Broadridge report finds 27% of firms’ overall IT budget goes to digital transformation
“A new chapter in digital transformation is emerging. In our work with clients across the financial services industry we see leading firms are already reaping the benefits from digitalization and the use of technologies such as AI and blockchain/DLT, as they adapt to economic headwinds and new competitive dynamics”
A majority of financial services firms now view digital transformation as essential to their business and are doubling down on their financial commitments as they anticipate further widescale adoption of new and more powerful tech, according to the 2023 Digital Transformation and Next-Gen Tech Study by Broadridge Financial Solutions.
According to the survey, firms now spend 27% of their overall IT budget on digital transformation – a 16 percentage point increase versus the same 2021 study.
The study also revealed a new chapter in digital transformation is emerging – adapting to a digital world and embracing the potential of new tech now underpins all major core business strategies.
Some other notable findings from the survey include:
- 80% of survey respondents say the industry will have modernized its tech stack before we land a human on Mars
- 60% of survey respondents agree that in 10 years, blockchain and DLT will become the core of financial markets
- 71% of survey respondents said artificial intelligence (AI) is now significantly changing the way they work, and 60% agree that within ten years, blockchain and distributed ledger technology (DLT) will become the core of financial markets infrastructure.
Study categorized firms as digital “Leaders” versus “Non-leaders”
Tim Gokey, Chief Executive Officer of Broadridge, said: “A new chapter in digital transformation is emerging. In our work with clients across the financial services industry we see leading firms are already reaping the benefits from digitalization and the use of technologies such as AI and blockchain/DLT, as they adapt to economic headwinds and new competitive dynamics. Firms are now looking ahead to what their customers will require five to ten years from now, and how technology can help them to deliver that vision.”
The study categorized firms as digital “Leaders” versus “Non-leaders”, based on how advanced they are in 10 of the most essential aspects of digital transformation. These aspects include their innovation culture, use of emerging technologies, seamless customer experience (CX), internal skill-building, and adoption of security and privacy protocols.
Broadridge’s 2023 study, which surveyed 500 C-suite executives across the buy side and sell side globally, found that more than half of digital Leaders (53%) view higher revenue growth as one of the most important benefits of digital transformation.
Yes for AI, data, blockchain. “Wait and see” for metaverse
Investment in next-gen technology is now understood to be essential in preparing for the future. Fifty-seven percent of firms agree that falling behind in digital transformation will hurt their ability to attract and retain talent, further impeding their ability to unlock new and innovative tools and platforms.
Regarding AI, data analytics, and real-world applications for blockchain and DLT, 80% of survey respondents believe the industry will have modernized its tech stack before early 2030. More nascent technologies are expected to make significant progress as well as leaders plan to increase investment in quantum computing by 16% on average over the next 2 years. Metaverse, however, is now currently under a “wait and see” approach.
Online banks, brokers, robo-advisors prioritize transformation
The study examined the differences between traditional financial firms and Digital Natives, defined as online banks, brokers, robo-advisors, and digital wealth management firms established in the last 15 years and not part of an incumbent firm.
The report found Digital Natives are more likely than traditional firms to place transformation as their most important strategic priority (78% versus 51%), marked by greater increases in digital investments.
Seventeen percent of digital natives also report being at the advanced stages of deploying AI, blockchain, cloud, and other emerging technologies, versus 7% of traditional firms.