Luxoft : Financial Services Firms Unable to Innovate as Technologists Lack Boardroom Influence, Warn IT Leaders in New Report

  • 78% of IT leaders believe senior executives do not understand
    technology and 81% are frustrated by unrealistic C-suite expectations
  • 86% have recently failed to get traction on a major digital project

Technology departments in financial services firms are unable to
innovate with technologies like Artificial Intelligence and Blockchain
because they have lost influence in boardrooms, according to leading
Information Technology (IT) executives working in the financial sector.

A survey of over 200 European IT decision makers commissioned by Excelian,
Luxoft Financial Services
reveals that 86% of respondents have
recently championed a major digital project that failed because it did
not get past the boardroom. IT executives believe misconceptions about
technology by executives are partly to blame for these failures – 78%
agree that senior executives do not understand technology and 81% are
frustrated by unrealistic demands to innovate with new technologies
whilst also having to cut costs.

Excelian, Luxoft Financial Services – the financial services
division of Luxoft,
a global IT service provider – today published Confessions
of a CIO
, a report which reveals the biggest frustrations
of IT executives working in capital markets, wealth management and
corporate banking in the UK, Germany, Austria and Switzerland.

The report shows IT executives working in the UK are particularly
frustrated by senior colleagues being unable to grasp new technologies –
85% of respondents in the UK agree that senior executives do not
understand technology well enough, compared to 76% in Germany, 75% in
Austria and 87% in Switzerland.

With a lack of understanding of technology, comes unrealistic
expectations about how it should be implemented. 81% of respondents are
frustrated by unrealistic expectations from the C-suite, with 22% going
further by saying a lack of support from senior executives keeps them
awake at night. As such, IT professionals are not being given the tools
they need to innovate and some financial institutions are being left
behind in the digital revolution by faster acting competitors.

Tensions in financial services IT departments are reaching boiling
,” said Roman
Trakhtenberg, Group Managing Director and Global Head of Excelian,
Luxoft Financial Services
in finance want to be the gateway to innovation but right now they are
unable to influence decisions at the top. Instead, IT professionals in
finance are stuck dealing with internal legacy systems and imminent
cyber-risks, and are not getting the support they need to implement real

The report also shows that although top executives want the company to
innovate with technology and most understand its importance to the
business, IT departments remain underfunded. 85% of respondents say that
the CEO understands the importance of technology within the business,
but 78% are frustrated by a lack of IT investment – 31% also say budget
cuts keep them awake at night. UK based respondents working for small to
medium sized financial institutions were particularly frustrated, with
nearly all (97%) agreeing they needed more investment – whereas only 76%
of UK respondents working for larger firms expressed the same

The case for increased IT investment at banks in Europe was recently
strengthened in September as the European
Commission announced it is looking at ways to treat expenditure on IT
systems as a cost rather than investment
– meaning IT spend may
no longer be deducted from banks’ capital ratios when calculating
capital requirements, which may free up additional budget. This could be
a particularly important EU initiative as 75% of respondents today are
frustrated that technology is treated as a commodity by the business,
meaning they believe financial institutions do not take into account the
future value of technology and see it only as a cost when looking at the
company’s balance sheet.

Despite this, Confessions of a CIO shows that mounting pressures on IT
departments, including cost saving initiatives since the financial
crash, mean IT leaders have lost the ability to innovate. IT executives
are unsure about how to encourage more innovation, but 41% believe a
change in their businesses culture is needed in order to embrace digital
innovation. Half of German-based respondents say their business needs a
cultural change – only 43% of Swiss-based respondents, 37% of UK-based
respondents and 35% of Austrian-based respondents agree.

It is harder than ever working as an IT executive in a financial
,” explained Roman Trakhtenberg. “They are
underfunded, underappreciated and are often not taken seriously by their
non-technical senior colleagues.
CIOs and technology leaders need
to strengthen their hand in the industry if we are to finally propel the
financial sector into the digital age.”

About the Research

Excelian, Luxoft Financial Services commissioned independent research
agency Censuswide to conduct a survey of 202 IT Decision Makers in the
financial services sector, specifically in capital markets, wealth
management and corporate banking in companies with over 500+ employees;
102 in the UK; 50 in Germany; 30 in Switzerland; 20 in Austria. The
survey was conducted in August 2017. Excelian, Luxoft Financial Services
also interviewed eight senior IT executives at tier one financial
institutions under conditions of anonymity to understand their specific

About Luxoft

Luxoft (NYSE:LXFT) is a global IT service provider of innovative
technology solutions that delivers measurable business outcomes to
multinational companies. Its offerings encompass strategic consulting,
custom software development services, and digital solution engineering.
Luxoft enables companies to compete by leveraging its multi-industry
expertise in the financial services, automotive, communications, and
healthcare & life sciences sectors. Its managed delivery model is
underpinned by a highly-educated workforce, allowing the Company to
continuously innovate upwards on the technology stack to meet evolving
digital challenges.

Luxoft has more than 12,800 employees across 42 offices in 21 countries
within five continents, with its operating headquarters office in Zug,
Switzerland. For more information, please visit the website.

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