The past 12 months has shown that technology is more important than ever to financial services organisations.
Vinod Kumar, CEO of Vodafone Business, believes it’s crucial for financial services organisations to adapt to changing social attitudes and customer behaviours, and here will talk about how these factors are critical for the sector to prepare for a post-pandemic world.
One thing that last year taught us was that entire industries and businesses have the potential to successfully change tack and digitally transform in very short timeframes. With this in mind, the financial services industry also has great potential for change, and in fact could be better placed to move quickly than other industries.
The sector has been working hard for years to add new channels, simplify processes and remove legacy infrastructure, all with the goal of better customer service. But experiences over the past few months have highlighted that digitalisation is imperative for businesses in this sector, with those further down the path better placed to succeed than their peers.
Adapting to innovation
So what do businesses leading the pack have in common? At Vodafone Business, our recent Future Ready Report found that 26% of financial services businesses are “future-ready” and have a positive outlook for the future, with a focus on technology projects and customers’ evolving needs. Those who had already invested in their digital capabilities were better placed to deal with the pandemic than their counterparts, and those that hadn’t have been forced to play catch up in recent months.
Most would agree that innovation in the financial sector has accelerated since the pandemic began. This acceleration builds on technology-driven changes kicked off by the rise of challenger banks and insurers, capitalising on new regulations and using their digital-first approach to release simple to use, exciting and engaging products. With their obsession with agility and ease of customer access, they have rewritten the rules in this sector.
Larger financial institutions have sometimes drawn criticism for their pace with digital innovation, with suggestions that a risk-averse culture impedes innovative new projects. But it is important to note that they are not out of the game. They can still rely on their great customer access, brand cachet and understanding of regulations to compete with nimble challengers.
Additionally, data is at the heart of digital transformation, a resource that retail and private banking companies have in abundance. Blending deep, data-powered insight with their powerful human-centric brands gives these organisations an opportunity to create real differentiation when it comes to customer experience. If this is done correctly, they can become smarter, faster and more resilient, while retaining their brand identity.
Attitudes are also changing. Some 79% of all organisations in our research now believe traditional business models are being radically disrupted, and that innovation is clearly underway. A further 92% believe that their business embraces change rather than tries to resist it.
Clearly, nearly all financial services organisations recognise the importance of these trends. For larger financial institutions, there is a great opportunity to drive change while retaining the heritage that helps to build trust with customers.
Connectivity, customers and data insights
Customer experience is at the heart of many of these change programmes. Financial institutions are working hard to provide the kind of 24/7, seamless experiences that today’s customers expect.
The need for consistent digital evolution is not just seen in back-office processes, or in digital native channels such as mobile and online banking. Technology can also help financial institutions rethink physical branches, and how customers are served during in-person visits.
Take the impact of 5G as an example. As networks roll out, all industries will benefit from accelerated processes, improved data capture, and the ability to handle more connected devices than ever before. In bank branches this can mean more innovative touchless experiences, such as augmented reality guides and in-store digital kiosks that help customers to serve themselves.
This type of digitalisation has a two-way benefit. Customers have a more immersive and engaging experience, building appreciation and affinity for the brand. Meanwhile, more devices connected and a greater amount of data flowing to financial institutions means that analytics can be used to find efficiencies and even identify new customer needs.
The key is being open to experimenting with new technologies to work out if they can help deliver value. Those companies that are fastest to trial new tactics will be the quickest to realise potential benefits.
A springboard for success
Although the coming months will be challenging for businesses in the financial sector, being open to technology-driven change can help them weather the immediate storm and lay the foundation for future success. Businesses in the financial sector should prioritise understanding how new technologies will help them serve their customers better, identify changing needs and deliver data insights.
All of these factors will play a critical part in meeting the changing needs of customers. Businesses that have already invested in their digital capabilities are evidently more prepared, but it isn’t too late for those that haven’t: the key is to act now.