The global
innovation report
Creating Advantage In Uncertainty
Creating Advantage
In Uncertainty
The current business environment is becoming increasingly difficult for many organizations, making risk mitigation more important than ever.
But how are businesses addressing the risks they face? What significance does innovation and new technology hold?
We surveyed more than 2,000 senior executives globally to discover their strategies for managing risks – and how innovation and new technologies can give them a competitive edge.
Every advance in technology creates new opportunities to innovate while simultaneously introducing new threats. While nearly half of executives believe their risk has increased, we should expect that number to climb as the pace of technological innovation accelerates. It's all about balancing risk and reward through strong governance frameworks as we look to reap the benefits of emerging technologies.
Generative AI is a great example. The promises of improved decisioning, productivity and hyperpersonalization of services must be balanced against the increased potential for fraud, IP exposure and data privacy. Without robust controls around proposed use cases, the consequences of generative AI can quickly overshadow the progress it will deliver.
Melissa Cullen, Banking and Decisions Solutions Division Executive, FIS
RISK AND REWARD
Business leaders say their organizations are exposed to more risk now than in the past, but they’re confident in their ability to overcome challenges and threats.
Given the current economic situation and difficult hiring markets around the world, financial and strategic risks are playing on leaders' minds. Business leaders are taking action by working with staff and consultants to implement new technology that can improve efficiency and mitigate risk.
0
%
of executives say they face more risk now than in the past
But making the wrong decisions can have a larger impact on an organization's reputation, operations and bottom line.
WHAT'S THE RISK?
Rising interest rates, inflation, ongoing supply and staffing shortages, and increasingly fragmented markets with growing competition all propel financial and strategic risk to the top of the list of concerns across all respondents.
Question: When it comes to your business, what types of risk are you most concerned about?
Blank
Any of these
%
%
%
%
%
%
%
%
%
Financial
%
%
%
%
%
%
%
%
%
Strategic
%
%
%
%
%
%
%
%
%
Legal and regulatory
%
%
%
%
%
%
%
%
%
Environmental and transition
%
%
%
%
%
%
%
%
%
Operational
%
%
%
%
%
%
%
%
%
Reputational
%
%
%
%
%
%
%
%
%
HIGH RISK AND HIGH OPTIMISM
While many organizations face increased risk, almost all (93%) are confident they will be able to manage and overcome their current challenges.
Question: How confident are you in your company’s ability to manage or overcome risks to the business?
Somewhat confident
Very confident
ARE EARLY ADOPTERS AT AN ADVANTAGE?
Early adopters of technology – those comfortable taking risks and among the first to introduce new technologies to their organizations – were more likely to agree that they face less risk now than in the past (20% versus the average 16%).
0
%
of executives at early adopting companies are confident that their organizations would be able to overcome and manage risks effectively, compared to 44% across all organizations
BUSINESSES ARE PROACTIVE
Regardless of their technology adoption strategy, executives are not resting on their laurels when it comes to addressing their most concerning risks.
One of the most common solutions for reducing risk is to assign existing staff to take responsibility. This is the favored approached to addressing almost all variations of risk across all organizations because it’s the fastest and most cost-effective option, although talent shortages may also be a deciding factor.
MULTIPLE STRATEGIES FOR THE
TOP-RANKED RISK
Question: Again, thinking about financial risk, what steps has your company taken or intends to take to address this risk?
Blank
Assigned existing staff
%
%
%
%
%
%
%
%
%
%
Hired additional staff
%
%
%
%
%
%
%
%
%
%
Hired outside consultants
%
%
%
%
%
%
%
%
%
%
Adopted new technology
%
%
%
%
%
%
%
%
%
%
Acquired/partnered with other business
%
%
%
%
%
%
%
%
%
%
Restructured business model
%
%
%
%
%
%
%
%
%
%
*Percentages are the proportion of those experiencing the risk and have taken this step to mitigate it
Risk is a wide-ranging concern. It’s also fast-changing and multifaceted. It includes financial risk, such as rising interest rates; operational risk, say from sophisticated and well-equipped cybercriminals; legal and regulatory risk from ever-changing rules; and climate risk, which is rapidly rising to the top of executives’ agendas. And no matter the sector, the impact of getting any of these wrong is huge.
Early adopters are more confident, and no wonder. Whether it’s next-generation AI tools or regulatory technology, deploying the latest technology is the best way to protect the business from high levels of risk. Couple that with internal ownership of risk and companies can be more confident even as they face a range of ever-changing challenges.
Tony Warren, Global Strategy Division Executive, Capital Markets, FIS
INNOVATION IS CRITICAL FOR MITIGATING RISK
Innovation – the conception, development and delivery of new products, services, processes and business models – plays a significant role in helping businesses address risk. Many executives look to innovation to help protect their organizations, gain a competitive edge and respond to the growing scrutiny of environmental, social and governance (ESG) activity.
0
%
of executives agree that innovation plays a role in managing the risks their organization faces
While some businesses are taking the necessary steps to achieve these goals, others find it difficult because they do not have the budget or talent needed to progress their plans at the desired pace or scale.
INNOVATION TAKES MANY FORMS
There is a wide range of areas in which organizations can mobilize innovation, each providing its own lever for driving change and reducing risk.
0
%
of organizations will build or adopt technology and system innovations to mitigate risk in the next 12 months
INNOVATING FOR A COMPETITIVE EDGE
More than 55% of the senior executives surveyed cite "becoming more competitive" as a motivating factor for their innovation strategies, but goals vary by sector.
Question: Revisiting the topic of financial risk, what do you expect to accomplish through your efforts to embrace innovation?
Financial services firms
Nonfinancial services firms
Blank
Become more competitive
%
%
%
%
%
%
%
Protect business
%
%
%
%
%
%
%
Improve profitability
%
%
%
%
%
%
%
Grow revenue
%
%
%
%
%
%
%
Deepen customer relationships
%
%
%
%
%
%
%
Drive sustainability
%
%
%
%
%
%
%
Improve internal culture
%
%
%
%
%
%
%
Blank
Become more competitive
%
%
%
%
%
%
%
Protect business
%
%
%
%
%
%
%
Improve profitability
%
%
%
%
%
%
%
Grow revenue
%
%
%
%
%
%
%
Deepen customer relationships
%
%
%
%
%
%
%
Drive sustainability
%
%
%
%
%
%
%
Improve internal culture
%
%
%
%
%
%
%
GROWING ESG INTEREST DRIVES INNOVATION
Companies are gaining greater awareness of the risks related to climate change and the evolving consumer sentiment toward ESG strategies.
0
%
of organizations have already been impacted by environmental and transitional risk, and 33% expect to be affected in the next 12 months
BUDGET IS A BLOCKER
Despite the importance of innovation, some firms are being held back.
0
%
of executives admit there is limited budget or financial resources for investing in innovation
But there are other concerns, as well. Even early adopters report above-average resistance among employees (53%) and management (48%).
Increasing pressure from stakeholders around ESG is guiding how many organizations prioritize risks and pursue innovation. With new reporting regulations being introduced this year by the Securities and Exchange Commission and International Financial Reporting Standards, companies will have to report on the financial impact of sustainability and climate-related risks and opportunities, which will likely spur investment in product, service and operating model innovation to deliver the most visible and tangible results.
Stephen Vitoria, Climate Risk Manager, FIS
NEW TECHNOLOGIES
DRIVE CHANGE
Emerging technologies are one of the primary tools businesses can use to increase competitiveness and protection. Yet, making them work effectively requires resources and a certain level of skill.
Businesses must balance their return on investment and evaluate the associated costs and time needed to establish effectiveness alongside the potential benefits.
TECHNOLOGY ADOPTION VARIES
Those in the financial services sector stand out from their nonfinancial services counterparts for a greater adoption of every technology included in the study, with the sole exception of cloud computing.
Question: Given this context, which of the following best describes your company’s position on adopting these technologies?
Firms have adopted a range of new technologies
Financial services respondents stand out from their counterparts for a great adoption.
Financial services firms
Nonfinancial services firms
0
%
are using cloud
computing
0
%
are using
regulatory
technology
0
%
are using digital
technologies to
improve the CX
0
%
are using as
a service
0
%
are using open banking
0
%
are using artificial intelligence
0
%
are using
embedded finance
0
%
are using
generative AI
0
%
are using cloud
computing
0
%
are using
regulatory
technology
0
%
are using digital
technologies to
improve the CX
0
%
are using as
a service
0
%
are using open banking
0
%
are using artificial intelligence
0
%
are using
embedded finance
0
%
are using
generative AI
FIRMS VIEW TECHNOLOGY POSITIVELY
When dealing with more established technologies, like cloud computing and open APIs, business leaders feel more comfortable incorporating them. But executives across the board see the opportunities that new technologies bring, and their appetite for investigating them is high. They see particular promise in digital technologies to improve the customer experience and cloud computing.
Question: How would you describe each of the following technologies in regard to your business?
GENERATIVE AI HAS THE MOST GROWTH POTENTIAL
Although generative AI currently has the lowest adoption rate, it has the highest level of planned usage. Respondents are ready to seize the opportunities generative AI brings.
Question: Which of these options most accurately represents your company’s stance on utilizing the listed technologies?
A MEANS OF MITIGATING RISK?
Respondents view all technologies as a means to mitigate risk, but not to the same extent or degree.
Question: You mentioned that you currently use or intend to use one of the technologies we asked about. Do you view this as a strategy to lessen the risks your business faces?
Financial services firms are most likely to say regulatory technology mitigates macro risks. Their peers choose cloud computing and digital technologies to improve the customer experience.
Financial services firms
Nonfinancial services firms
0
%
see cloud computing as a means of mitigating risks
0
%
see regulatory technology as a means of mitigating risks
0
%
see digital technologies to improve the CX as a means of mitigating risks
0
%
see artificial intelligence as a means of mitigating risks
0
%
see as a service as a means of mitigating risks
0
%
see open banking as a means of mitigating risks
0
%
see generative AI as a means of mitigating risks
0
%
see embedded finance as a means of mitigating risks
0
%
see cloud computing as a means of mitigating risks
0
%
see regulatory technology as a means of mitigating risks
0
%
see digital technologies to improve the CX as a means of mitigating risks
0
%
see artificial intelligence as a means of mitigating risks
0
%
see as a service as a means of mitigating risks
0
%
see open banking as a means of mitigating risks
0
%
see generative AI as a means of mitigating risks
0
%
see embedded finance as a means of mitigating risks
*Percentages are the proportion of those saying they are currently using or intend to use the technology
MORE THAN JUST RISK
Mitigating risk isn't the only benefit of these technologies. Executives see technology as helping them become more competitive – just like innovation. The only exceptions are cloud computing and regtech, which are both seen as methods to ensure business security. The climate is a motivating factor, too.
Question: What do you aim to achieve through your plans to embrace each technology?
Financial services firms
Nonfinancial services firms
Blank
Become more competitive
%
%
%
%
%
%
%
%
Improve profitability
%
%
%
%
%
%
%
%
Protect business
%
%
%
%
%
%
%
%
Grow revenue
%
%
%
%
%
%
%
%
Deepen customer relationships
%
%
%
%
%
%
%
%
Drive sustainability
%
%
%
%
%
%
%
%
Improve internal culture
%
%
%
%
%
%
%
%
Blank
Become more competitive
%
%
%
%
%
%
%
%
Improve profitability
%
%
%
%
%
%
%
%
Protect business
%
%
%
%
%
%
%
%
Grow revenue
%
%
%
%
%
%
%
%
Deepen customer relationships
%
%
%
%
%
%
%
%
Drive sustainability
%
%
%
%
%
%
%
%
Improve internal culture
%
%
%
%
%
%
%
%
Embracing these emerging technologies could revolutionize the business world. The potential for enhanced efficiency, personalized experience and sustainability is immense. These technologies are also important levers for mitigating a variety of risks – making them critical to fostering trust and long-term growth.
John Avery, Vice President, FIS
FINDING THE ADVANTAGE
Shifting economies and increased competition are just some of the factors putting businesses in difficult positions. Many face more risks now than they have in the past. However, most feel that they will be able to overcome these challenges due to the variety of innovative strategies and new technologies.
Executives believe that these strategies will give them a competitive edge, protect their businesses, improve their sustainability credentials and demonstrate their investment in innovation. But a lack of in-house knowledge and budget could leave many vulnerable.
How can you move past uncertainty and create an advantage with innovation? Start with these six steps:
1
Systematically assess the short- and long-term impact of macro risks on your business.
2
Identify which innovation strategies can mitigate the risks not only to your technology infrastructure, but also your business model, processes and customer experience.
3
Consider how the latest technologies can support your innovation strategy, the best way to fully leverage them and how partnering could help you achieve your goals faster.
4
Understand where resistance to innovation is coming from and implement educational or operational programs to clear roadblocks.
5
Determine where you need to augment internal knowledge and skills, and whether that requires training existing staff, hiring new employees or partnering for expertise, especially in relation to the evolving regulatory landscape.
6
Stay close to your customers. If you build their preferences into your strategy, both now and in the future, then your decisions will always be client-centric.
EMBRACING INNOVATION
TO KEEP PACE
Economic and regulatory environments continue to change fast. But no matter the climate, innovation and the latest technologies will be key to remaining competitive and protecting your business. Action now is likely to pay dividends tomorrow.
Get the whole picture, including breakdowns by industry sector. Download the full Global Innovation Report today.
Get the report
Close
To see the rest of the Global Innovation Report, please fill out this form
The global
innovation report
CREATING ADVANTAGE IN UNCERTAINTY
innovation report
CREATING ADVANTAGE IN UNCERTAINTY
Thank you for visiting
Don’t leave an insight behind. Access the full report before you go.