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Practice Management > Building Your Business

Financial Services Leaders Fail to Consider Tech as a Disruptor

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Vuealta CEO Ian Stone Vuealta CEO Ian Stone

Advisors are well aware of the disruptive impact that technology has had and will have on their businesses, such as cloud-based software, big data and the competitive threats posed by online advice providers. However, a new survey shows that leaders of major financial services firms are far more worried about staying compliant and protecting against cybersecurity threats than they are about the impact to their firms of continued technology disruption.

That’s the headline finding of an independent survey of 500 financial services industry decision makers in the U.S. and the U.K. sponsored by Vuealta, which provides cloud-based planning software for enterprises, including asset management firms.

The survey, conducted by the independent research firm Censuswide, asked respondents to rank the issues they believe will be most disruptive to their businesses over the next five years, and how they plan to address those issues.

Their responses as to the biggest issues they’ll face:

  1. Cybersecurity—42%
  2. Political changes—39%
  3. Regulation and compliance—36%
  4. Data management and privacy—31%
  5. Planning and uncertainty in the market—20%
  6. Disruption from technology—16%

The concern about the impact of political change on their businesses was, as you might expect, much more marked among U.K. respondents than among those from the U.S.: 54% of British respondents said they were worried about political change, compared to 24% of American respondents.

In a foreword to a report on the study—The Future of Financial Services—Vuealta CEO Ian Stone writes that ten years after the disruption highlighted by the market freefall of 2008-2009, the financial services industry is “far from settled,” and that the next five years are likely to be “just as dynamic,” though also replete with opportunities for firms that can “navigate the period well.” However, those businesses “hamstrung by siloed and outdated legacy solutions” may not fare as well, Stone warns.

Here’s a related disconnect between what we know about the industry and what those decision makers take too lightly. The study notes that lower barriers to entry have allowed fintech startups to gain financing and industry market share against larger, more established technology providers. However, the survey found that only 11% of respondents saw these fintech startups as causes for concern for their businesses over the next five years.

Startups are not the only competitive threat that businesses face, the survey found: the same percentage of respondents, 11%, listed competition from established businesses as threat over the next five years.

A final disconnect found in the survey might be the most instructive finding for any corporate decision maker. When respondents were asked whether they had plans in place to address what they saw as their biggest issues in the next five years, the great majority said they did have such plans: 78% for both cybersecurity and regulation and compliance, for instance. More broadly, 86% of U.S. and U.K. respondents said their firms’ leadership teams were “equipped to succeed” against the market challenges they will face (with 92% of U.S. respondents expressing confidence).

The study found that this confidence may be unfounded, however, since only 50% of respondents said that in their businesses all the departments in their firms work “from one tool which is updated in real time.”

More than a third of respondents (35%) said their firms keep planning siloed within departments and 38% use “multiple documents for different departments which are then used to try and create one plan for the business.”

A final “worrying,” finding, said Vuealta, is that almost a quarter (24%) of respondents said their firm share one spreadsheet across business units for planning purposes.

The survey was conducted online in December 2018 with business decision makers at the director and senior executive levels among a broad cross-section of financial services and fintech companies; 250 of each in the U.S. and U.K. markets.


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