What Will Digital Transformation Look Like Over The Next Five Years?

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As organizations felt the effects of the global pandemic, digital transformation underwent its own transformation. Here's an example of what digital transformation could look like in the next five years.
To say we live in a disruptive era is an understatement. Following the COVID-19 pandemic, financial institutions (FIs) and other financial service providers underwent an unprompted stress test. Workplaces were broken up and siloed into individual home-based offices, disrupting even the disruptors. These factors presented unprecedented challenges for IT professionals in financial institutions and online payment gateway companies.

While many were thrown into an ad hoc digital transformation — and others found themselves accelerating a transformation already underway — the shift in everyone's path is certain to have long-term ramifications. This raises the question, "How will digital transformation look in the next five years?" The answers are as diverse as they are ambiguous. However, FIs and payment companies must plan for both the expected and the unexpected. If 2020 taught us anything, it's that anything is ...
... possible — and businesses must be prepared.

Post-COVID Digital Transformation Landscape
Prior to the global pandemic, the pace of digital transformation in fintech and financial services was already breaking new ground. The luxury of playing the waiting game has vanished in a post-pandemic world. Those with 18-month to 3-year digital transformation roadmaps have found themselves scaling these initiatives in months or even weeks. FIs and payments companies have a lot on their plates between migrating physical channels online and adjusting the surrounding systems, processes, and procedures.

Fintechs and IT departments within larger financial institutions are looking for ways to improve operational efficiency, analyze large amounts of data, and derive insights from that data, particularly as digital channels become the primary channels for customer engagement.

The central theme of what to expect in 2027 is to be bold with technology. Laggards and those who are slow to adopt new technologies should apply lessons learned from 2020 to forward-thinking initiatives in order to reap the benefits of early adoption. According to a McKinsey report from August, 47 percent of incumbents that use "bold, tightly integrated digital strategies" have seen annual revenue growth of more than 10% over the last three years. Only 30% of those who did not focus on new digital strategies saw the same level of growth.

To understand the future of digital transformation, it is necessary to examine the trends and technologies that are emerging in the worlds of fintech and finance.

Emerging Technologies and a Reimagined Future
Deloitte made some predictions about the world of finance, and these predictions are sure to influence how digital transformation is approached and unfolds over the next five years.
Touchless Transactions Rule via Automation & Blockchain
Emerging technologies such as automation, cloud-based ERP, automation, and artificial intelligence (AI) innovation will make processes much simpler, freeing up human resources to add value. This does not imply that human roles in fintech and finance will vanish entirely; rather, operational workforces may become leaner as humans transition into more business-oriented and specialized roles within financial services.

Customers Will Lean Into Self-Service
While many consumers and businesses still prefer personalized engagement and hand-holding when it comes to payments and other financial products, there are many who would prefer to handle matters themselves. People will increasingly bank, make payments through the best online payment gateway, get support, and use digital financial products to manage their own finances as more information becomes available via smartphones and voice assistants.

Digital solutions must rise to the occasion by providing automated activities as well as easily accessible, intuitive, on-demand data and insights.

Data Will Still Be a Mess
Many financial services organizations continue to struggle with data alignment and integration. Without this, they will be unable to gain holistic and important insights about their customers and business, implying that they will not be able to fully realize the benefits of digital transformation.

The New Normal for Financial Services Digital Transformation
To meet the new needs of customers living in a new normal, digital adoption will be a top priority. McKinsey recommends several areas of opportunity for digital transformation professionals to succeed in the newly transformed landscape.

Experiment. Testing and learning are the quickest ways to develop innovative processes and solutions. Experimentation was often regarded as an unpalatable risk in pre-Covid times. The issue is that there is no way to make long-term gains without taking some risk. Using the pandemic's disruption to make these tests and experiments more appealing to stakeholders is one option.

Maintain the momentum of productivity. The shift to remote workforces has compelled many organizations to look for novel ways to boost efficiency through automation. This should continue even after (or if) people return to their offices. Continuing to invest in automation and predictive analytics will yield long-term benefits.

Review data frequently. Data sources should be reviewed as frequently as possible to stay on top of changing customer needs and gain useful business insights. Secure file-sharing technologies can also be used to distribute this vital information and broaden data reviews to include all key stakeholders.

The disruption is unavoidable, and FIs and financial service providers will soon discover whether their organization and infrastructure are up to the task. As everyone adjusts to the new normal, customer preferences will remain fluid, and a solid digital transformation roadmap will be critical to ensuring that organizations can deliver products and solutions that meet these preferences.