An Unwelcome Guest with a Silver Lining

An Unwelcome Guest with a Silver Lining

Written by Tom Pittman
Written by Tom Pittman

For many years now, digitization has been heralded as the new frontier for companies of all shapes and sizes. At EWM Global, we have been beating the drum for digital transformation among financial institutions for just as long. It is fair to say that demand for digitization has been patchy: there have been clear leaders who have adopted it with enthusiasm; and there have been noticeable laggards who have delayed their digital investments until forced into it.

We started 2020 predicting that the beginning of this new decade would finally see widespread adoption of digitization and significant progress in technological change. And so far, it looks like we may have been onto something. But, as it turns out, not for the reason we expected.

The sudden onslaught of the coronavirus pandemic has left many companies’ well-laid plans for investment in tatters. It has disrupted all manner of business operations and caused many sleepless nights for CEOs and CFOs. However, in the midst of the chaos, we are seeing a trend emerge from the rubble.

When it comes to digitization, companies’ appetites have grown stronger. We are seeing this ourselves, with a busy pipeline of opportunities to help private equity firms, other asset managers and banks digitally transform their carried interest plans or compensation schemes. Since March, we have completed three virtual RfP processes and foresee more in the months ahead. Anecdotally, we have also heard from many CFOs that they are seeking to take advantage of the current situation to improve their operations.

It seems that our experience is not an outlier either. A recent PwC COVID-19 CFO Pulse Survey[1] found that 60% of US financial services CFOs said that in the current environment, technology investments would make their companies better in the long-term.  In another telling statistic, only 12% expected to cut digital transformation since it can achieve their goals of leaner and more efficient operations.

The Boston Consulting Group[1] also published a helpful CFO survey, which found that 75% of respondents expected to adopt digitization as a cost reduction lever in the finance function over the mid-term. Meanwhile, other global consulting firms, such as Deloitte[2] and McKinsey[3], have developed insightful commentary that urges CFOs to navigate their businesses through coronavirus by supporting the virtualization of the finance and HR functions and boosting productivity through digitization.

Digital transformation, spurred on by this unexpected crisis, now seems an unstoppable force that will find numerous ways to benefit how companies do business and generate value. At EWM Global, we look forward to playing a part in this process by enabling the global private equity, asset management and banking communities to digitize their carried interest and compensation schemes throughout the remainder of 2020 and beyond.