Progress and innovation are always customer-driven. So why is it that in an industry like financial services, digital transformation has been slow in many respects?
Part of the issue is, undoubtedly, the regulatory background. The other is the overall air of caution associated with investment and finance generally. Another challenge is the lack of industry-driven innovation.
In Europe, the Second Payment Services Directive (PSD2) has certainly increased the scope, but it’s technology-driven companies that are devising solutions to common problems—not the banks themselves.
It’s crucial that those with financial expertise take a stand to guide innovation toward true business needs. Here are a few ways in which financial services companies can help propel digital innovation forward, for a whole range of industries.
As fewer bank customers visit their local branches for routine transactions, there’s increased focus on improving the digital and mobile customer experience. As a result, challenger banks—like Metro Bank—and neobanks (like Monzo) are thriving.
Unencumbered by legacy processes, these new breeds of banks and fintech providers are essentially able to run their entire operations via apps, APIs, and other IT platforms. A banking license can be obtained by a third party.
So what does this mean for more traditional finance-focused companies? Well, they have the experience and built-in expertise to offer more tailored services. It’s just a question of knowing how to leverage these assets.
One thing they do have is data—by the boatload. One area in which they could see themselves thriving is “predictive banking.” While most people know what’s coming in and out of their bank accounts each month, predictive banking uses AI, machine learning, and data analytics to ensure all of their transactional information is deployed to make traditionally lengthy processes—like setting up transactions or completing loan applications—a lot easier and faster.
Being able to securely share this kind of information with other financial institutions—such as insurance companies and investment banks—could ensure that customers get a better, more personalised experience all round, at each digital (and to some extent, physical) touchpoint.
Out of all the C-suite executives, CFOs are generally regarded as the most cautious of the bunch. However, it seems that they’re increasingly becoming drivers of business change.
Why? Well, they have oversight of profitability for one, and are tasked with ensuring constant improvement. Also, over and above everyone else, it’s in the CFO’s interest to make digital a true business success story.
That’s why, given their first-hand understanding of the way in which finance is changing and how different business units are affected, CFOs are ideally placed in banks and insurance companies to help them up their digital game.
In other words, CFOs are a crucial linchpin in opening up the digital ecosystem—giving financial services companies access and insight into both data and ways to use it more effectively.
As more and more companies begin to take their approach to financial wellness more seriously, many are looking to go above and beyond in the way they support their staff. In addition to providing pensions (which, in certain countries, they must do by law) some companies are offering financial advice and debt consolidation services to employees.
As this trend continues there’s a definite need and opportunity for finance companies to step up to the plate and offer advice to many different businesses.
However, both data and accessibility play critical roles here. By integrating these sources into automated services, chatbots, and “roboadvisors” (which can dispense financial advice or insurance quotes on-demand), staff can get support they need, in a way they want, that’s specifically tailored to their individual needs.
While traditional banks and finance companies might be able to provide the right expertise, are they really equipped to offer it in a way that employees will be most receptive to?
All things considered, it’s only by understanding companies’ needs and pain points that those working with them can truly help them to innovate.
Those operating in financial services have a distinct advantage—they’re a necessary part of life and most have been operating for a long time. They’re huge sources of knowledge and therefore customer insight.
However, if they’re unable to adapt and keep pace with the shifts happening in technology, they’ll quickly find themselves left behind; meaning more fintech players will dominate while they struggle to survive.