The Digitalization Journey
Digitalization refers to the implementation of digital technologies and digitized data to transform a business model, altering the way the business works and creating new digital revenue streams. It is not the same as digitization, which refers to the conversion of analog to digital, or digital transformation, which refers to the broader impact of digital technologies on businesses and their customers.
The road to digitalization can be difficult but the journey is necessary.
The most significant development in the world of financial services has been the digitalization of operations. Investment firms are no longer reliant on anachronous manual processes to manage their data. Spreadsheets are on their way out, to the delight of many, and are being replaced by automated systems. These systems provide faster, more accurate results but must be integrated into the firm’s operational culture. It can be a tricky transition, but it’s absolutely necessary for firms to keep up with the times.
Like many outdated practices, previous operational methods were laborious and error prone. Collecting files from dissimilar sources, such as databases, FTP sites, web services, and email, was time consuming and often disorganized. On top of that, the files themselves varied widely in format, including Excel, CSV, XML, and PDF. Once the correct files were retrieved and collated, the arduous task of extracting the necessary data within them began, often involving transferring it to spreadsheets. Here the pitfalls of manual procedures were most apparent, as human error was common and often times costly.
To ensure the validity of data, it was necessary to employ further checks on the extraction process. This often involved separate teams to perform quality control on the figures. Hiring in-house was prohibitive, so many firms employed offshore support teams to accomplish the task. This produced a new set of complications, as communication and accountability were common issues. However it was accomplished, double checking the data cost firms further time and money and created greater inefficiencies in their operations.
The emergence of automation relieved a great deal of operational burden for investment firms. Systems were programmed to collate files and extract specific data, saving countless hours of processing time and eliminating the need for manual extraction teams. The systems were also adept at identifying anomalies, reducing the cost and time of quality control. As they grew more sophisticated, processing systems became more customizable and able to extract data from more complex material, adding further value to their firms.
With the time and money saved by automating operations, investment firms are able to concentrate more on the quality of their investments and the satisfaction of their clients. The data required to inform their decision support systems reaches them faster, with greater accuracy, and with less burden on their resources. The more firms invest in efficiency and intelligence, the greater their ability to outdo their competitors. Is your firm up to date?