The top six challenges to growth for fast-growing financial services companies

From implementing new technologies to recruitment and retention of skilled staff, firms need to overcome a number of hurdles before they achieve their expected growth goals

The adoption of new and emerging technologies represents a vast opportunity for financial services firms. However, on the other side of the coin lies risk. After all, pursuing innovation does not come with a guarantee of success. 

For example, the challenges of managing the implementation of distributed ledger technology are numerous. The danger is that mis-steps may derail day-to-day operational performance. 

Our survey reveals that 42% of fast-growing financial services companies feel that the difficulty and cost of digital transformation could be the most significant drag on their performance.

Notably, the same percentage of businesses (42%) cite recruitment and shaping the workforce as a potential drag on their ability to grow. This comes as many businesses face a skills gap, which itself is intrinsically linked to the rapid uptake of new technologies and the expertise required to use them. As businesses continue to change, led by technological advances, so too will the skills and capabilities required for them to operate. However, these are in short supply across the sector and a lack of talent may prevent businesses from capitalising on the potential of new technology.  

Almost a third (31%) of fast-growing financial services companies warn that technological change is one of the two biggest threats to their ability to continue expanding at a rapid pace. This may in part reflect a fear of disruption. Just as businesses are benefitting from new technology, so too are their rivals. This is enabling incumbent firms to compete and new, disruptive entrants to rapidly snap up market share.

“Innovation in Fintech has hindered our growth,” says the Head of Finance at an Irish business in the sector. “These technologies are targeting millennials, who are the next generation of customers, and they are choosing these Fintech products over us.” 

Execution risk is undoubtedly part of the equation too, with firms concerned about their ability to secure their targeted returns on technology investment. 

The fact that technological change is regarded as just as big a threat to growth as regulatory challenges (also 31%) underscores the scale of the challenge. Only political uncertainty (35%) and economic uncertainty (35%) are regarded as more significant potential dampeners on growth, which might be expected given recent instability in Europe, the UK's impending withdrawal from the EU and ongoing trade tensions between the US and China.