Can the sector turn the tide on recent challenges, and leverage technology to boost confidence amongst stakeholders over the next 12 months?
by Fred Heritage
As the past few years have shown, trying to predict the future can easily prove to be a pointless exercise. Time and again the pandemic has reared its head to slow economic recovery, halt progress, and force companies and individuals to put their best laid plans on ice. However, as another year approaches, it’s still helpful to look ahead to some of the trends that we either expect, hope, or fear may occur.
Feel the churn
The so-called ‘Great Resignation’ has been an unexpected result of Covid-19, with the cumulative effects of burnout and remote working thought to have encouraged swathes of employees to leave their jobs after reconsidering what they want from their careers, and lives.
It’s a trend that’s intensified throughout 2021 and shows little sign of slowing. In September, a survey of 6,000 workers carried out by the recruitment firm Randstad UK found that 69% felt confident about moving to a new role in the next couple of months, with 24% of them planning to change jobs within three to six months.
Writing in Investment Week, Sai Perry, head of solutions for Europe and Asia Pacific at Clearwater Analytics, says financial services firms are continuing to feel the impact of the Great Resignation, and the sector sees the trend continuing in 2022, resulting in a fierce war for talent amongst employers. “We are seeing huge changes in the volume of resignations,” he writes.
“This has been driven by increased workloads and burnout, as well as the ‘post-pandemic' reprioritisation of employees. Many professionals are looking for roles with more work-life balance, opportunity, and that can afford them the flexibility experienced at the height of lockdown.”
Perry predicts that with workforces reduced, or in flux, investors are more likely to demand greater adoption of analytical and reporting technology. “Utilising this software to analyse their portfolios and remove tedious manual procedures will free up the workforce to focus on more complex and revenue-driving strategic tasks,” he adds.
Growing ESG standards
Climate change awareness grew in 2021, with COP26 being held in Glasgow later in the year. With terms like ‘ESG’ (Environmental, Social and Corporate Governance) and ‘sustainability’ now part of the shared lexicon of global business, 2022 could see the introduction of “explicit ratings and increased standards” across the ESG, sustainability, and insurance sectors, writes Perry. “Alongside this, transparency of reporting will become more important than ever” to address the lack of data available, he writes.
This is echoed in a Finextra article by Doug Craddock, senior principal consultant, FICO, who expects “to see an increased focus on bringing ESG data into more granular lending and investment decisions” in 2022. This will be dependent on the sector’s capacity to innovate in how ‘alternative’ data is used, such as including property energy ratings data in mortgage valuations, or CO2 emissions data for small businesses.
Digital adoption takes flight
The pandemic has served to increase companies’ impetus to pursue digital transformation strategies.
In an article for The Financial Brand, co-publisher Jim Marous writes, “Banks and credit unions have accelerated their digital banking transformation efforts. Much of the impetus is because the fintech and big tech competitive landscape continues to expand, offering simple (online) engagement and seamless experiences.”
However, with many firms still getting to grips with digitalisation, the adoption and pursuit of digital strategies is a trend that’s likely to grow further in 2022 as financial services firms continue to adapt to the ‘new normal’. In 2021, “six in ten institutions surveyed indicated that digital transformation efforts were only partially deployed, with less than half indicating measurable success with their efforts,” writes Marous.