Putting the customer first in a digitalised financial services industry (Part 1)

It’s an irrefutable fact: we live in a digital world.

From the proliferation of smartphones to the rise of social media, digital technology has pervaded every aspect of our working and personal lives. While this shift has delivered enormous advantages for consumers and businesses alike, it has also created major challenges for the teams responsible for service delivery. Nowhere is this felt more so than in the financial services industry.

Welcome to the world of tomorrow

Right or wrong, the rise of online and mobile services has led to much speculation as to whether the likes of high street banks and insurance brokers will soon become relics of the past. Being able to transfer money, take out a loan or buy a new insurance plan online offers customers a far more convenient alternative to visiting the high street. More forward-thinking firms have been looking at ways in which they can embrace this trend in order to drive service improvements and cost efficiencies in both front-end services and back-end processes. For example, some are encouraging customers to use self-service channels instead of high-street facilities; a movement that is seeing face-to-face conversations being replaced by online interactions. In short, digital channels are now driving the way that customer experience is delivered in the financial services industry.

Customers are now more connected, so any incident where they receive a bad experience could result in a commensurate amount of revenue loss and reputational damage. Against this backdrop, customer experience management in financial services has now become more of an investment into proactive risk management and profitability enhancement, rather than a nice-to-have function that is secondary to core business goals. As such, organisations need to become far more versatile and responsive in order to keep up with the pace of the changes in the digital arena. The ability to adopt new digital channels and implement them into services as quickly as customers demand them has become essential. The challenge is that many more established financial services firms are not naturally given to being digital businesses. They are often being held back by legacy IT infrastructure that has been in place for decades; while budgetary constraints prevent them from investing in a major overhaul. Decades-worth of paper-based records are being replaced by digital files, which is bringing with it a whole number of complexities for back-end systems.

In the insurance industry for example, processing a claim now involves a far more complex process than checking a few documents and scanning some copies; a number of online records from a variety of internal and external databases must be corroborated and verified in real-time. This makes digitalisation a daunting process, but unfortunately, there will be severe consequences for those that fail to act swiftly. Industry analyst Gartner forecasts that a quarter of organisations will lose market position through failing to digitalise their business effectively.