A risk-averse attitude could hold back financial services organisations and prevent them from fostering a culture of innovation, according to research undertaken by Marketforce. The study was conducted on behalf of Pegasystems Inc. (NASDAQ: PEGA), a provider of strategic applications for customer engagement, and Cognizant (NASDAQ: CTSH), a leading provider of information technology, consulting, and business process outsourcing services.
The study surveyed 500 retail financial services and insurance industry executives across 56 countries to examine the challenges and opportunities they face in a time of rapid technological change. It found that nearly two thirds of all executives (61 per cent) felt their governing board would tolerate a maximum failure rate for innovation pilots of only 30 per cent or less, indicating the existence of a deeply-rooted ‘safety-first’ culture within the industry that could hold back innovation. This is at odds with the fact that 98 per cent of all survey respondents agreed that the most important contributing factor to innovation in retail financial services was the need to move outside of their comfort zone, ‘think beyond traditional boundaries,’ and ‘identify new ways of meeting consumer needs.’
This is particularly troubling considering that many within the financial services industry predict that a storm of digital disruption caused by the arrival of many new, innovative technologies is on the horizon. Fifty per cent of all survey respondents said that digitally-savvy new entrants to the market will be either ‘massively’ or ‘significantly’ disruptive in the next five years, while more than one third (39 per cent) made the same prediction about the Internet of Things. Meanwhile, one quarter of those interviewed said that blockchain would have a ‘significantly’ disruptive effect within the same period.