of the digital transformation challenge. "In an environment of growing competition and consumer expectation, the view is very different from a few years ago, and it’s unsurprising that large organisations have become more realistic about their capabilities.

“At the same time, this is a wake-up call for banks and insurers to re-examine their business models. Tomorrow’s operating model is collaborative, innovative and agile. The digital masters we looked at are working with an ecosystem of third-party partners, developing and testing ideas more quickly under an MVP model, and nurturing a culture of bottom-up innovation and experimentation. The majority of financial services firms need to learn from the small pool of genuine innovators in their field,” Bose concludes.

Low confidence in digital and leadership capabilities (Source: Capgemini)

Compared with 2012, a smaller proportion of financial services executives said their organisations had the necessary digital capabilities to succeed – with the confident few falling from 41% to 37%. Breaking this down, although more executives felt they had the required digital capabilities in customer experience (40% compared with 35%), confidence in operations saw a significant drop. Only 33% of executives said they had the necessary operations capabilities, compared with 46% from six years ago.

A shortfall in leadership was also cited, with only 41% of executives saying their organisations have the necessary leadership capabilities, down from 51% in 2012. In some specific areas, confidence in leadership fell significantly, including governance (45% to 32% ), engagement (54% to 33%) and IT-business relationships (63% to 35%).

One area of advantage for insurers was operational automation, with 42% of executives saying they used robotic process automation, against 41% of bankers, and 34% reporting the use of artificial intelligence in operations (compared with 31% of bank executives).

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