It’s clear that the Financial Services industry overall has responded well to the impact of COVID-19 — but it hasn’t emerged unscathed. In fact, McKinsey’s Global Banking Review states that half of banks are not covering their cost of equity. The future remains uncertain apart from one thing: Financial Services organizations need to make the most of every cent invested in customer experience, operational excellence and innovation.
Specifically, here are the trends I believe are likely to dominate banking and insurance this year.
‘War on talent’ emphasizes employee experience
Deloitte says the ‘war on talent seems to have gotten kind of nuclear.’ If financial services companies were struggling to attract people with the right digital skills prior to the pandemic, the situation is ten times worse now. Asking the brightest talent to ignore the tech giants, start-ups and other ‘cool’ industries for banks means companies must provide employee experiences that are digital, flexible, collaborative and rewarding.
Yet, a late 2021 survey found less than half of financial services employees say their organizations deliver on employee experience and satisfaction. Firms should invest in digital technologies – such as mobile, content services and AI and analytics – that not only empower employees to better serve customers but also provide an environment where they wish to work.
It’s time to get personal, not personalize
Gartner predicts 80% of all B2B sales interactions are expected to happen via digital channels by 2025. But the success of customer success can’t be measured by how well financial institutions digitalize an existing product or service. Gartner talks of humanizing digital to meet the needs of digital humans. And for good reason. According to PwC, 82% of consumers want more human interactions from brands and people still want to use bank branches.
“In terms of wealth management, the opportunity to deliver a hyper-personalized #client experience in balance with #digital platforms to meet investor needs is real. Volatile markets, unstable economy and growing health concerns have made wealth management an ‘essential’ service,” wrote April Rudin, founder and CEO of The Rudin Group, a global wealth marketing firm.
Humanizing digital relies on two things: trust from customers and empathy from firms. As customers increasingly demand life event-driven experiences, financial institutions– especially large retail banks — must move from inherently transactional business models around products and services to basing their engagement models on an intelligent and proactive understanding of each individual customer, using solutions such as Digital Experience Platform (DXP) for Retail Banking from OpenText™.
“Consumers who have become accustomed to predictive experiences on Netflix and Amazon want the same from their financial institution. Expansion of relationships and increases in loyalty will be based more on contextual engagement than on the ease of basic transactions in the future,” says Jim Marous, co-publisher of The Financial Brand and the owner and publisher of the Digital Banking Report.
Hyper-automation should be focusing minds
We all know that digital transformation has accelerated during the pandemic. Banks and insurance companies are rapidly digitizing their internal and external processes to drive operational efficiency as well as innovation and collaboration. Financial institutions have embraced automation for some time and, over the next few months, will extend into hyper-automation to address customer needs, increase business flexibility and build resilience to disruption.
Hyper-automation brings together capabilities including machine learning, process mining, process automation and API integration to replace high levels of complexity with end-to-end automation for back-end operations and customer-delivery services. Customer Information Management for Banking from OpenText helps customers, employees and partners engage and collaborate through any delivery channel ensuring consistency, visibility, compliance and optimal customer and employee experience.
“To deliver the speed and simplicity of fintech and big tech providers, traditional financial institutions need to change back-office processes for a digital future, not just automate legacy processes. Start from scratch and reimage what’s possible,” says Marous.
The need to become ‘cloud fluent’
Prior to the pandemic, financial services firms had been sceptical about cloud and slow to adopt it. Things have changed, but many are still faced with the daunting challenge of modernizing old but critical applications. It seems steady progress is being made but security and resilience concerns remain. Deloitte talks about becoming ‘cloud fluent’: Really understanding the technology and how it can transform business. Cloud is perhaps the only viable infrastructure to both modernize internal systems and connect to an increasingly digital ecosystem of suppliers, customers and partners. Firms must work hard not to lose the cloud migration momentum established over the previous 24 months.
Security, risk and compliance remain top priorities
In 2021, ransomware attacks on banks increased by an incredible 1318%. At the same time, instances of fraud rose by 238% and data breaches continue to rise. As an industry, Finance has experienced the second most costly data breaches. In 2021, financial industries have suffered on average $5.72 million in losses directly connected to data breaches. Cybersecurity, risk and compliance remain top priority and are more vital than ever. The move to digital channels has greatly increased the surface area open to attack and the number of endpoints that need protected.
“To become future-ready, financial institutions will need to move forward on all of the initiatives mentioned above at ‘digital speed.’ This is because change is happening faster than ever before and will not move this slowly again.” says Marous.