Top five barriers to overcome for a better customer experience
To say that the financial sector has been transformed by financial technology is something of an understatement.
Over the past few years, we have borne witness that a whole range of digital-only banks have lured more and more customers away from the traditional main banks. This has resulted in the established banks stepping up their own digital offering to keep pace with these new participants.
In fact, we’d likely view any provider with suspicion today that doesn’t provide customers with the digital tools to open accounts or manage their existing ones 24/7.
In accordance Cornerstone Advisors’ 2022 What’s Going on in Banking study, to date three-quarters of banks and credit unions have launched a digital transformation initiative. A further 15% are busy developing a digital transformation strategy this year.
However, some banks have an infinitely larger budget to invest in digital tools than others. A staggering fact in the world of financial technology is that each of the world’s top 100 banks spends an average of 26 times more on IT than the individual 900 banks that follow them.
So what can smaller and mid-sized providers, many of whom will be part of this group of 900 and don’t have a bottomless pool of money to spend on fintech, do to keep pace with big banks, big tech and many digital-first- suppliers?
If you’re one of these smaller or mid-sized players, before embarking on your next CX improvement program, it pays to understand the obstacles in the way.
Here we analyze the top five barriers you must anticipate.
IT backlog
A potentially long list of priorities in financial services can push improving the customer experience from the top of the IT agenda. These include operational risk, cyber security risk and regulatory and behavioral risk.
Such burning issues can cause projects to improve the customer experience to be stuck in a lengthening IT queue. Cruelly, the regulatory burden for mid-tier financial services is much the same as for larger institutions. Consequently, many established middle layers have a longer IT backlog than digital leaders.
If your digital banking requirements disappear for six months or longer, you fall further behind more nimble competitors.
Older systems
Older technology uses a disproportionate amount of IT resources.
Even small changes can take a long time. And given a choice of propping up creaky systems or working in a dynamic team using the latest cloud technology, it’s obvious where the best IT talent will gravitate.
Simply put, if your company is burdened with legacy systems, you have fewer resources available for innovation, and digital projects will take longer.
Digital talent crush
The global shortage of IT talent is getting worse. According to The Computing Technology Industry Association (CompTIA), the UK’s net tech employment has grown between one and two per cent each year in recent years, woefully short of demand.
47 percent of IT decision makers say they have accelerated digital transformation plans due to the pandemic1.
Unfilled cybersecurity jobs have grown 350 percent in the eight years to 20212.
In these market dynamics, it is becoming increasingly difficult for mid-tier financial services firms to attract and retain the digital talent they need.
Lack of digital flow
Like any team sport, agile product development requires combat training to build confidence and fluency. Unlike digital leaders, laggards lack the necessary experience to develop such fluency.
And with a quarter of project managers likely to change jobs by 2021, mid-tier financial services firms are particularly vulnerable when headhunters come calling to fill positions at larger banks and fast-growing digital-only providers.
Consequently, even if mid-tier firms succeed in recruiting the latest digital development skills, they risk wasting such talent on projects that run into difficulties. According to the Financial Conduct Authority, 24 percent of serious incidents are the result of errors in IT changes.
The story of doing it
The heroic efforts of operations teams can make building the business foundation for digital customer experience improvement more challenging. They mask the inefficiencies of disjointed systems with human integration—the manual steps, rekeying, and workarounds they’ve used for years.
Customer introduction is a good example: Digital leaders integrate online forms with back-office systems and third-party AI-powered web services for KYC and AML checks, credit risk checks and more. They automate every step of the onboarding process – making the customer experience lightning fast and the direct implementation cost minimal.
Digital laggards lack integration and automation. They often use paper-based application forms. When you use web forms, they result in little more than an email to a shared inbox. Applicants wait while staff perform slow, repetitive and error-prone tasks. Decisions can take days. Applicants often have to visit a branch to prove their identity. Implementation costs are sky high, especially considering the high dropout rate.
About the Author: Jerry Young, CEO of i.e. Digitala portfolio company of Parabellum Investments which is led by the founder and CEO, Rami Cassis
