When the global markets strived to contain the spread of Covid-19, many banking and financial institutions (FI) were more determined than ever to emerge successful from the pandemic. Even in the face of seemingly unfavourable macro and microeconomic factors,
the focus for financial services firms was embedding resilience, stability and reimagining the future of finance in the new normal.
The Coronavirus pandemic has caused structural and business model shifts for firms across industries and the financial services institutions aren’t immune. The extended period of uncertainty, market volatility and disruption has resulted in unprecedented
changes to consumer behavior, preferences, wants and needs.
Increasingly aware of health, personal and travel risks customers seek solutions that help them manage risks more effectively than they are personally able to. Similarly, a surge in the need for interactions via digital channels has come to stay, and digitally
enabled investor services offerings as well as digital-only administration services may be accelerating the consolidation of market share and growth potentials in the industry. These rapid market and consumer behavioural changes will require financial services
firms to develop simpler solutions, and efficient digital operating models somewhat independent of physical interactions or branches.
Although these are not new considerations, the current crisis is accelerating the need for transformative investments in digital and analytics initiatives. Firms that have thrived during the lockdown have been those who with relatively mature or scalable
digital sales and interaction capabilities. My research shows that truly digital firms that offer a seamless user experience enjoy increased customer loyalty and revenues in comparison to companies that have siloed digital platforms. Truly digital companies
embed customers at the centre of their operations and as a result their products and services deliver superior value at the individual and corporate level. As such, financial service institutions that are seeking to deliver increase value to their customers
and boards need to rapidly transform their operating model, processes and update legacy technology solutions to emphasize user experience within a seamless digital experience.
Reimagine the future of Banking and Financial services
As described above, investment in digital and analytics capabilities will help banking and financial service institutions better understand their customers and determine the best ways to meet their needs. However, these investments in digital and analytics
capabilities go beyond technology alone and requires a change in mindset and culture, ways of working, operations and skills.
To successfully, reimagine the future of banking and financial service institutions, companies should adopt the following digital and analytics initiatives:
1. Make all channels digital
Even though human communication and interaction cannot be replaced, customers now expect to interact via digital channels. For example, some big banks now allow you to apply for overdrafts and loans online but require you to bring documentations into branch
even during the crisis. However, this becomes a pain point and blocker for increasingly health conscious and risk averse customers who might avoid taking up such services. By making all channels digital, processes and procedures of conducting know-your-customer
checks (KYC) can be completed online. This ensures the customer journey is standardized, consistent and faster for all, thereby making it more appealing to customers and increasing uptake.
Additionally, banks and financial service institutions can use digital and analytics capabilities, such as heatmaps, to monitor bounce rate, activities, hotspots, pain points and touchpoints on the page.
2. Become a Customer led business
Most banking and financial services institutions are good at compliance, but few put their customers at the center of their strategy. For so long companies have been speaking about how they put their customers at the centre of all they do but these past
couple of months have been put this to the test as a lot of banking and financial services companies have been unable to service customer needs because they didn’t understand what truly matters to their customers.
During this crisis, customer attraction, retention and growth would be driven by the relevance of your products and services to customer needs. Relevance in this context is more about providing clear information to the customers, ease of access and communication
via digital channels including websites, mobile apps and telephone, safer and secure access to funds without the need for complex traditional review processes within branches or offices. Following the crisis, banks and financial service institutions can retain
and grow these customers by continuously studying their changing behaviours, wants and preferences through a variety of rigorous and customer-focused research efforts to ensure their products and services still satisfy these needs.
3. Innovative digital products and services
Banking and financial services institutions should position themselves as partners to their customers that help them achieve financial goals and literacy and empower customers to defend, stabilize and increase their wealth. In order words, your clients want
to know that they can count on you when it really matters to provide them with the best financial guidance and support that focuses on their needs rather than making a sale. This is a good time for banks and Financial services firms to experiment and co-create
new products and services that are focused on the customer including financial health, planning and even succession preparations. These could be products built from scratch or services provided via a platform or ecosystem of partners.
Innovative banks and Financial services firms are collaborating with Fintechs and challenger companies to integrate and make available their services via application programming interfaces (APIs). Such digital and analytics capabilities are already available,
for instance — One UK bank integrated with a credit scoring agent to provide customers with a snapshot of services that may be available to them beyond the bank by other suppliers in a marketplace. This approach has been seen to increase the volume of new
business and conversion via digital channels by 8 to 20 percent.
Overall, banks and financial services institutions should identify new opportunities that help them deliver value to customers in a safe and efficient manner. By partnering with the right strategic partner(s), banking and financial service institutions can
build customer loyalty and achieve sustained competitive advantage via product differentiation.
4. Adopt Artificial Intelligence capabilities to deliver prompt service
During the crisis, customers are tired of getting messages that your offices are closed and it would take a long time to respond. They want prompt services and responses, these can be driven by artificial intelligence (AI) capabilities such as Chatbots,
and virtual agents. Timely responses to specific emails also provide an alternative channel for demand. By understanding the key questions asked by customers, banks and financial service institutions can teach their AI agents to respond to these questions
and redirect complex issues to traditional call service agents.
5. Upskill and Reskill employees and build new capabilities
To drive innovation, banking and financial services institutions need to have employees with the right balance of technical and functional capability. Employing, training and retaining key digital talent remains a key sources of competitive advantage for
organisations now and in the future. Innovative Fintech and Challenger banks and FIs are investing in new digital and analytics capabilities to harness their workforce and empower them for the digital future.
Although finding the right balance can prove challenging, innovative firms are increasing the diversity of talent and adopting new means of training, delivery and retention. These range from providing multi-lingual support networks, real time and interactive
centres of excellence, and personalized learning, shadowing and mentorship opportunities.
Whilst agile practices have been seen to help improve performance and delivery within organisations, this is not a one size fits all solution. Leading banking and Financial services institutions adopt agile principles as a guide then translate these frameworks
in a way that reflects their organizational culture, people and processes.
Now is not the time for banking and financial service institutions to delay, cancel or wait to see how the crisis impacts the market. Instead, this is an opportunity to revisit and reimagine their digital and analytics capabilities to ensure they have products
and services that meet the need of their financial and health conscious customers. By doing so, they would create increase value for their business, shareholder and customers.
Article first published here: https://link.medium.com/oJ3l2hv4g9