Broadridge's Next-Gen Technology Adoption Survey indicated that firms also reported a range of strategic benefits from prior investments in emerging technologies, including accelerated time to market, better decision-making and improved risk management.
Broadridge developed The ABCDs of Innovation Maturity Framework for the study to categorize firms as either a beginner, implementer, advancer or leader in next-gen technology adoption. Next-gen technology maturity was based on progress made in implementing these technologies and reported effectiveness in driving business performance.
Over the next two years, firms worldwide reported plans to increase the share of their overall IT budgets spent on next-gen technologies from 11.8 percent to 15.7 percent on average, an increase of 33 percent.
"In a remote and evolving business environment, investments in AI, blockchain, the Cloud and digital technologies will continue to drive long-term growth and have already become essential to both day-to-day operations and larger strategic shifts around mutualization, resiliency and digital transformation," said Chris Perry, president of Broadridge. "Broadridge's inaugural study reveals that for financial services firms, investments in next-generation technologies directly lead to a range of strategic benefits, in addition to increased revenues and profits and decreased costs. Put simply, those who are investing in technology with a clear strategy for accelerating adoption are getting the most value."
The study found leaders, those firms with multiple next-gen technology use cases, which are moving toward enterprise-wide adoption and driving major performance gains and business transformation, are spending a greater share of their overall IT budget on emerging technologies versus non-leaders. They also report improved employee productivity, more effective risk management and compliance, faster creation of new/enhanced products and stronger reputations as a result of their investments.
The study reveals that while spend is increasing across the board, firms that are Leaders in next-gen technology adoption plan to increase this allocation to nearly 20 percent of their overall IT spend by 2023. The study showed that sell-side firms are spending a greater proportion of their IT budgets on next-gen technologies than buy-side firms and will continue to do so over the next two years.
The cloud: underpinning firm's strategic transformation
Broadridge's Next-Gen Technology Adoption study finds that organizations are most reliant upon Cloud technologies for improving their business activities and capabilities, followed by digital, AI and blockchain. According to the firms surveyed, the Cloud is used most often within areas such as sales and trading (68 percent and 54 percent, respectively), product development (68 percent), human resources (67 percent), customer management (66 percent) and IT infrastructure (65 percent), making it a beneficial tool for firms continuing to operate in a remote environment.
The study also found that digital capabilities are used most often within areas such as strategic planning (61 percent) and marketing (51 percent), and AI capabilities are used most often for security (39 percent) and portfolio and investment management (35 percent).
According to the study, firms plan to increase investments across all of the next-gen technologies in the next two years with 60% saying they will increase spending on the Cloud, followed by AI (56 percent), then digital (53 percent) and blockchain (53 percent).
In terms of return on investment, those who were identified as Leaders said they had achieved a 2.55 percent profit margin increase over the prior year through the use of emerging technologies. This compared with firms that were identified as Non-leaders, which reported a smaller 1.25 percent profit margin increase. Leaders also reported a 4.04 percent increase in revenue through the use of emerging technologies, compared to a 1.74 percent increase in revenue for Non-leaders, indicating that leading firms are more likely to create new revenue streams through these technologies. Cost reductions were relatively consistent among firms at an average of -2.72 percent.
Leveraging next-gen technologies is part of Broadridge's investment in The ABCDs of Innovation – AI, blockchain, the Cloud and digital – helping clients understand and apply these technologies by simplifying the complex to help them be ready for next.
View the full Broadridge Next-Gen Technology Adoption survey report