A new study “Unlocking opportunity in challenging times: innovation in European Financial Services” was released this week by Objectway, an international wealth, banking and asset management software and service provider.

A study commissioned by Objectway shows that over half of European banks and wealth managers believe that they must become increasingly digital and tackle digitisation projects in the next two years in order to remain competitive. 

A clear majority, almost 70 per cent, also believe that ever-increasing regulatory pressure is forcing them to continuously question and adapt their business model, the study reveals. "Investor protection and environmental concerns are increasingly becoming priorities for regulators in Europe," Luigi Marciano, founder and CEO of Objectway, added. 

In light of the recent financial crisis and the "bank run" on private banks in the US, he said that the call for stricter international regulation is inevitable. While the extent of the changes is uncertain, they are expected to create a number of additional costs for administration and legal departments. Therefore, a shift to more efficient, digital and technologically advanced business processes will be necessary, the firm said. 

The study shows that banks and wealth managers increased their investments in technology by 8.5 per cent last year and will probably increase them by a further 9.2 per cent by the end of the year. The aim is mainly to improve the customer experience for increasingly demanding digital technologies, optimising processes and business procedures, and continuing to develop the range of products and services, the firm continued. 

Almost 40 per cent of respondents cited customer experience as the most important priority. "Increased competition between players, the challenge of digitalisation and the ability to then guarantee the results of investments are the biggest challenges," Marciano said. Nearly 50 per cent cited artificial intelligence (AI) and machine learning as the biggest changes in customer experience strategies over the next two years, followed by expanding the number of customer-facing channels (35.6 per cent).

When it comes to innovation in terms of offering, ESG investments take the absolute lion's share, the firm continued. Across the industry, 84.5 per cent plan to add or expand ESG investment options in the next three years – led by private wealth at 97.2 per cent. "Sustainable investing is on the rise among high net worth individuals in Europe and globally, as awareness of positive social and environmental impact combined with improved financial returns grows," Marciano said. 

Objectway clients include over 200 banks, wealth managers, asset managers and insurers in more than 15 countries.