Digital technology upgrades are changing experiences in financial services, inside and out

Back in October 2018, researchers at Gartner made a striking prediction: Without sufficient digital improvements by 2030, up to 80% of heritage financial firms would cease to exist. And then, just 14 months later, the COVID-19 pandemic hit.
 
The pandemic accelerated the need for digital services in incumbent banks. As cashless payments and online banking surge, one study suggests that we may see a quarter of Europe’s brick-and-mortar branches close within the next two years.
 
Meanwhile, digital challengers are leading the mobile banking pack. German fintech N26 is now valued at $9 billion — higher than Germany’s second largest listed bank. In the UK, digital banks Monzo and Starling Bank now outperform established lenders across customer experience metrics, according to Ipsos MORI’s 2021 survey.
 
In order for legacy banks and financial services businesses to restore their favour with customers, change is needed. So, how can banks change their digital processes and infrastructure to deliver more compelling experiences for customers and employees? Let’s take a look.

Break up information silos and legacy data storage

The issue facing many legacy organisations is that their internal systems are old, inflexible, and inefficient. This makes them incapable of meeting the demands of today’s customers by effectively leveraging data to anticipate the trends of tomorrow.
 
Take data storage, for instance. Customer data at heritage banks is often held in separate silos, most typically divided by product. Storing data in silos leaves traditional banks unable to understand their customers and deliver the products and services that will meet their needs, today and in the future.
 
Once a single view of customers’ account data is attained then it needs to be married with customer-interaction data — including transactions, mobile app visits and customer service contacts — in order to fully understand the customer and their behaviors.
 
Customer Data Profile (CDP) software enables companies to manage this mountain of data and glean insights from it that can be used to present customers with well-timed offers for services that address their needs.

Update digital processes and infrastructure

Once organisational structures are streamlined, banks must focus on improving data architecture and digitising processes. It can be all too easy to gravitate towards customer-facing adjustments — a fancy app redesign, for example. However, such solutions only deliver positive experiences when back-end systems support their demands. Consumers now expect to be able to set up a bank account on their smartphone within 10 minutes — if they’re still forced to wait hours, or even days, for final approval due to legacy infrastructure, it won’t matter how flashy an app looks.

Financial services organisations need to invest in aligning their data environment and business processes, enabling more effective design and delivery of digital services. Upgraded infrastructure allows for stronger customer analysis too, with the opportunity to utilize insights that will have greater impact on results. Improvements to data systems can lead to better results on the front end — the kind that can help incumbents in the competition with challenger banks.
 
Again, implementation of CDP software can enable these results once the bank’s relevant databases are optimized to take advantage of its benefits. 

Create intelligent customer experiences

With the right infrastructure in place, internal account and behavioral data can also be leveraged alongside external third-party data to create even better, more personalised customer experiences. This could mean everything from offering virtual advice on how to spend and save, to offering tailored discounts from partnered retailers, or even providing customers with credit based on financial touchpoints beyond credit bureau ratings.
 
In recent years, third-party collaboration has been fostered by Open Finance, a shift in practice and regulations that enables consumers to share their financial data with authorised providers. In the UK, PSD2 regulations require banks to facilitate data sharing via APIs, and it’s in their interest to do so — customers increasingly expect to be able to curate their own connected financial ecosystems. Delivering this effectively, without the full cost of in-house development, can lead to better customer experiences.

Enjoy relationships that last

A financial services business that undergoes digital enablement of its services with the support of a specialist improves relationships both internally and externally. Winning over customers with great experiences is the focus — however, this starts with giving employees the tools to create those experiences in the first place.
 
Earning customers’ loyalty can be difficult, but so is recruiting, retaining, and upskilling staff. Employees need the right tools to solve business problems, just as customers need the right solutions to improve their financial lives. No finance professional wants to contend with a range of disconnected, ambiguous tools that cause frustration for them and their customers. Indeed, 80% of global employees now believe time-saving workplace tech like AI creates a more engaging, empowering employee experience. So, the sooner banks realise that digital investment also boosts workforce retention, the better.
 
Ultimately, the process of digitising financial services will lead to lasting relationships with both employees and customers. Whether you are a new fintech entering the market or an established financial institution, the right digital transformation initiative will lead to long-term success.

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