Nearly 61% of financial services and insurance companies (FS&Is) are ready to embrace digital business model, veering away from traditional vertically-integrated business models, according to a new report by NTT DATA.

Nine out of 10 global FS&Is said they realise the need for transformational digital change.

To address the changing market need needs, FS&Is are focusing on creating a Digital Business Platform (DBP), which enables them to operate with fintechs, insurtechs and other parties.

Nearly 85% of the respondents said DBP represents a significant opportunity to reposition their companies, while 83% conceded that integration of legacy core systems into a DBP is important for their competitive position in the next three-five years.

However, meagre 23% of the respondents said that their companies currently have a DBP.

Majority (53%) of the respondents said that the new technologies such as artificial intelligence and blockchain will shape the future of insurance and financial sector.

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By GlobalData

Whopping 84% of the people said that industries outside of financial services and insurance are exerting significant influence on the direction of the market.

More than 80% of the respondents tech giants such as Amazon, Apple and Facebook could become their major competitors.

NTT DATA representative director and senior executive vice president Toshi Fujiwara said: “Platform-driven companies such as Amazon, Google, and Netflix that provide fast and easy digital experiences to customers are changing the expectations for financial services and insurance companies.

“These technology giants operate agile business models that allow them to leverage existing customer data and quickly customize new products at competitive prices to better serve mobile-first consumers.”

NTT DATA Services president of financial services Wayne Busch said: “Banks have actually been digital businesses for decades, moving money at the speed of light. Recasting their capabilities and building a true Digital Business Platform will allow companies to create and support multiple business models on a single technical framework without replacing outdated, legacy core systems.

“This will also enable partnerships with fintechs and insurtechs that help to more easily incorporate new digital technologies, use application programming interfaces and share customer data.”