9 top digital trends that are transforming the financial industry

Traditional financial services companies have recently been more and more eager to incorporate best practices from agile and more flexible fintech startups. Banks and credit unions are beginning to see the advantages of moving quicker, introducing innovation at a faster pace, digitising core processes and making the most of their data with advanced analytics methods.

In some way, consumer expectations of safer and quicker financial operations, as well as the fierce competition, have pushed even the well-established companies to look for a more precise strategic focus, as well as adopt eagerly new technology. In 2019 we can expect a wealth of financial and tech resources to be aimed at revolutionary changes in financial services. Good news is the end goal of most of these expected changes is to put the consumer front and centre. We will see more powerful mobile applications, voice-enabled gadgets, contextual personalisation and a lot more exciting innovations.

Here the 9 transformational trends that will drive financial services innovation in the months to come

Personalisation of offers and services by customer segment is old news. 2019 is the time to develop communications and experienced tailored for the individual customer. The idea itself is nothing new, but advanced analytics and digital technologies now allow the process to scale quickly and without a huge increase in human resources for the entirety of the customer base, not only specific small segments. Personalisation can be done at every stage of the customer journey to improve conversion, upsell or cross-sell rates.

The so-called “segment of one” will be defined by advanced analytical technologies that combine CRM data, Customer Demographic Data, Primary Research Data, POS sales data, customer experience data, customer service data, loyalty card data, etc. For example, each individual customer can receive a personal digital brochure which contains tailored upsell offer for a credit card upgrade, based on the customer’s credit card usage, credit ratings, demographic info, etc. This matching of customers to offers is done using an advanced machine-learning model which is embedded in the CRM and marketing communication workflow of the company. Similarly, retargeting of customers through other digital channels is also based on an individual-level targeted offering.

Serving a segment of one is not limited to individual consumers. Banks and credit unions can also focus their efforts on the small and medium enterprise (SME) segment and the needs of individual businesses.

Open application programming interfaces (APIs) can both be an opportunity and a threat to traditional banking. One of the main competitive advantages of emerging fintech providers is the promise of an easier flow of actions and more intuitive interfaces, but when it comes to security most people would still prefer the sturdiness of a traditional bank vault.

Regulatory bodies globally are increasingly requiring banking organizations to enable customers to share their data securely with third parties to power new financial services and increase competition in the banking industry. By making account and payment data available through secure application programming interfaces (APIs), consumers have greater freedom and control in how they interact with their financial service providers.

One of the most exciting capabilities of AI technologies is the power to predict customer behaviour. Banking is a sector where this capability is of significant appeal, especially when it comes to minimising losses from bad credits or unsuccessful investments. But AI’s real potential lies in providing value to the customer in the form of a Next Best Action Recommender system. It leverages existing data and identifies the best action to maximise the chances of success: e.g. upselling or preventing the client from switching to another bank. To ensure “always on” availability at the customer’s convenience these systems can come with the interface of robo-advisors and AI-driven chatbots. Powered by machine learning algorithms and getting better with each processed case, these chatbots have the potential to take on many tasks that would be traditionally part of a personal banker’s job. They can be a resource-efficient way to proactively change customers’ everyday behaviours, with figures and insights contextually delivered.

On a longer perspective, if financial institutions integrate this capability with the expanded services of open banking and connected devices, they can really change the game for good.

Social media will still have an important place in the general marketing strategy. The main shift will be in the way they are utilized – from a performance channel with low-cost inventory to a place to build meaningful relations with micro-influencers and distribution of quality content. The main reason behind this is that consumers are growing increasingly tech-savvy and usually perform extensive research before choosing a certain brand. They are looking for authenticity and insightful content before they put their trust in a product or service. Engaging micro-influencers is a big area where financial institutions can invest to fortify the trust in their brands.

The speed at which consumer data is generated calls for the same increase in the speed at which data is processed, analysed and generated insights turn to real-life actions. AI and machine learning technologies are developing and they now allow for the generation of real-time data insights. 2019 is the time for real-time data to be translated into actual benefits for the customers:
• Speed of service – end-to-end digital account opening, identification authorisation and funding
• Speed of consulting in the form of proactive advice and personalised service alternatives
• Speed of product development – bringing new digital products to market faster
• Speed of customer experience – generating customer feedback at the point of interaction and implementing improvements right away

Establishing a real-time CX strategy doesn’t have to take weeks or months to develop — just a deliberate top-management decision to create a path to more personalized customer experience. Building a strong personalized marketing platform at scale is a challenge with tremendous opportunities. Financial institutions that deliver customers timely, relevant, and personalized messages, however, can build lasting loyalty and significant revenue growth.

Digital consumers are sceptics and they have been doing extensive research before buying a product for years while choosing a banking or other financial service has been more shielded from digital exposure and consumer choices were mostly guided in a bank office or through personal consultations with experts. The rise of fintech has made information about payment platforms and other financial services readily available. Consumers are armed with more information and expectations than ever. Digital research is becoming an important part of their customer journey. This trend will call for increased transparency and closer engagement with influencers to accommodate consumers in the first steps of their journey.

Improvement of personalised experience is not possible without the so-called “personally identifiable information” (PII) or “sensitive personal information” – for example, date of birth, email address, social interactions, buying behaviour, personal preferences and passwords. That makes it all the more important to protect such information at all costs against hacking and phishing attempts and not betray consumers’ trust.
In 2019 this trust will be increasingly hard to gain – it’s even expected that consumers will share valuable personal information only in exchange for certain incentives. Incentives will also be expected for other consumer actions, such as watching an ad or referring friends.
Regulations, such as GDPR in the European Union, are giving consumers the power to determine who can access their PII. This places the burden of security of PII squarely on the companies each consumer engages with. In the end, consumers will expect a tangible value for the use of their personally identifiable information. If they receive this in the form of enhanced customer experience, the value of this experience will yield trust in the brand.

Despite continuing talks about “customer centricity” and “improving customer experience”, those will continue to be nothing more than buzz words, unless organisations manage to break down product silos and leverage cross-functions data to deliver a contextual digital experience.

According to the Digital Banking Report, the objective of delivering a positive customer experience has become secondary to other bank priorities, resulting in a transactional banking relationship with the consumer. For financial organisations to change this dynamic, and meet the evolving needs of today’s consumer, there are five areas that have emerged as crucial priorities:

• Focus on creating better experiences rather than reducing costs when planning digital engagement
• Use advanced analytics and machine learning method to create an experience, tailored to the individual
• Let customers engage when and how they want to engage
• Provide advice, consultations and sales information proactively, based on prior interactions and behaviour patterns
• Provide a unified customer experience from research to purchase decision to service usage

The ability to quickly implement strategic improvements in these areas will define the future leaders of the global financial industry.

Digital transformation is led by people – talented visionaries who are not afraid to move quickly and learn from their mistakes. But most importantly – they must have valuable digital skills, such as data analytics and user experience (UX) design, to artificial intelligence (AI) and software engineers. Competition for top tech talents is fierce and financial institutions need to work on core reasons why they are a preferred place to work. At the same time, traditional organizations need to have a sensible strategy to cope with the loss of jobs caused by technology and automation. In the short term, this will lead to an increase in partnerships with outside consultancies and managed services providers, as well as training for current employees.

Closing Thoughts – A Digital Future

Genuine digital transformation of financial services will take time and effort to move away from traditional business model and focusing on hyper-personalised products and services. New technologies are to take over virtually every aspect of the business – from digitisation of back-office process to implementing a frictionless customer experience.

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