Key Takeaways:
- Procurement within the financial services sector is undergoing significant changes, driven by factors such as consumerization, regulatory requirements, and the shift to outcome-based pricing.
- In the future, procurement strategies will focus on aligning with product-customer offer teams, enabling high-value commercial input and ensuring suppliers behave positively.
- Categories that have a direct impact on product offerings will be prioritized, while e-procurement technology will streamline other spending categories via user enablement and automation.
- Emerging trends such as sustainable procurement, third-party centricity, category innovation, and customer-centric procurement are reshaping the financial services procurement landscape.
- To drive digital transformation in procurement and maintain competitiveness, it is essential to leverage artificial intelligence, advanced analytics, and process automation.
Introduction
Organizations are presently navigating significant changes and disruptions that pose threats to their future viability. Forces like consumerization, expanding regulatory requirements, pricing pressures, an ever-changing industry landscape due to M&A activity, and shifts to outcome-based pricing are compelling procurement leaders to re-evaluate their strategies. During continuous disruption, one thing is certain: procurement should disrupt itself to grow and stay ahead of the curve.
In the future, procurement will align with product-customer offer teams to shape categories that directly impact the product offer. This will involve focusing on high-value commercial input and orchestration of supplier behaviour. For other spend categories, the focus will be on user enablement and automation through e-procurement technology. Users want to purchase solutions that may cut across classic categories, and this recognition will lead to a shift in focus.
The categories that directly impact the product offer will vary across businesses and industries. Typically, all direct categories will impact the product, and depending on the situation, a proportion of the indirect ones will as well.
Financial services procurement teams, along with finance leaders and procurement specialists, are at the forefront of making strategic decisions regarding visibility, pricing, quality, and industry standards. With the fintech revolution in full swing, financial services providers must forge vendor relationships and partnerships to make smart decisions while navigating credit risk. Incorporating affordability checks into procurement processes ensures financial prudence and sustainability.
Have a look at our supply chain intelligence solutions
Future of Procurement: Emerging New Trends in Procurement
Third-party Centricity: Third-party performance and relationships
In third-party-centric procurement, businesses prioritize mitigating risks, ensuring legal compliance, and meeting industry standards. They achieve this through the use of digital technologies to streamline procurement processes and ensure regulatory adherence. Effective vendor management and performance monitoring are also essential, as they enable businesses to maintain high standards, track supplier performance, and foster positive relationships. By focusing on these aspects, organizations can enhance operational efficiency, minimize risks, and drive sustainable growth in today’s dynamic business environment.
Category Innovation: Creating new financial products, services, or processes
Category innovation refers to the development of new financial products, services, or processes to cater to the changing demands of customers. This involves leveraging digital technologies to transform traditional practices and offer more personalized and efficient services to customers. By continually adapting and innovating, businesses can stay ahead of market trends, anticipate customer needs, and enhance overall customer satisfaction. Through category innovation, organizations aim to create value, differentiate themselves from competitors, and drive growth in an ever-evolving financial landscape.
Customer-centric Procurement: transforming procurement functions more user-friendly by leveraging technology
In the future, customer-centricity will be a major focus of procurement in all areas, including systems, processes, and personnel. Procurement will strive to become a genuine business partner rather than just a spend gatekeeper, and business leaders will recognize the value added by procurement and want to collaborate with them. Procurement will play a critical role in the business-planning process, leveraging crucial insights into spend data, supplier relationships, and risks to drive spend behaviour. They will act as brokers for products, skills, and sources of innovation to solve business problems.
They will also be responsible for long-term decisions that benefit the business, its customers, the environment, and society. Procurement will prioritize a human-centric approach to problem-solving and measuring true customer satisfaction. They will focus on reducing the cost of change and adapting more quickly by investing in digital technologies. Procurement will monitor market trends and evaluate potential impacts to procurement to foster a culture of innovation. They will also proactively drive spend behaviour by providing the right data at the right time and investing in AI.
Sustainable Procurement: Integration of ESG criteria into procurement processes
Sustainability has become a top priority for corporations worldwide, with its significance heightened post-COP26. A staggering 70% of the global community has pledged to achieve net-zero emissions, prompting most major businesses to embark on this transformative journey. Beyond environmental concerns, there’s a growing emphasis on the social (S) and governance (G) aspects of ESG (Environmental, Social, and Governance) criteria. Procurement teams are now tasked with actively involving suppliers in addressing a broad spectrum of sustainability issues encompassing environmental, social, and governance dimensions. By aligning procurement practices with these principles, businesses can fulfil their commitments and uphold their overarching purpose.
Leveraging Artificial Intelligence, advanced data analytics, and process automation
To establish itself as a vital function within a company, procurement should not only examine its own strategy but also play an active role in shaping the company’s digital strategy. By digitizing procurement, companies can benefit from a stronger focus on customers and the necessary flexibility to adapt to rapidly changing customer requirements, giving them a competitive edge. Outdated procurement organizations, on the other hand, may struggle to identify innovative suppliers early on and integrate them into their value chain, resulting in less transparent and efficient end-to-end supply chain management. As a result, the gap between the company and its competitors will likely widen as it is forced to rely on veteran suppliers that have failed to innovate. This is why the market is expected to divide into innovative and outdated supply chains. Companies that want to be among the innovators should embark on the digital transformation journey sooner rather than later.
Requirement of skilled workers in data analysis, relationship management
The future of procurement demands a broader skill set, emphasizing not just commercial acumen but also empathy, technological proficiency, and analytical prowess. Skilled workers must excel in category strategy, innovation, and high-value activities, extending their impact beyond mere cost savings metrics. This augmented skill set reflects the evolving landscape of procurement, where professionals are expected to navigate complex relationships, harness technology, and deliver tangible results that align with organizational objectives. As procurement evolves, the emphasis shifts towards holistic expertise, ensuring professionals are equipped to drive innovation, create value, and adapt to the dynamic demands of the industry.
SpendEdge Market Intelligence Solutions
Supplier intelligence: Identify suppliers that provide technology solutions
Our team at SpendEdge is dedicated to finding suppliers that provide innovative technological solutions, evaluating their capabilities, and providing strategic recommendations that will help you optimize your procurement processes. By utilizing our supplier intelligence expertise, you can make informed decisions, strengthen your relationships with suppliers, and drive innovation within your organization.
Procurement transformation and strategy development:
At SpendEdge, we offer procurement transformation services that are designed to help you identify areas for improvement, analyze market trends, and understand the key cost drivers affecting your organization. We work with you to create customized roadmaps that align with your strategic objectives and help mitigate potential risks. Our approach enables you to embark on a journey towards procurement excellence, transform your operations, and maximize value across the supply chain.
Best Practices: Analyzing competitor’s practices in terms of strategy alignment
SpendEdge conducts a thorough analysis of competitors’ procurement practices to identify areas of opportunity and process gaps. By comparing your strategies with industry leaders, we uncover insights that drive strategic alignment and operational efficiency. Our solutions based on best practices empower you to adopt innovative approaches, enhance competitiveness, and achieve sustainable growth in today’s dynamic marketplace.
SpendEdge Success Story:
A financial services company based in Belgium was looking to streamline its procurement processes in the financial services domain. Their goal was to improve supplier intelligence, identify potential suppliers with relevant capabilities, and create a strong procurement strategy that aligns with the latest trends in the BFSI industry.
Our team of experts at SpendEdge conducted a thorough market analysis to identify key suppliers that were tailored to meet the client’s specific requirements. We then revamped their procurement processes, integrating digital solutions that increased efficiency and transparency. Leveraging our industry expertise, we provided actionable insights on market trends and risk management strategies, ensuring resilience against geopolitical and cybersecurity threats.
Our solutions enabled the client to overhaul its procurement function, unlocking new opportunities for growth, innovation, and competitive advantage within the dynamic BFSI landscape.
For more information
Conclusion:
The financial services industry is experiencing significant changes and emerging trends that require proactive adaptation. To stay ahead, organizations need to embrace digital transformation, align procurement strategies with evolving customer demands, prioritize sustainability, and manage risks effectively. By leveraging innovative technologies, fostering strategic supplier relationships, and adopting customer-centric approaches, financial services companies can navigate disruptions, drive growth, and maintain a competitive edge in the rapidly evolving market landscape. In conclusion, financial services companies must keep up with the latest trends and take advantage of technology and strategic partnerships to remain competitive.
