By Chris Labrey, Econocom UK & Ireland, MD
Currently, the UK economic climate is uncertain as the political landscape for the future remains unclear. However, the financial sector is a resilient one and has so far emerged largely unscathed from the build-up to Brexit, as a recent Reuters survey shows.
Yet, as the final Brexit outcome remains unclear, this may not be the case for long. Currently London has the largest number of banks and the largest commercial insurance market in the European Union (EU) and remains the European centre of international finance. This forms a huge part of the UK economy; it accounts for over 2m jobs and £66bn of tax payments in the UK. Understandably the sector remains cautious; in a worst case scenario, Oliver Wyman predicts as many as 75,000 jobs could go, while the London Stock Exchange suggested two years ago that figure could be as high as 232,000.
And, financial firms and markets are more heavily regulated and supervised than most. During these uncertain times, most firms are likely to be evaluating their exposure and strategy in terms of regulation, operations, and distribution as well as the impact of falling exchange rates and communicating to clients within the EU. Investments in big ticket items are likely to sit on the back burner for now.
So, significant IT investments may not be top of the agenda at the moment. However, just remaining compliant and agile enough to ride through the uncertainties requires a certain amount of investment. It becomes increasingly important to understand how and where client data is stored and how it is protected. Doing this requires resilient hardware and software platforms. Legacy systems may need to be upgraded but this can seem an impossible task without a large increase to IT budgets.
However, using a subscription or as-a-service model allows financial organisations to spread the technology cost burden associated with a capital spend, enabling them to implement the best technology to ensure both compliance and agility. A model such as this not only spreads the costs of an investment over the term of the agreement, it also protects against the unpredictable costs relating to device ownership such as maintenance, damages and breakdowns. Warranty services can also be built into the model meaning that assets can be managed, replaced and disposed of in a safe and compliant manner as needed. The model also protects against any unexpected large purchases. If additional IT assets are required, then they can be added to the terms of the agreement with no upfront outlay.
This may be a change from the usual way in which financial organisations fund IT investments. However, it is one that is already widely adopted by employees to fund their cars and mobile phones. Like cars, technology also has a shelf-life, and it can become obsolete very quickly. Streamlining the payment process throughout its lifecycle not only removes the risks associated with upfront investments, but it can also save time and money.
Indeed replacing, upgrading or installing new technology assets can be time-consuming, challenging and costly. Budget aside, the main concerns in the financial industry centre around data privacy and security, and the absence of the right in-house skills and expertise. However, working with a trusted digital services partner and using a subscription or as-a-service funding model can go a long way to overcoming these challenges.
Technology is also a tool for growth and competitive advantage. Digital transformation is one area that is impacting all areas of business. Certainly, consumers, as well as employees, are expecting a more immersive and flexible way of working. For example, Samsung describes bank branches of the future as advice-driven financial centres incorporating existing technologies such as smartphones, tablets, self-serve kiosks and wearables, as well as newer technologies such as virtual reality and virtual desktop infrastructure.
So, although the political backdrop remains unsettled, technology continues to move forward with certainty. Adopting a digital transformation strategy can realise benefits in terms of both business agility and competitive advantage. For instance, according to a study by BDO, nine out of ten financial institutions say they either have a digital transformation strategy or are developing one. Subscription and as-a-service models help organisations invest in powerful technologies to realise their digital future. without putting a strain on capital expenditure.
It may prove difficult to predict the future political climate as well as its impact on the UK finance market. But, organisations cannot afford to stand still when it comes to technology. Subscription and as-a-service models allow them to move forward without risk.