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December 8, 2020

Challenges for the Financial Services Industry

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The biggest challenges in the banking industry and a look ahead to the solutions and opportunities available to meet them

The financial services industry has undergone a fundamental shift for many years now. As more people rely on digital to handle tasks and expect businesses to meet their new digital needs, financial services have been pivoting. Over the last few years, the focus on digital transformation has accelerated. Finding ways to exceed customer expectations and stay competitive presented as main challenges in the past year. 

Looking ahead to 2022, what solutions and opportunities are available to meet those banking industry challenges? 

Top 5 banking industry challenges 

Delivering unified customer experiences

Customers are looking for an integrated experience, or a “one-stop-shop”, for all of their banking needs. While the financial industry has already migrated to online banking and digital experiences, keeping up with growing customer expectations will continue to be a challenge in 2020. This was something we knew going in, however. According to the 2019 Accenture Global Financial Services Consumer Survey, “The ability to deliver a consistent level of service across all channels is an increasingly important competitive differentiator for financial providers.” When the pandemic hit and in-person interaction became impossible with branch and store closures, the reliance on digital became even more paramount. In fact, in our own 2020 SMS Survey Report we saw digital channel usage increase significantly across all financial services sectors.

Staying competitive in the era of fintech

Smaller companies are utilizing technology and data to deliver financial services in new ways, upping the ante for established financial institutions. In a PwC Global FinTech Survey, respondents thought a quarter of their business, or more, could be at risk of being lost to FinTech companies within five years. While FinTech companies are taking up some of the financial industry landscape, long-standing companies are still finding ways to stay in the game and even give the shiny upstarts a run for their money. 

Keeping up with technology

Implementing the latest technology is key to meeting business goals and ties into both of the previously mentioned challenges – unifying the customer experience and staying competitive with FinTechs. Contact center technologies are continuously evolving, particularly in the ways financial institutions can reach and communicate with their customers. 

It’s imperative that financial services are catching up, or keeping up, with the latest technology to improve efficiencies and lower costs. In the PwC survey mentioned earlier, 70% of the leaders said the speed of change in technology was a concern. And in our own Customer Experience Flash Report, 73% of contact center C-suites cited improving barriers to customer service through the use of digital technology as a top priority this year. 

Data breaches and cybersecurity

Data breaches continue to be a concern in the financial services industry. Financial services are a prime target for cybercrime due to the sensitive nature of their data. With the increase of transactions and communications online, security and risk mitigation have been key areas of focus in 2020.

Staying regulatory compliant

Financial services are already one of the most heavily regulated industries. As the industry shifts to new technologies, so do the regulations. Regulators are moving to increased supervision and enforcement. Some of the regulatory challenges expected in 2021 include data protection and governance and divergent regulation (differences in state, federal, and global policies), and new mandates around debt collection practices and STIR/SHAKEN.

Digital transformation is one of the biggest banking industry challenges.

The impact of COVID-19 across the banking industry 

Digital transformation accelerated

Digital transformation was well underway in the banking industry in the years leading up to 2020, and the global pandemic only intensified the transition. Firms are prioritizing spending to expand their cloud capabilities to meet the rapidly evolving demands of their customers for greater access to online banking and other tools. In a world where increasingly fewer transactions take place face to face, organizations are looking for new ways to encourage customer engagement on their digital platforms, like social media and apps. 

We’re also seeing a transformation of the deals done in the sector. Legacy financial brands are teaming up with (and acquiring) nontraditional firms and startups to make inroads with new audiences, while investments in paytech–which offers services for the new ways customers shop–have soared to record levels. 

Regulators worked to find balance

Amid the digital disruption, regulators are working at a frenzied pace to keep up. Their task is a challenging and complex one: balancing the benefits of innovation with the necessity of protecting financial stability, all the while allowing for an appropriate level of competition. The reality, however, is that their efforts mostly lag behind real-world developments in the industry, making it critical that firms stay abreast of the latest regulatory actions and retroactively adjust their policies to fit them as needed. 

New security concerns emerged

The shift to remote work means millions of banking and finance employees are now handling sensitive financial documents in less secure home environments. This creates a new and pressing need for firms to reinforce their cyber defenses, invest in the necessary technology to safeguard the work that’s being done remotely and provide continuing cybersecurity education to all employees. Compliance managers will need to reexamine how their approaches hold up in a post-COVID-19 world and deploy new risk mitigation strategies to fill the resulting gaps. 

Firms are looking for lessons

COVID-19 has no doubt caused extreme hardship for people and companies around the world, and the banking industry challenges it raised are no different. But it’s also created an unprecedented learning opportunity for forward-thinking organizations to capitalize on. Companies’ operations have been stress-tested like never before, revealing cracks in policy and procedure that, if not corrected, could cause the entire organization to crumble. 

Shrewd leaders will take this as a chance to radically reimagine their business models, taking steps to protect against unexpected global emergencies in the future and adopting the technology needed to flourish in a post-COVID world. 

Remote banking industry employees have raised new security concerns.

Solutions and opportunities

The new challenges from the past year, and the ongoing ones headed into 2021, can be tackled with innovative and holistic solutions. There are many opportunities to meet these challenges and improve business operations and outcomes.

Automation, AI,and the cloud

Automation, artificial intelligence (AI) and the cloud are essential pieces for financial services to keep up with FinTechs, stay up-to-date on technology, and deliver on ever-more demanding customer expectations. 

Businesses can start by migrating on-premise services, such as IVR systems, to the cloud. This allows updates to occur in real-time and provides 24/7 support from providers. 

Incorporating more automation into the business model increases efficiency and decreases cost. Automation is a key way to free up needed resources. Implementing chatbots, virtual agents, and other automated technologies, will help financial services stay competitive in the market. 

Practical utilization of AI is a critically important piece of the technology puzzle going into 2021. This is because AI transforms customer interactions, providing information, efficiency and, ultimately, optimizing the customer experience.

Optimize the customer journey

In order to optimize the customer journey, companies not only need to invest in the right technology, but they also need to put the customer experience at the forefront of their operations. It’s common knowledge by now that good customer service is an important factor in repeat business. So much so that in a space like financial services it’s now considered a key competitive differentiator. According to a McKinsey study, “Banks with the highest degree of reported customer satisfaction see deposits grow 84 percent faster than at banks with the lowest satisfaction ratings.” 

There are numerous ways to provide for customers’ needs in a more digital world. Omnichannel solutions give businesses the ability to reach customers in the ways most relevant to them. These solutions can include SMS, ‘round the clock service via forms, virtual assistance, and knowledge bases, and old standbys with modern updates like conversational IVR that’s augmented with texting. With an integrated CRM system linked to the channels you’re communicating over, you can offer your customers the most seamless experience. The ability to manage conversations across many platforms lets customers choose how they wish to communicate and continue the conversation without ever losing the thread, letting contact center agents follow and manage the relationship seamlessly.

Agent experience is crucial to optimizing the customer journey going into 2021. If the agent is able to work more efficiently, they are able to provide a better experience for the customer. An integrated platform aggregates all communications with customers into one system, allowing an agent to easily pick up a conversation where it left off. It provides the opportunity for more customer personalization. It also makes an agent’s life a little easier, and a happier agent is more likely to provide a good customer outcome.

Comprehensive data structure

That same integrated platform that can be a game-changer for the customer experience, can also be a one-stop-shop for the consolidation of data. Creating a solid data infrastructure allows financial services institutions to capture all the relevant data points about a customer’s relationship with a bank and help clearly pinpoint the right levers to pull to maintain the relationship. AI can provide insights in order to turn the data points into action items. 

Turn competitors into partners

Financial services have felt the heat of competition from FinTech startups in recent years and this shows no signs of slowing in 2021. What many banks and wealth management firms might find, however, is that their best bet is to kick off a partnership. Financial services organizations could consider leveraging the insights and capabilities of FinTechs. In fact, 94% of financial services companies said they were confident FinTech would help their business grow its revenue in the next two years. The bank can focus on holistic services, while working with FinTech to enhance one area of the business.

We saw this dynamic emerge in the concept of “open banking” in 2020 and that’s likely to remain a buzz in the new year, lending all the more credence to the foundational need for communication platforms that integrate easily with third-party systems and APIs. 

How LiveVox can help solve challenges in the banking industry

The banking industry is transforming at a pace unlike any we’ve seen before; changes that would previously have taken place over a decade or more are now happening within the course of a year or even mere months. In this rapidly changing business environment, LiveVox helps clients maximize their potential with solutions like digital communication platforms, practical AI, agent-friendly dashboards and battle-tested security tools.

With more than 20 years of cloud contact center expertise, we help banks, financial advisors, investment firms, collections agencies and more meet the demands of the modern consumer while mitigating risk and meeting all industry compliance requirements. LiveVox empowers you to create more personalized interactions with purpose-built tools for customer engagement like payment reminders, account alerts, tailored up-sells and two-way conversations. 
We recognize the new obstacles raised by the work-from-home movement and are your trusted partners in rising to meet the challenge. LiveVox makes it easy to monitor 100% of all agent interactions, flag conversations that require your attention, turn calls into highly specific training materials, and access deep insights that can be transformative to your business. See our cloud contact center platform in action by scheduling your free demo now, or contact us to speak with one of our dedicated financial services representatives today.

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About LiveVox

LiveVox (Nasdaq: LVOX) is a next generation contact center platform that powers more than 14 billion omnichannel interactions a year. By seamlessly unifying blended omnichannel communications, CRM, AI, and WEM capabilities, the Company’s technology delivers exceptional agent and customer experiences, while helping to mitigate compliance risk. With 20 years of cloud experience and expertise, LiveVox’s CCaaS 2.0 platform is at the forefront of cloud contact center innovation. The Company has more than 700 global employees and is headquartered in San Francisco, with offices in Atlanta; Columbus; Denver; New York City; St. Louis; Medellin, Colombia; and Bangalore, India. To stay up to date with everything LiveVox, follow us at @LiveVox or visit livevox.com.

To stay up to date with everything LiveVox, follow us at @LiveVox, visit www.livevox.com or call one of our specialists at (844) 207-6663.

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