What does digital transformation look like for financial services?
Digital transformation is completely reshaping the financial services industry - particularly across banking and insurance. Customer expectations (especially with younger clientele) are rapidly evolving, and customers expect the same level of digital service they receive from leaders in other industries like Amazon, Facebook, and Uber. Put simply, a bank or insurer that isn’t focused on digital customer experience isn’t facing a bright future.
While each is unique, our financial services clients do face several common digital challenges. For decades, many banks and credit unions have differentiated themselves on optimal customer service. With fewer customers actually visiting brick-and-mortar branches, institutions now must determine how to deliver an equally positive - or improved - customer experience through their digital channels.
New competition, new challenges.
Traditional financial services organizations are also facing disruption from agile fintech startups, who are making mundane tasks like payments and money transfers much easier through technology. Services like Zelle and apps like Venmo have banks racing to catch up. (Note: Zelle powers their Dotcom on Acquia.)
Similarly, insurance is trying to combat low-cost, nimble startups that deliver a seamless customer experience. Insurance policies can be confusing and complex, and these disruptors are simplifying the experience, often insuring customers in just a few clicks.
Traditionally, many large insurers have sold policies through their agent networks. But today, insurers need to serve their agents through digital channels while simultaneously determining how to get their brand and products into the consumer’s hands directly.
Change must run deep.
Solving these challenges is a substantial undertaking. To deliver an optimal digital customer experience, financial services organizations typically need a wholesale shift in both mindset and process. While technology is only one part of the solution to these challenges, it needs to be at the forefront of each decision made. Financial services organizations are starting with user-centric design practices to streamline their digital experiences, and then implementing technology accordingly.
Transformation priorities vary.
The top digital priorities in financial services organizations vary depending on the maturity of the individual organization. But there are some consistent themes.
Smaller, regional and local banks and credit unions are typically making a substantial push into mobile banking, with the goal of creating the most intuitive and efficient experience possible. While the customer base of these types of firms is typically older and often reticent to adopt new technologies, they recognize the importance of attracting and retaining new customers, who are often younger millennials.
Larger, more mature organizations are more focused on understanding the customer journey and delivering personalized experiences and offers that align with the customer’s point in that journey. This approach enhances the customer's experience, while also leading to an increase in “share of wallet” due to improved cross-sell and upsell opportunities. All this equates to customer “stickiness”.
The tools and technologies in which financial services organizations are interested provide a clear illustration of where the priorities currently lie. We consistently see the most investment in:
- Mobile and online banking
- Payments - especially peer-to-peer
- Fraud protection
- AI/Machine Learning
The time for change is now.
We see a great deal of potential for the digital experience in the financial services industry. Evolutions in digital processes and technology have forced financial institutions to think about how they are servicing their customers, and use those insights to create the best possible experience. The rapid pace of change combined with low barriers to switching are forcing institutions to step up their game and reimagine their business models.
Financial services companies must maximize their digital potential to help customers build, maintain and protect their wealth - or they’ll lose them.