Research conducted by global financial technology firm, FIS in collaboration with Oxford Economics, has revealed the true impact of financial, operational, and technological disharmony, defined as disruptions and inefficiencies across the money lifecycle, on firms in the US, the UK and Singapore.
In two global surveys of a combined 1,000 C-suite business and technology leaders across six different industries, FIS and Oxford Economics found that businesses are losing out on an average of $98.5million a year as a consequence of cyber threats, fraud, regulatory hurdles, and operational inefficiencies.
The Harmony Gap: Finding the Financial Upside in Uncertainty study revealed nine sources of disharmony, with 88 per cent of respondents identifying cyberthreats as the most pressing source of tension, followed by fraud (79 per cent) and regulatory complexities (65 per cent). Other tensions identified by respondents were operational inefficiencies, payment friction, human errors, illiquidity, financial technology skills gaps, and reputational damage.
The survey results also shed light on the specific financial technologies that forward-looking organisations are employing to address disharmony in their operations. Over four-fifths (82 per cent) of surveyed leaders said they have implemented embedded finance solutions, realising an average 8.5 per cent growth in sales through these investments.
Stephanie Ferris, CEO and president of FIS, said: “We commissioned this research to determine the sources of tension within organisations’ financial ecosystems, whether money is at rest, in motion, or at work. The findings uncover the profound consequences of disharmony in the money lifecycle, and our goal in sharing them is to empower businesses to overcome these challenges by finding the upside of uncertainty.
“By ensuring their financial systems and processes are in harmony, companies can unlock the extra capital and capacity needed to invest in innovation and competitive advantage.”
Initial findings from the research included:
Money in (slow) motion
Moving funds seamlessly from point A to B is a critical function of nearly every business. Yet, The Harmony Gap survey highlighted key points of friction within respondents’ payments systems and processes.
Fifty-one per cent of those surveyed said their business faces greater tension when money is in motion, including when moving money through payments systems, credit and debit accounts, and card networks, than during other phases of the money lifecycle.
While 79 per cent of respondents said their business has adopted automated payment processing technology, 57 per cent reported experiencing transaction delays at least once a month.
Businesses under siege from cyberattacks and fraud
The survey respondents identified cybersecurity and fraud as the two most costly sources of friction and tension across the money lifecycle.
More than one-third (37 per cent) of respondents said their company experiences cyberthreats daily, and 74 per cent face critical or high-profile threats on a monthly basis.
Eighty-three per cent of the respondents surveyed said their firm prioritises fraud risk management. Yet, 53 per cent said they are unhappy with their fraud response plans.
Forty-one per cent of respondents reported being dissatisfied with their basic software tools for fraud detection and prevention methods.
Forty-seven per cent of those surveyed said their company does not regularly train employees on fraud and cyber awareness, leaving these firms more vulnerable.
Insurance firms buck the trend; 75 per cent of the respondents from insurance companies reported that their firm relies on employee training for fraud prevention, compared to 48 per cent of respondents from all sectors surveyed.
Fintech strategy is key to growth
The survey data underscores that a strategic approach to technology that advances financial transactions is critical for organisations seeking to address disharmony and achieve growth. Respondents from companies with teams dedicated to implementing and managing financial technology – whether in-house or outsourced – reported greater preparedness to tackle key challenges.
Eighty-five per cent of leaders surveyed from organisations with dedicated fintech teams reported feeling moderately or very well-equipped to address frictions including inefficiencies, cyber risks, and compliance failures.
Respondents from firms with dedicated fintech teams reported higher sales growth than those without, with 83 per cent of these companies seeing revenue increases after embedding fintech solutions.
In contrast, the research identified the insurance industry as lagging in fintech adoption, with only 52% of leaders surveyed from investment companies reporting that they have a fintech team, compared to 74% of respondents across all industries surveyed.
Firdaus Bhathena, chief technology officer of FIS, said: “The findings highlight that a well-defined technology strategy, supported by a dedicated and knowledgeable team, is a fundamental component of a firm’s success. Companies that invest in building or partnering with fintech expertise are better positioned to optimise their financial operations, mitigate risks, and ultimately achieve the financial harmony that drives sustainable growth.”
Unlocking AI and automation potential
A notable trend among the executives and business leaders surveyed was the significant investments their organisations are making in AI and automation technologies.
Over half (55 per cent) of respondents reported that their companies are investing in innovative solutions such as generative AI and machine learning to meet their strategic objectives.
However, 73 per cent cited the high cost of implementation and maintenance as an obstacle to their firm’s adoption of AI and automation, as well as struggling with a lack of in-house expertise (64 per cent) and the difficulty of integration with existing systems (58 per cent).
Showing signs of optimism despite these obstacles, 56 per cent of respondents said their companies plan to leverage AI to increase their organisation’s agility in response to market dynamics, while 48 per cent anticipated it would enable them to gain new customers.
“Our groundbreaking research in partnership with FIS has quantified the impact of tensions within the money lifecycle,” Bianca Fisher, research manager at Oxford Economics, said.
“This unique analysis has allowed us to identify the cost of financial disharmony, and how it can hinder organisational growth and innovation. By working with FIS, we’ve delivered insights that will help businesses globally understand and address these challenges, leveraging emerging technology solutions like AI and automation to enhance efficiency, security, compliance, and strategic decision-making.”
