Is your client experience is critical for your business?

Digital transformation is a critical and often buzzworthy topic across various industries. However, one sector experiencing significant effects from this transformation is financial services. Established financial organizations are being compelled to completely reimagine and revamp their long-standing practices, potentially spanning decades. In this article, we will explore the key trends, challenges, and themes associated with digital transformation in the financial services sector.

1. Customer experience:

The concept of omnichannel banking has been around for some time. But as customers increasingly demand seamless experiences and frictionless transactions, the notion of true omnichannel banking becomes increasingly significant. Omnichannel is not merely about providing a consistent experience across multiple platforms (e.g., website, app, messaging); it involves offering a connected and seamless experience across all channels. Customers expect a personalized, efficient, and consistent experience every time they interact with a financial institution, regardless of the channel they use. This poses a significant challenge for many financial service organizations: how can they deliver such flexibility and agility while dealing with legacy systems and cultures?

1. Decline of physical branches and physical currency:

In recent years, bank closures have been a common topic of discussion in the media, workplaces, and social gatherings. It is becoming increasingly rare to find physical bank branches open or available with extended hours in local town centers. Financial institutions face the challenge of delivering comprehensive experiences across digital platforms, reducing the need for customers to visit physical branches. This shift saves money and resources, enabling these organizations to transform their services to remain competitive. Additionally, as online banking makes transferring money quick and easy, the prospect of keeping physical branches open becomes less attractive and financially viable.

1. AI and machine learning:

Financial service organizations are turning to cutting-edge technologies such as artificial intelligence (AI) and machine learning to meet customer expectations. AI and machine learning are revolutionizing the finance sector in numerous ways, making life easier for both customers and organizations. Some examples of AI's application in financial services include:

• Anti-fraud: AI and machine learning facilitate the analysis of customer spending patterns, enabling organizations to quickly and effectively identify anomalies and respond to fraudulent activities.
• Auto-advice and finance management: AI can analyze customer spending patterns and provide recommendations for saving contributions, spending reductions, or even suggest financial products like overdrafts. On the fund management level, machine learning is utilized to recommend and execute investment strategies by analyzing millions of data points and identifying patterns that humans may struggle to detect.
• Speedy application processes: AI and machine learning can receive and analyze credit card applications, considering an applicant's credit history, financial profile, and residential history against predefined parameters. This eliminates the need for manual processing, benefiting both customers and organizations.
• Chatbots: Some financial services organizations have deployed chatbot technology to assist customers with simple tasks like money transfers or balance inquiries. When properly utilized, chatbots can create internal efficiency savings, reduce manual tasks, and aid compliance with regulations such as GDPR.

Rise of FinTech and its impact on larger banks:

Established financial institutions now face competition from smaller startups and challenger organizations in the form of FinTech companies. These startups are more agile, open to leveraging advanced technologies, and not burdened by legacy systems. Their flexible culture allows them to adopt and deploy powerful technology, delivering exceptional customer experiences. In response, larger financial institutions must keep pace with these changes or risk becoming irrelevant. A study by Econsultancy revealed that over 40% of financial service businesses worry about appealing to the next generation of customers. To stay relevant and competitive, these institutions must embrace agility, overhaul established processes, and disrupt traditional systems.

The current landscape presents both challenges and opportunities for financial service organizations. Agile FinTech startups, adaptable to a changing market, are competing against major players who rely on their reputation and existing relationships. However, this competition ultimately benefits the customer, as established organizations transform to deliver more efficient and seamless services. To succeed, large banks must be receptive to transformation and execute it efficiently.

If your organization, whether in financial services or any other industry, wishes to explore how digital transformation and innovative technology can enhance efficiency and deliver better outcomes for your customers and your organization, feel free to reach out for a free two-hour consultation.