Financial services are undergoing a huge period of digital transformation, as advanced technologies radically transform the way the industry operates. AI, machine learning and robotics are fundamentally changing the sector and it’s time we fully embraced the amazing opportunities they have surfaced. However, added to the impact of digital transformation, financial services are also undergoing a crisis of trust with PWC reporting that British consumers have lost trust in the industry. With rising competition from fin-tech disrupters, the question is how can financial services succeed in this increasingly digital world? How can they embrace and deliver the digital innovation that customers demand without compromising security and ultimately consumer trust?
The Customer is still king
The financial sector has historically been a digital slowcoach due to strict regulations, legacy systems and senior decision makers being slow to recognise potential ROI. Whilst banks are now increasing I.T. spend and are automating business processes through artificial intelligence (AI), there is still a lag in meeting consumer expectations for seamless mobile apps, alternative technologies like person-to-person payments, mobile wallets and more. The problem is that many banks still believe that digital transformation is about systems and workflows rather than customers. Many banks are also hindered by fears that new technologies will lead to new security threats.
It’s misguided to let security concerns eclipse the fact that consumer behaviour in banking is changing. Studies show that instead of speaking in-person to an advisor at a local bank branch, most customers will prefer to interact remotely via digital channels. In fact, the average consumer will initiate up to 10 digital interactions with their bank per month. These changes in consumer behaviour are opening doors for a new breed of fintech disrupters who are ready and waiting to take market share and customers. Digital-first providers like Monzo and Revolut are giving dissatisfied consumers the opportunity to literally take their money elsewhere, and with multiple challenger banks shaking up the industry, consumers are spoilt for choice. Consumers are enjoying digital transformation in other sectors and now expect the same from financial services; disrupter banks are simply giving them the innovation they crave.
Learning from the competition
So what can be learnt from the boom of disrupters entering the financial market? Without a high street presence, disrupter banks have prioritised the user experience, as every point of contact for their customers is now digital. It’s clear from their successes that other financial services companies must follow suit in order to regain consumer confidence; put simply, banks must evolve or die.
Despite the threat from disrupters, traditional financial services organisations, such as banks and credit unions can win back favour with today’s entitled consumers. Financial services must generate trust and long-term dividends by establishing themselves as stewards of consumer financial assets, namely money and data, and by ensuring their service is relevant and bespoke.
Meeting consumers’ demands with new technology
Consumers are aware of the value their data has for banks, especially in this post-GDPR world. The good news is they are willing to share; but with this comes higher expectations of the service they will be getting as a result. Research by Accenture found that almost half of UK bank customers expect relevant advice and product information available at their fingertips that they can access easily. They expect banks to inform them of the best rates to suit their individual financial situation. What’s more, Big Data provides significant opportunities for banks to outshine their competition. Migrating data onto a cloud platform provides a 360-degree view of every customer and this deep insight shows banks where they can provide a higher level of service and create more value.
For example, if a customer is in the process of buying their first house, their bank can contact them with relevant and useful information to ease the process. With all the data available to financial services, customers expect their bank to know what they want and need, before they do, offering them next level personalisation that caters to their every possible financial need. AI and machine learning has finally made it possible for financial services to personalise marketing messages which truly resonate and drive revenue.
Creating seamless experiences
Another aspect of the customer experience that needs to be improved is flexibility: giving customers the freedom to access and manage their finances on the go is vital. Consumers expect to perform transactions anywhere, at any time, and only a seamless omni-channel experience will meet this demand.
British consumers want the flexibility to access and manage their finances from wherever they are, whenever they want to. If offered by their primary bank, for example, over 75 percent of Gen Z US internet users would use the financial tech services offered such as apps that can be accessed on the go. It is the responsibility of the banks and financial services to ensure accounts are quick and easy for customers to access, whilst also being highly secure in order to avoid catastrophic data breaches.
Despite the ongoing fundamental changes to the industry, three things remain certain: customers want to bank with companies they can trust, customers demand individual financial advice, and customers insist on full control over their finances. Prioritising customer experience in these ways is nothing new, but financial services must wake up to the new technologies at their disposal in order to match changing consumer behaviour. Through a data-driven blend of personalisation, prediction, and true omnichannel reach, financial services can create a much brighter future for their customers and, ultimately, themselves.