Why Financial Services must look at Digital Transformation to Deliver Customer-centricity

With digital competitors emerging in the Financial Sector (FS) at an ever-increasing rate and with technology that has transformed the sector in terms of the way organisations engage, prehistoric legacy systems are standing in the way of digitisation and hindering FS organisations efforts to make improvements to the customer experience (CX)

Modernisation has often been viewed as something that is expensive, complex and not without risk and therefore it has taken a major event such as a power outage or cyberattack to push FS organisations into changing their priorities.

However, as of August 2018 The Financial Conduct Authority (FCA) has announced that all high street lenders offering business or current accounts will be forced to publish details of major operational and security incidents in order to provide consumers with more transparency, enabling them to easily compare services offered by Financial Services (FS) providers and to drive greater competition in the marketplace. If ever there was an impetus for FS organisations to make operational changes in the form of digitisation it would be now.

Inarguably, there is a wealth of unlocked value still to be had from operational systems, however that value purely depends on how FS organisations utilise digital technology. An organisation’s ability to become more agile to meet consumer demand depends on it being able to change more than one process at a time in order to deliver the best digital customer experience.

To overcome these issues FS services must look at an organisation-driven approach that encompasses converging business and IT operating models into one integrated digital strategy with exceptional customer service at the forefront.

Consumers mostly interact with FS organisations via technology and therefore IT and should be part of their core offering. Insight-led decision making, customer journey optimisation, legacy replacement where possible, digital integration and organisational agility is vital, in order for FS organisations to offer their customers what they demand from their provider.

FS organisations need to incorporate these insights directly to consumer devices via mobile apps in order to bring the back office to the forefront, leaving the legacy mindset and technology behind. Indeed, almost 4 in 10 (39%) of banking executives cited their complex legacy IT environment, with the cost of modernizing those systems the most significant obstacle to adopting new technologies according to Accenture.

Another complexity is a lack of knowledge behind legacy technology. Due to the infrastructure being in place for decades, staff naturally move on without passing down processes to future generations. Therefore, FS organisations should look to agile SMEs to help customisation and integration of digital and mobile applications in order to fit with current and future consumer and business needs.

For example, Barclays has introduced a new feature to its mobile app that will enable its customers to view their current accounts with seven other banks. Although consumers won’t be able to make transactions, it does offer them a simple and secure way of monitoring their finances which can otherwise be time consuming.

The move comes in light of the introduction of ‘Open Banking’ in January and new compliance regulation PSD2. PSD2 is not only a regulatory compliance and a technological challenge but also a strategic and operational one. The legislation acknowledges the rise of payment-related ‘FinTech’ companies and aims to create a level playing field for all payment service providers while ensuring enhanced security that protects customers.

The app uses API technology that ensures customers’ accounts are linked into the app security without ever having the use other banks’ user names or passwords which offers the same protection as traditional and web-based banking.

Inarguably, Barclays is one of the first out of the blocks, but ultimately, waiting is not an option for FS organisations, legislation aside. Given that modernisation was ranked as the most important technology (IT) trend for nearly a quarter of global banking respondents by analyst house Ovum in 2016, CIOs need to look at simultaneously managing their portfolio of technology assets to emphasise digital activities that differentiate them from their competitors. Those that can address these emerging challenges and recognise the opportunities of digitisation should, in turn, reap the rewards in customer centricity and retention.

About the Author

Wayne Munday is Non-Executive Director at Rokk Media, who specialise in web development, mobile application and software solutions for businesses. Wayne has extensive experience in international sales, marketing and strategy through positions at NavTeq, MapQuest.com and AOL Inc. Having also served as the UK Managing Director for erento, CRO and Co-Founder of OTPmedia and COO at Ticket Zone, Wayne brings his digital media and business development insight to Rokk. Rokk Media assists all organisations from SMEs to large-scale corporations with their digital transformation, utilising almost 20 years’ industry knowledge and the latest technology to facilitate the strategy, design, production and support of digital projects.