Large and recent shifts in consumer attitudes and behavior have forced Financial Services Institutions (FSI) to accelerate toward a digital frontier. Emerging markets in Asia, in particular, saw a spike of 60% increase in contactless payments with an eightfold growth in paperless B2B payment flows.
Like many end users, I now expect immediacy, seamlessness, and all the necessary information in one place—usually my smartphone or tablet—to make informed decisions and get things done. While we were lucky that the financial sector was able to benefit from earlier technology adoption, there is an indisputable need to build business resilience.
McKinsey says this physical-to-digital shift is set to accelerate even more this year. And FSI organizations need to ride the wave, or risk being left behind.
Thankfully, the FSI sector is well-placed for innovation, as services are innately digital, and change leaders have already been innovating over the last five years. In fact, more than 60% of FSI organizations have already begun accelerating their pace of digitalization in response to the pandemic.
Fundamentally, I see four areas of change that FSI firms need to embrace: technology, data, customer centricity supported by processes, as well as people and culture to drive systemic innovation.
Leverage technology as an ally and embrace data
FSI firms like National Australia Bank are embracing the cloud as part of their digital journey to ensure the resilience of banking services, with the recent introduction of a multi-cloud ecosystem that will host 1,000 of the banks’ applications. This is reducing development timelines for system changes from weeks to only days.
According to IDC’s Worldwide Public Cloud Services Spending Guide (January 2021 Release), Asia/Pacific (excluding Japan) (APEJ) public cloud spend of FSIs will grow over three times from US$4.9 billion in 2019 to US$18.1 billion in 2024 at a compound annual growth rate (CAGR) of 29.9%.
While cloud is the foundation, I believe integrating data, particularly unstructured data, is key. Moreover, translating the data into hyper-personalized offerings via services and apps should be high priority for FSIs to drive value-creation for its digital customers.
According to Deloitte, technical debt in the form of legacy infrastructure and data fragmentation across the enterprise continues to impede banks’ digital transformation initiatives. In response, finance leaders expect to increase cloud investments, with more than half saying that their firms will increase spending on data analytics.
It is promising that we are starting to see firms like China Asset Management Co. Ltd (China AMC) helping market traders make more informed decisions by tapping into mountains of financial data with AI.
While most FSIs face the challenge of integrating insights from unstructured data and external sources, AI tools can optimize the process by analyzing up to 100% of data—an untapped resource for firms.
Risk analytics and personalization are other examples where FSIs need to integrate and process huge amount of data.
By unlocking comprehensive customer insights with customized solutions, unique templates, APIs and additional industry-specific standards with your chosen vendor, every customer interaction can now be personalized as diverse data pools to turn insights to action.
Cloud technology also places important tools in the hands of FSIs to meet their specific needs of modernizing business-critical applications to improve agility, risk management, and ultimately supporting the creation of new business models. As large batches of data are updated and analyzed, FSIs would only need to rely on a few accurate and credible data points to serve their customers better.
Serve customers better in the new normal
With customers seeking personalized, intelligent service, the attention is no longer solely on “engagement with customers”, but “engagement with impact.”
Time-starved customers are now able to quickly distinguish great experiences from mediocre ones and will continue to demand a seamless experience across various touch points, from call centers to in-app services.
We all know how tedious it can be to repeat our issue to different service officers each time we reach out. We want intuitive, empathetic customer service that picks up right where we left off at the last enquiry, while also being able to trust that all our information remains secure.
FSIs are already taking the lead in reshaping customer experiences, leveraging efficient, reliable and cost-effective data infrastructure and the cloud.
When COVID-19 hit, Paisabazaar.com stepped in to mitigate the unprecedented credit freeze, introducing a new solution built on cloud. It helped banks and non-banking financial corporations disburse loans in a completely digital manner, ensuring that loan applications and approvals could continue.
Union Bank, one of Philippines’ largest and most profitable banks, introduced automation to its Treasury & Investments Channel Management (TICM) workflows to manage efficient transactions remotely. The bank was able to simplify the entire remitting process and improve online client transactions. Customers can now receive copies of their statements, proof of investments and remittances with e-signatures that can be easily accessed remotely—anytime, anywhere.
Australia’s Westpac is also setting new standards in digital banking. Its Data Driven Experience Platform (DDEP) acts as the foundation for real-time data analytics across the bank and increasingly uses machine learning and other cloud cognitive services. This supports decision-making with the goal of delivering more personalized services based on greater understanding of customer behaviors and preferences.
It is promising to see how FSI firms are increasingly embracing fully digital strategies and are deriving value that ultimately impacts customer success.
Address the cultural shifts between remote workforces, customers, and technolog
Ultimately, technology must be developed in tandem with culture and people if FSIs want to accelerate recovery and do so sustainably.
The front, middle and back offices in a financial service business must collaborate to break barriers across these previously siloed departments to streamline data transparency and processes.
This begins with culture and prioritizing collaboration within the organization.
Yet, this responsibility does not lie solely with the CEO or CIO, but across the organization, with department leads and experience managers. Great culture does not just boost internal operations, employee morale and loyalty; a company with departments that work in tandem and share information also translates into better customer service and engagement.
If technology is the enabler for change, culture is its key driver. My biggest takeaway from the last year is that innovation does not need to be perfect right away to start—it just needs to be better than before. Innovation is a journey in which we need to embrace incremental change with the courage to fail and learn.
As FSI leaders embrace digital adoption, innovative customer solutions, and more efficient big-data utilization through AI, I am confident the industry will grow from strength to strength.