Technological developments are both disrupting and transforming the financial services industry (FSI) with customer experience being the clear driver and catalyst for change.
Customer experience is the product of an interaction between a customer and an organisation over the duration of their relationship. It is governed by the customer journey, the brand touchpoints with which the customer interacts and the environments (digital or brick and mortar) where those interactions take place.
Incumbent financial institutions are struggling to cling to market share while more agile digital pure-plays are disrupting the status quo and threaten to take up to 35% of market share (Econsultancy 2017). Customer experience is central to the pace of challenge that pure-plays present to digital laggards by offering a better experience through smartphone apps to “meet customer demand for faster, cheaper and easier-to-use services”.
Just as it becomes the norm to offer a banking service to customers via any channel of choice — in store, on the phone, via a mobile app, through a website or over social media — the customer is upping-the-anti yet again. Now customers are demanding that their experience via those channels is an integrated one. Meaning that they should be able to, for example, switch from using their banking app to talking to a customer service assistant over the phone seamlessly.
While iterations of an omnichannel customer experience have been in the works since 2003, traditional financial institutions have battled to keep a-pace with the technological developments. The heavily regulated landscape, legacy systems and internal siloes are some of the hurdles these institutions are facing.
Challenger banks and fintech, on the other hand, are not burdened by the same regulations, they are quick to adopt new technology and operate within an agile methodology. Their customer-centric philosophy puts them leaps and bounds ahead in the race to provide a truly seamless experience for customers.
55% of individuals aged 16-74 based in the EU-28 order goods and services online (83% in the United Kingdom) in 2016, and this number is expected to rise (Eurostat 2017). Offering out-dated in-store banking services will not continue to be acceptable for much longer, especially as digital channels are getting smarter.
Financial services wanting to attract and retain customers should look to raising awareness and improving user experience of mobile payment methods, adopt machine learning capability to better understand the customer journey and leverage automated personalisation technology to be able to offer the right products to the right customer at the right time.
Traditional customer service routes, such as the dreaded call centre, are damaging the customer experience and have become the last port of call for a customer seeking a resolution or interested in new products. Driven by a growing preference amongst customers to solve a problem themselves, self-service technology is becoming increasingly sophisticated.
Self-service has come a long way since the days of FAQs (frequently asked questions) and customer forums. These days virtual agents, chatbots and artificial intelligence are being applied to self-service methodology.
Self-service is key to increasing the return on investment of technology, retaining customers, attracting new customers and improving customer satisfaction.
Winning the loyalty of today’s customer not only requires cutting-edge and optimised technology, it is also dependent on credibility gained from industry-leading expertise. Financial services have an opportunity to improve customer loyalty, satisfaction and experience by building personal relationships with their customers. Effective relationship marketing involves a variety of overlapping strategies and technologies that help foster a deeper, long-term relationship with current and prospective customers. Personalised interactions with a customer can build stronger ties.
The financial services are implementing customer relationship marketing into their customer experience strategy in the following ways: They are re-imagining their physical presence to be more experience-based, getting on board with educational content, targeting millennials, experimenting with digital technology and looking for the sweet spot between digital and human.
A study, published by Springer, found that “ﬁnancial services ﬁrms can allocate relationship marketing resources to maximise returns in terms of customer loyalty, and fully unlock the opportunities of increased client participation in, and contribution to, effective service delivery.”
Financial literacy is a growing trend within FSI to meet customers’ desire to become more comfortable managing their assets, making investments, selecting insurance products, etc.
Helping customers to become better educated when it comes to making financial decisions benefits financial services by improving customer engagement and increasing trust. Customers are also more likely to choose their products over institutions who do not offer the same service.
Financial literacy is being offered through schools and a wealth of online tools such as blogs and video tutorials.
Historically, legacy financial services institutions have found it very difficult to leverage their data capabilities, largely down to complicated technology stacks and siloed organisational structures.
However, marketers are waking up to the potential that improved data analytics will have to the customer experience with some banks even hiring ‘journey managers’, empowered to track the customer journey from start to finish. This will allow them to identify opportunities as well as customer pain points.
While concerns over privacy regulations make it difficult to join offline and online data, 99% of respondents to research conducted by Adobe in 2017 identified “improving data analysis capabilities” as a key element to improving the customer experience.
The revised Payments Services Directive (PSD2) and Open Banking regulations, which came into force in January 2018, are going to force the hand of financial services and their approach to customer data.
Banks have also begun to adopt artificial intelligence (AI) to help improve the customer experience. This fascinating case study of how Indian bank, HDFC Bank, is using AI to transform the customer experience is a glimpse into the future (the sci-fi version) of the banking experience.
But on a more practical level, AI is being used for insight generation — to better match customers with products — and customer engagement — to allow customers a more sophisticated experience through banking websites, mobile applications and with contact centres.
While fintech is disadvantaged by their inability to scale-up, they are digitally savvy, agile and customer-centric. These are attributes traditional banks should be adopting in order to remain competitive. And some are already.
Deutsche Bank has built ‘innovation labs’ in Silicon Valley, London, Berlin and New York with teams in Frankfurt and Bengaluru. Clydesdale and Yorkshire Banks opened a financial innovation lab, Studio B, in London and invites sprint designers to explore voice recognition, artificial intelligence, virtual reality, Internet of Things, blockchain and other innovations. Barclay’s Eagle Labs are a space for businesses and communities to learn about new technologies and boost digital skills.
And in 2015, UBS became the first global wealth manager to launch an innovation laboratory to tackle industry-wide challenges such as the management of complex data and risk assessment in volatile markets.