Digital Transformation in Financial Services: challenges and opportunities | Econsultancy.
You don’t need to be a business strategist to realise that digital technology is radically changing the behaviour and expectations of consumers.
This is particularly the case in the FSI sector where established brands are striving to ensure their services are as seamless as possible for customers and business prospects expecting an increasingly personalised and relevant experience across all channels, including mobile and social engagement.
Our new Digital Transformation in the Financial Services Sector report looks in detail at the opportunities and challenges faced by businesses looking to stay ahead of the competition.
The research is based on interviews with senior executives across a range of companies which included Saga, MORETH>N, RSA Insurance, LV, BlackRock, Alpha Financial Markets Consulting, The Co-operative Insurance, Barclays Bank, Lloyds Banking Group, Santander UK, Droplet, Nutmeg, AXA, JP Morgan Asset Management, Bibby Financial Services, Interactive Investor and Hargreaves Lansdown.
It was also supplemented with data from a global survey of 200 financial services and insurance companies carried out at the start of the year.
For more insight, Econsultancy subscribers can download the full report, but here are several key trends and recommendations emerging from the study.
Number one priority is around Customer Experience
A dominant theme in this sector is the need to focus on the customer experience by putting the customer at the centre of all decision-making. With the increase in mobile usage, delivering a great experience across all touchpoints is seen as essential.
This is backed up by Econsultancy’s survey which shows that one third of company respondents said that customer experience represents the single best opportunity for their organisation to deliver on their priorities for 2015. This percentage is significantly higher than the average percentage across all sectors.
Making the experience as personalised and relevant as possible is where financial services companies are placing the most emphasis in order to improve the customer experience, highlighted by the chart below.
As one interviewee stated:
You need to deliver on your promise; if you don’t you will lose credibility.
Companies can reap the benefits when they get these things right. Research by Accenture has shown that financial institutions offering timely, relevant and personalised online experiences have been shown to improve their conversion rates by 30% or more.
Standing out from the crowd to add value back to the customer
The financial services industry faces significant challenges as new players, unencumbered by legacy systems, enter these markets and change the industry landscape.
Companies talked about looking to differentiate their offer, adding value to the customer and moving away from price and being seen as a commodity product. Almost two thirds of companies surveyed (62%) said that over the next five years customer service and experience is the primary way they will seek to differentiate themselves from competitors, with only 2% highlighting price.
Creating space for people to work in a different way
In this fiercely competitive sector companies were adopting more agile ways of working and are using a number of ways to create the space for people to think of new innovative solutions to meet the challenge of competition and consumers’ needs, not held back by dated systems and the traditional ways of doing things.
Encouraging a digital culture where digital is part of everyone’s job
A strong digital culture was seen as essential to delivering transformational change and for digital to be inherent in everyone’s jobs. Showcasing internally what is working well in digital was helping to engage people along the digital journey and to encourage a cultural change. The Head of Digital at Alpha Financial Markets Consulting stated:
Digital is the new normal, not a special term. Digital is inherent in every job and should not be isolated. Everyone has an element of digital in their job and it is about understanding and adapting to change.
Regulation and legacy systems still barriers to delivering on ambitions
Key themes from the interviews were around the challenges of legacy systems, siloed data, and the inability to have a single view of the customer. Moving off legacy systems to more adaptable platforms was seen as a key driver towards digital transformation.
It is all about the data as companies talked about the need to develop a better understanding of customer journeys and behaviour across channels and devices for digital marketing and transformation over the next few years.
For more insight download our new Digital Transformation in the Financial Services Sector report.