Adapting a digital core crucial for incumbent and digital-only players

February 7, 2020

At the aggressive rate with which technology is infiltrating the day-to-day lives of consumers, financial services providers today need to come to the table but beat the customer there too. In order to retain customers, they need to stay ahead of the curve in terms of coming up with a suite of offerings, not just answering consumers’ present needs but in anticipation of their future needs.

This is especially crucial with the advent of virtual banks claiming to do the same, if not better. If both traditional and cloud-based digital banks can deliver the customised services and guidance customers desire via a technology-based experience, they will withstand the competition only set to intensify in the financial services landscape.

Currently, banks are all using technology differently, which means they are all realising different results[1].All players along the financial services value chain y to better serve customers and end users. For traditional players specifically, this adoption of a digital core does not mean a complete overhaul of legacy systems. Rather, it is a requirement for them to embrace the ‘technology-first’ mentality that their customers, who are all digitally aware to a varied degree, possess.

Possessing a digital core means to have core business operations to be driven by technology – the fuel to provide insights and intelligence across all internal functions to successfully pivot to the future. With this, traditional banks can best set themselves up for success as a legitimate differentiator in an increasingly competitive environment.

Customer needs are anticipated, and not just met, through personalisation

The incumbents have put all their efforts into unifying the customer journey and consolidating channels to an omnichannel system. However, current traditional banking systems lack the intelligence to identify the contextual intent of customer transactions and the adoption of a customer experience strategy becomes a last-minute consideration.

For instance, banks cannot expect to acquire, engage and retain customers if personalisation is an afterthought. This is especially so when 3 out of 4 Singaporeans consider a bank’s overall customer satisfaction important when choosing their primary financial institution, according to the latest J.D. Power Retail Banking Satisfaction Study[2].

At present, there is still a gap in wholly fulfilling the consumer’s needs and expectations for personalisation. Though two-thirds (66 percent) of consumers already feel that companies are doing “much/somewhat better” in their efforts to personalise their experiences, delivering a personalised experience is still not reaching the vast majority of a bank’s customer base[3].

Financial institutions need to use technology to leverage their core competency in having visibility over a customer’s total knowledge lifecycle and journey. One example is to uncover trends using analytics. This offers banking institutions a way to enhance the process of ultimately anticipating events and a customer’s needs and use patterns before they themselves even realise. Personalisation is at its best when the customers know that their most important goals and components of their financial life are at the centre of all decisions made.

The co-creation of innovative solutions should also be considered. In this hyperconnected economy, all players in the ecosystem will no longer be capable – or expected – to build entire solutions on their own. Working with external partners to build upon legacy technology is one strategic approach for banks to keep personalisation at their digital core.

Banking processes are transformed to meet evolving customer needs

Being a successful financial services provider today does not stop once the customer needs have been served. By adapting a technology-first mindset, banks set themselves on the path of durable transformation via increasing customer satisfaction. If banks lag behind their customers, organisational structures and processes will fail to deliver their customers’ changing needs, let alone anticipate them.

Emerging technologies such as artificial intelligence, predictive analytics and natural language processing have transformed the way people want to interact with companies, especially their financial institutions. While incumbents have spent the last few years accelerating the adoption of digital strategies to stay competitive, this has been at a laggard pace. What customers need to see is their bank being proactive in identifying how technology can play a part in both long-term strategies and short-term adaptations to meet their needs.

The financial services industry is no longer a business about facilitating transactions. Technology has empowered the customers of today to demand personalised and efficient services that will help them reach their financial goals. Harnessing the power of technology in today’s financial ecosystem is a must for both traditional and new players to be better prepared to meet their objective in being a customer’s financial institution of choice.

References

  1. https://internationalbanker.com/technology/will-the-constraints-of-traditional-systems-cost-banks-the-next-generation-of-customers/
  2. https://www.businesstimes.com.sg/banking-finance/2-in-3-singapore-bank-customers-keen-to-try-digital-banks-poll
  3. https://thefinancialbrand.com/74986/banking-personalization-targeting-trends/
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