The Zero Office: Why financial services firms must reinvent the back office as a growth engine

Financial services leaders agree that the traditional back office is on borrowed time, but most have only just started the journey to replace it. A new global survey conducted by HFS Research in partnership with Iron Mountain found that 77% of banking, financial services, and insurance (BFSI) executives believe the traditional back office will disappear within three years. Yet, only 21% are taking decisive steps to make that happen.

Legacy platforms and processes, overreliance on paper, intense regulatory oversight, and inconsistent governance are holding many companies back from achieving the speed and agility enabled by cloud platforms and artificial intelligence.

This paradox of ambitious vision paired with incremental execution presents a significant challenge to achieving digital transformation objectives, particularly at a time when changing customer preferences and competition from thousands of financial technology (fintech) startups demand rapid and substantive change. The back office, once seen as administrative overhead, is now the engine of growth for digital businesses. Executives are aware of this, but their challenge is to translate talk into action.

The results of the survey of over 500 senior executives around the world make clear that transformation is no longer optional:

• 78% believe that failure to digitise could result in permanent competitive irrelevance.
• 58% plan to build a fully digital back office within two years, spending an average of $25 million toward modernisation efforts and expecting ROI within 24 months.
• Although 81% expect AI agents to handle at least three-quarters of routine tasks eventually, just 13% have deployed them at scale.

Beyond efficiency

The goal is more than just cost savings. Digital workflows enable faster and more personalised experiences, fuelling the development of new products. Modular systems that add new capabilities without rip-and-replace disruption enable organisational agility. Embedded audit trails, real-time controls, and adaptive monitoring improve management oversight and regulatory compliance.

But there are seven “hard truths” that confront BFSI executives on their journey.

1. Although 78% believe that autonomous, application programming interface-driven workflows should replace manual tasks, only 21% are moving boldly toward that objective. Most remain mired in legacy infrastructure.
2. Despite pronounced enthusiasm for AI agents, which take actions and work with little or no oversight, just 13% of firms have adopted agents on an enterprise-wide basis. Fragmented systems and unclear governance hinder scaling.
3. Generative AI can extract insights from decades of legacy data, yet only 23% of firms report success in this task. The widespread adoption of even mature technologies, such as optical character recognition and intelligent document routing, remains elusive.
4. Paper remains a major barrier to efficiency. While 72% of senior executives rank digitisation as a top priority, just one-third feel confident they can digitise records at scale securely and compliantly.
5. Less than one-third have achieved real-time, predictive compliance, in which controls are embedded into workflows. Fragmented data, manual processes, and outdated governance models continue to make compliance costly and complex.
6. Just 34% have operationalised document intelligence, or “self-aware files,” which enable faster processing, improved compliance, and a better customer experience. Failure is less an issue of technology than it is a matter of a unified content strategy.
7. The productivity benefits of AI and no-code tools are hindered by talent shortages and reliance on vendors whose products are outdated and hinder modernisation efforts.

Closing the ambition–execution gap

The report urges financial services leaders to take bold steps to replace incremental thinking with systemic redesign. The process begins with breaking the “efficiency trap,” or the belief that cost savings are the only meaningful change driver. Back-office success metrics need to expand beyond efficiency to include trust, compliance, and customer experience.

Organisations need to take a proactive approach to adopting artificial intelligence, creating governance playbooks that define its responsible use, implementing dashboards to monitor performance and baking explainability, ethics, and human-in-the-loop safeguards into every deployment.

The industry’s “not invented here” philosophy needs to give way to a more collaborative approach to transformation, one that involves regulators, fintechs, and vendors in co-developing scalable and secure frameworks. Industry consortia can be the source of durable standards and cost-sharing mechanisms.

The fragmented vendor ecosystems that many BFSI companies have built up over years of acquisitions and point projects need to be consolidated and overhauled. Companies should adopt a co-innovation model that gives them, not their vendors, firm control over governance and accountability. Although four out of five leaders are actively exploring vendor consolidation, they should do so to work with more forward-looking vendors, not just fewer of them.

Major employee upskilling initiatives are needed to prepare people for an AI-powered future. Leaders need to position AI agents as digital coworkers and develop training programmes that prepare their people to take on more strategic roles supervising teams of agents in a way that raises everyone’s value to the organisation.

Partnering toward a digital future

Transformation is accelerated when trusted partners are involved. Iron Mountain’s back-office products and services align with many of the challenges executives cited in the survey. Iron Mountain InSight^Ⓡ Digital Experience Platform (DXP) directly addresses these by leveraging AI and Large Language Models (LLMs) for comprehensive data ingestion, processing, and enrichment, creating a unified platform for AI discovery and search across diverse assets. This powerful, scalable solution activates hidden data insights for strategic growth, proactively tackles complex regulatory obligations, and dramatically boosts operational efficiency by automating manual tasks and streamlining workflows to enhance customer experience. InSight DXP empowers financial institutions to deploy next-generation technologies at scale, freeing human talent for high-value work and driving measurable, growth-oriented outcomes.

The 21% of respondents whom the report authors categorise as “Radical Transformers” stand apart from the rest by embracing bold, enterprise-wide reinvention rather than incremental change. They dismantle silos, digitise at scale, and utilise automation, AI, and data-driven insights to create agile operations that quickly adapt to shifting markets and customer demands. Unlike firms that seek mainly to optimise existing processes, Radical Transformers redesign the way work gets done. Resilience, compliance, and innovation are core values. Most importantly, their primary objective is to improve customer experience.

Iron Mountain’s Insight Digital Experience Platform (DXP) enables this accelerated transformation by unifying physical and digital information, automating governance and workflows, and delivering actionable insights across the enterprise. With Insight DXP, organisations can more effectively harness the data they already have, eliminate inefficiencies, and build the foundation for the kind of agility, trust, and scalability that define true radical transformation. InSight DXP delivers faster and more transparent experiences that delight customers and build long-term loyalty.

BFSI executives stand at a crossroads. They recognise that the traditional back office is unsustainable, yet legacy processes, unclear ROI, and risk aversion hold many back. The companies that successfully navigate the digital transformation journey will be those that reframe the back office as a source of competitive differentiation, scale projects beyond the pilot stage, invest in upskilling their workers to succeed with new technology and partner with vendors who are committed to their success. They will resolve the industry’s paradox of “digital promises, analog results.”

To learn more about the steps you can take to become a "Radical Transformer" and thrive in the age of continuous disruption. Read the full HFS Research report to unlock the strategies for groundbreaking innovation and sustainable growth.