We are right in the middle of the storm of the 4th Industrial revolution; the age of the customer. What does that mean for the financial industry where regulation, technology and risk management are absorbing all of the budget that is being spent on regaining trust of customers? How do we learn from fin-tech startups to absorb their learnings into our day to day operations? What about all the new technology that people use; how does it fit it into the financial system? What can be used to ease the day to day operations?
Within the financial industries we distinguish three main trends:
- Regaining trust in the financial system
- Innovation to adopt new technology in products & services
- Digital capabilities to create consistent seamless customer experiences
The most important fundamental in the financial markets are all summoned in one word; trust. Since the financial crisis in 2008 trust was at an all time low with consumers and businesses. In the following 10 years the industry has worked hard in trying to regain trust of it’s stakeholders. In doing so it has not been very successful. According to the ‘Update Vertrouwen Financiële Sector’ of March 2019 trust in the financial system is at 43%; one percent lower than in 2009 right after the start of the financial crisis. In the study it is stated that a primary cause for the lack of movement seems to sit within the lack of engagement with customers followed by and lack empathy or understanding of their needs.
Innovation to adopt new technology
Technology is a greater good also within the financial services industries. Adoption to create lean and efficient back-office processes has traditionally been the focus within the financial services industries. From origin technological advances were focused on adding value to operational processes with the aim of gaining efficiency. This efficiency was in turn translated to collective benefits for businesses and consumers. Great example is the Ford Model T. By standardising processes and configuration the Ford Model T became widely available at a lower cost making personal motorized travel available for the middle class. Technically a logical move forward but the impact this had on other industries was huge! The customer base for P&C and Loans all of the sudden increased by over 50%. It is safe to draw the conclusion that innovations in other industries had huge effects on the financial industry.
In the 70’s and 80’s technology shifted more towards computing technology and was deemed to be cool for a select few. There were even nicknames for those who fought for the technological advances. Widespread consumer adoption of computing innovations was far away. Within financial industry this was completely different. Already in the 70’s and 80’ substantial investments were made on adapting computing innovation with the idea of gaining operational efficiency and automating as much as possible. Remember the mainframe, as400 and Cobol innovations? The green screens you had to fight your way through to change some data of a customer?
The last 10 years things are different. A massive shift has occurred in which speed of adoption of innovative technology has never been this quick.
With it two main challenges also arrived:
- Workforce adoption: Innovation of technology in day to day work life are going so quickly that they could feel like it would replace human logic (AI). Hence some resistance comes to adoption of new technology on the workfloor as it could replace people’s jobs.
- Data privacy & social acceptance: Technically far more is possible then socially is accepted. Behavioral data seems to be the new gold making people weary of adopting new forms of products and services that require data.
A good example is the idea of pay as you drive insurance. This has been technically ready to go for over 10 years. From an actuarial science perspective the idea of insurance premium calculation could be automated making the product different than traditional insurance calculations.From a social acceptance aspect the idea of pay per use insurance is still not a common good in many countries. This however is rapidly changing as convenience, customer experiences are becoming more important to consumers and businesses.
From self driving cars to artificial intelligence, from pay per use to group/crowd funding, most of the fundamentals of banking and insurance are changing. All financial institutions are investing heavily to jump on board of the new possibilities that innovation brings. Start-ups are financed, innovation centers are set-up, new products are launched so lot’s of positive movement there.
Digital capabilities seem to be a key subject in solving the first two trends. If one has it’s digital capabilities up to par then customer contacts are orchestrated with the objective of getting ther right customer value creating a personalized experience building their trust. Easy integration allows you to master new innovations! Plug-in new products and services at ease! Sounds easy… In order to do so you would need a CRM platform that integrates seamlessly with all of your touchpoints; preferably real-time so that innovations can actually work. A real 360degree customer view from which your employees can really support your customers quickly and easily. Support them at what they need, when they need it and how they want it done.
Unfortunately, studies show that most financial institutions do not believe that they have the required digital capabilities that they need.
Nextview & Financial Service Cloud
At Nextview we see that Innovation in the Financial Services Industry is growing at a rapid pace. We embrace innovations such as PSD2, open banking so that we can connect them to your customers and your employees making their lives easier. Using readily available technology to enable your employees and customers to have meaningful experiences making the difference. We support the use and adoption of the Salesforce Financial Service Cloud platform as we have experienced it’s flexibility, high security standards and innovative power to use AI in daily routines making everyone’s life easier.
To make matters short; we believe that we have an answer to get your digital capabilities up to par so that your employees and customers can benefit from you being their trusted financial partner.
Would you like to know more? Contact our Industry Lead Nikolaj Kiepe now by e-mail or by phone on +31 (0)6 5354 4374 to make an appointment. We’re looking forward to meet you!