Asia Pacific Financial Services Industry organizations’ maturity in adopting innovation has ensured resilience amid the pandemic: Microsoft Study

Apart from relying on innovation, the study also revealed that FSI
organizations are deriving high revenue shares from digital products and
services — this stands at 39% currently and is forecasted to rise to 52% in three
years.  This is much more so for FSI
leaders, where this stands at 47% today and expected to rise to 57% in three
years. 

This is evident in the examples of Indian fintech start-up, Paisabazaar, which introduced a new digital service to digitally overhaul the
personal loan application and approval process amid the pandemic, as well as banking groups like Standard Chartered
Bank and National Australia
Bank which have taken steps toward a cloud-first digital
strategy, to make virtual banking, next-generation banking and payment services
a reality for customers.

Assessing the Innovation Maturity of FSI Organizations

During COVID-19, FSI organizations matured in their approach toward
innovation. This has included the swift pivot of business processes to raise
customer experience and centricity and embracing data management insights to
enhance the speed and quality of decision making. In addition to that, FSI
organizations have integrated cloud technologies to ensure business continuity
during a time of remote working and living.

The study confirmed this, and found that in the span of six months, Asia
Pacific’s FSI organizations have matured in the culture of innovation by 12%,
which indicates an increased ability to drive sustained innovation.

Fig 1: Growth
in Culture of Innovation Maturity (%)

FSI organizations have improved their sentiments on innovation with 61%
of FSI leaders agreeing that innovation is easier since COVID-19. Other FSI
organizations have also embraced a more positive stance, with 52% agreeing with
this statement.

“FSI has maintained its lead, based on our findings,
and was assessed to be the most innovative vertical^[3],
with the highest culture of innovation maturity score, and the highest
proportion of leaders and verticals,” said Michael Araneta, Head of IDC
Financial Insights, Asia Pacific.

“What has been most interesting is that large FSI organizations — the
incumbents — are not necessarily laggards in the space but on occasion, credible
leaders with a mature culture of innovation. On the flipside, the prospects of some
challenger banks are already dimming in some markets, as they have not been
able to address sources of funding despite previously having good prospects
when it came to their services in payments, and lending,” continued Araneta.

Putting a Culture of Innovation into practice — best practices from FSI
Leaders for the new year

The study revealed the best practices that organizations can adopt,
referencing the culture of innovation framework, for progress across people, process,
data, and technology.

Specifically, organizations are encouraged to:

1.    
Leverage platforms
to drive transformation

As FSI organizations continue to forge ahead and integrate technology in
their operations as well as products and services, moving mission-critical
business processes and workloads onto cloud platforms will be key to ensure
that innovation scales. Technology architecture will also need to be
well-integrated to effectively enable transformation, which will be a key
measure of technology Return on Investment (ROI).

2.     Enhance People’s capabilities through enterprise-wide
skilling initiatives

A diverse cross-industry, multicultural and multi-generational talent
will be key in generating new and disruptive ideas. Beyond that, FSIs need to
champion a culture that embraces collaboration, especially with third parties,
to create new value.

3.     Utilize Data for extreme personalization and rapid
value creation

Investing in data will not only enable FSIs to enhance and differentiate
products and services, but with trust, privacy, and security paramount for
their businesses, a well-integrated data architecture will enable the building
of accurate, trusted and secure data sources for reliable decision-making when
it is needed most. This will enable personalization and real-time insights.

4.     Integrate automation within Processes to empower
continuous innovation

Automation will be key especially for business processes that have high
implications to customer experience, to accelerate the enablement of
enterprise-wide collaboration and knowledge sharing. Processes will also need
to account for a way to ensure a formal and systematic approach to driving innovation
and incorporating this within operations for sustained impact.

“As FSIs continue to forge ahead in a post-pandemic world, lasting
transformation will only take place if FSIs alongside investments in
technology, prioritize people and culture, as they are key to ensuring greater
collaboration and continuous transformation. At Microsoft, we are committed to
working with the regional FSI ecosystem to unlock the value of innovation, and
reimagine the industry for the future, together,” concluded Leung.

APPENDIX

Appendix A:
Stages of Culture of Innovation

Appendix
B:  Culture of Innovation Framework

Appendix C: Innovation Capability as a Key Theme in Post-Pandemic
Banking