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. In the unprecedented year of 2020, 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 2021, what solutions and opportunities are available to meet those challenges?
Top 5 Challenges for Financial Services in 2020
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 continued 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.
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 customer’s 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 the 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.