In partnership with Sitecore, Econsultancy has launched a new report – Financial Service Focus: Are brands meeting customers’ next-level digital expectations? – exploring challenges and opportunities faced by brands operating in the sector. Based on a survey of 201 financial services executives and 155 respondents working across all other industries, here are the key highlights.
Legacy providers understand the challenges ahead
It goes without saying that the past year has proven to be one of immense change across many areas of financial services.
Retail banking finds itself on the front line, serving customer needs as the COVID-19 pandemic impacts finance and customer mobility. The insurance industry, already undergoing a digital transformation, faces a hardening market and increased pressure to reduce costs. Whereas wealth management customers continue to seek improved, digital access to services as their appetite for self-service grows.
Financial services (FSI) executives recognize the need to address ever-increasing customer expectations as 40% reported this to be among the most important changes happening today requiring action (see Figure 1). The heightened expectations have been undoubtedly partly influenced by the rapid shift from in-person experiences to digital experiences, regarded as an important change for one-third of respondents.
Figure 1: What are the most important changes happening in the way you engage with customers today that you need to take action to address? (Respondents could select three options.)
Delivering next-level digital experiences
The return to in-branch interactions poses the next challenge for FSI organizations: managing a blended online and offline customer experience for a larger number and wider variety of customers.
For now, at least, there is an intensified focus on digital channels. The top three channels that FSI executives plan to emphasize the most in the next 12 months are digital: social media and websites (both at 24%), followed by mobile applications (20%). By contrast, only 12% of the executives plan to emphasize their in-person channels (see Figure 2).
Figure 2: Which channel will you place the most emphasis on for the next 12 months?
Centralization is key to end-to-end customer journeys
Experiences that address customers’ broader needs, deliver innovative solutions to previously impenetrable challenges, and work seamlessly across all channels are the key to differentiation in a crowded brand world. That means being able to recognize individual customers as they access providers across an ever-expanding range of touchpoints.
Taking a centralized approach to customer journey management is a prerequisite for delivering true personalization at scale.
However, FSI organizations still lag compared to other industries. FSI organizations are less likely to agree that their organization manages experiences end-to-end and in a way that is “centralized, with designated owners to manage key stages, actively” (FSI - 38% versus Other industries - 52%).
To compete strongly and more freely in an intense and evolving market, legacy businesses clearly need to transform their organizational setup and tech.
Technology has more profound role in transformation
The financial services industry is notable for having many IT-heavy players. HSBC, for example, has more than 20,000 employees in its IT group, which is more than well-known technology vendors. At the same time, it has made significant investments - $2.3 billion - in AI and digital innovation.
While FSI companies may have embraced technology to the degree that has helped transform front-end user experience, our survey indicates that integration at the back end may be a greater problem. For example, compared to other industries, FSI senior executives are less likely to agree their organization has martech stacks fully integrated with CRM and commerce platforms (28% versus 40%).
Even with the growth of the cloud and SaaS, optimization to support an organization’s unique set of business capabilities and CX delivery expectations remains a challenge. In some cases, the quest for a comprehensive tech stack can result in a fragmented collection of technologies that are challenging to maintain and lack the flexibility to evolve with changing business needs.
Optimize customer data to overcome necessary hurdles
Given challenges in FSI regarding back-end integration and regulations, it’s perhaps unsurprising that only 31% have centralized customer data used for all-digital and offline touchpoints. In this scenario, firms are more likely to struggle with data silos that get in the way of enabling a single source of truth for customer profiles.
The resulting inefficient marketing workflows can affect an organization’s ability to maximize customer data. Sharing data across the right teams in real-time can help alleviate inefficiencies. However, decentralized customer data management in silos prevents firms from delivering the most appropriate communications that link the network’s physical and digital parts.
And yet, customers will continue to have high expectations. This was brought into the spotlight for insurers during the pandemic. Changes to customer lifestyles, notably the sharp reduction in miles driven during the various lockdowns, highlighted the inflexibility of traditional insurance premiums. In response, many carriers, including Geico, USAA, and Farmers, offered a limited-time premium reduction. Efficient customer data management will therefore be helpful for anticipating these shifts and to be proactive in taking actions around changing circumstances.
Move towards next-level experiences
Technology doesn’t just centralize customer data; it analyzes and enriches data making it a proven driver of competitive advantage. However, linking data together across different platforms, both online and offline, is a challenge the world over.
Using machine learning (ML) and artificial intelligence (AI) to plug gaps and target customers effectively would significantly shift organizations towards a more profound digital transformation.
Our research indicates that only 31% say that the digital experience is dynamically and automatically tailored for each customer using ML. But, an additional 38% say they use algorithms and/or persona-based personalization and experimentation with machine learning to improve segmentation and targeting.
Figure 3: To what extent are you personalizing the digital experience today?
Increasing the numbers here, particularly around algorithm and persona-based targeting, could help FSI organization make a significant leap in digital experience maturity.
Understanding the way forward
When asked about their primary business goals, the participants` top response was “better leveraging technology to accelerate our business success” (28%). There is a willingness — perhaps driven by necessity — across the whole organization to delve deeper into systems that deliver next-level digital experiences.
Results in this report are also a reminder that, despite the gaps in customer understanding and lack of centralization, FSI companies do not lack data or even technology solutions per se. Instead, they need to resolve the lack of connectivity between systems and silos to keep up with ever-evolving customer behaviors and needs.
To learn more, access the full report and results.
Michael Plimsoll is a Senior Director of Industry Strategy and Marketing at Sitecore. Find his linked on LinkedIn