There is a joke that is commonly said derisively that goes something like “companies loose millions but track down pennies”, and while it might sound impossible, in reality it is much closer to the truth than most companies would like to acknowledge. In fact, it is so true that Fidelity National Information Services, or FIS, a fintech company led by CEO Stephanie Ferris, discovered that companies lose an average of $98.5 million per year.
The number is staggering, and there are of course some companies that do not lose a single penny simply because they cannot afford to, but there is always some unnecessary expense that falls through the cracks or a duplicate cost that contributes to this overall number. According to the research made by FIS, which was done in collaboration with Oxford Economics, the most common reasons why businesses lose money are cyber threats (88%), fraud (79%), and regulatory complexities (65%).
And these losses happen across the board, the study was conducted based on two global surveys of a combined 1,000 C-suite business and technology leaders across six different industries.
Firdaus Bhathena, chief technology officer at FIS stated about the unsurprising results that they always knew that there were losses “But what was missing was quantifying it. You have this gut feeling that it’s worth investigating.” And investigate they did, revealing an enormous amount of data that “really helps us understand the scope of the problem, and it’s large.”
Why companies lose so much money throughout the year
The reasons are varied if quite simple according to Bhathena, inability to detect fraud, cybersecurity threats, financial technology skills gaps, reputational damage, and human error are some of the most common ones. “You may not always be able to automate out of human involvement, but you can certainly put in checks and balances to ensure that the likelihood of mistakes being made is very low,” he said.
The problem seems to lie on the fact that there is too much trust in technology, but not enough control over it, especially considering how much it has evolved in recent years and the lack of literacy that many employees and bosses seem to have. Bhathena continues to explain “These are companies in different industries. The way technology change is accelerating these days, they’ve had to deal with change in their businesses, and they’ve all been at different levels of preparedness. Think about the fall of 2022 when Gen AI kind of burst onto the scene”. Tech experts were familiar with the technology. “But, for most of the world, it was like this thing came out of nowhere. I had somebody describe it this way—It’s like an overnight revolution 20 years in the making.”
And that suddenness is what makes it so hard to properly implement, as companies are used to running in a certain way, with legacy programs tailor made for them that their employees are used to being able to use. Most of them see dedicated teams to manage new technologies as superfluous and will not even pay for an outside audit to ensure that the novelties are being correctly implemented. This is such a problem that the FIS analysis discovered that companies with teams dedicated to implementing and managing financial technology reported greater preparedness to tackle key challenges.
But it is also important to realize that not every new tech is important or appropriate for your business and that sometimes holding off might not be the worst idea, since it will give the company time to see what it is really lacking. As a last piece of advice by Bhathena for execs looking to make a change “You need to be bold but not reckless. You need to look at what’s available on the technology landscape and make appropriate investments.”