More of us are going digital to take control of our health and finances – from tracking daily physical activity and food intake to online banking and mortgage calculators. This consumer demand, combined with the operational and competitive changes businesses are going through as a result of new technologies, is creating huge opportunities – and challenges – for established financial services and healthcare companies.
The financial services and healthcare sectors have a lot in common – they provide vital services, they are highly regulated, and they are subject to heightened scrutiny when it comes to the privacy and data security of their customers. However, when it comes to efforts to transform their businesses to compete in the digital era – these two industries are on quite different paths in the Asia region.
Recent research commissioned by Telstra and conducted by the Economist Intelligence Unit (EIU) looked at which countries in the Asia-Pacific region are best positioned when it comes to having the necessary building blocks in place for business success in a connected world. The survey also compared six different industries when it comes to their approach to digital transformation – financial services, healthcare, logistics, media, manufacturing, and professional services.
Across all countries the financial services industry leads the way when it comes to having commitment to driving and embracing change through digital transformation, while healthcare organisations were the least likely to see the benefits of digital transformation. Here are some insights from the report to help explain why.
A leader versus follower
Almost a third of financial services organisations consider themselves responsible for digital transformation – the highest of any industry analysed by the EIU. This compares with around 18 per cent in healthcare.
In part, this mentality has been forced on the financial sector thanks to the success of fintech disrupters, new technology led companies that are now competing with incumbent financial services companies in areas like e-commerce, services marketplaces and blockchain. But it also probably reflects the industry being more readily adaptable to changing their business models, as well as consumers being more willing to experiment with new services than they may be when it comes to healthcare.
Differing views on the benefits of digital transformation
Overall, the financial services industry has more positive views on the benefits digital transformation can deliver for their business. In the research, the two biggest benefits cited by financial services companies were that digital transformation would deliver more innovative ideas for new products and services, as well as an expanded reach into new markets. This compared with the healthcare industry, which was more focused on making what they do today more efficient, with organisations in health citing greater cost savings and productivity improvements as the top two benefits they were seeking from technology.
Customers are using online channels to buy products, access services and interact with businesses more often when it comes to financial services than they are with healthcare. For example, 64 per cent of financial services companies in the Asia-Pacific region deliver their services online compared to less than half of healthcare organisations, while half as many healthcare organisations interact with customers via live chat compared to the financial services sector.
Varying degrees of success from previous transformation efforts
The healthcare industry’s results may well be the result of previous digitisation efforts not meeting expectations. Transformational change in a sector as complex and sensitive as healthcare is always very difficult and one third of healthcare organisations interviewed said their investments in digital transformation have not yet proven their value – the lowest of all industries.
In short, the results show each industry will experience digital disruption differently depending on the type of services they provide, the way consumers use their products and the rules and regulations that apply. This research shows that so far the financial services industry has realised greater benefits from its digitisation efforts in Asia. This does not mean the health sector is not pursing change, clearly efforts to digitise healthcare are well underway, but it is clear there is still a long way to go in this sector in terms of deriving the benefits of digital technology to the same extent as other industries, including financial services.
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