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The Digital Challenge in Financial Services

February 12, 2016 | stratabeatit

Customers are increasingly taking to their laptops, tablets and mobiles to search for goods and services and to make buying decisions. For providers of financial services this presents a challenge and an opportunity to meet the expectations of customers engaging with them in this way.

It requires a consistent customer engagement strategy across physical and online channels and the delivery of a seamless customer experience regardless of the channel they choose, or even if they choose to switch between them.

Newer market entrants compete with ‘traditional’ players in this space. ‘Disrupters’ in the financial services industry set themselves up in the digital age and designed their offering, and operational systems, to respond to today’s customer needs and market environment.

The opportunity is there to succeed, and for those that get it right, customer engagement through digital channels can go up. BBVA saw an increase in consumer loans through digital channels last year with over 19 per cent of the total made in that way and mobile users up 45 per cent.

For many providers of financial services, matching customer expectations of speed and convenience – particularly those expectations set by digital channels – means looking end-to-end. If the process of taking a prospect from enquiry through to paying customer isn’t as smooth as it can be, there exists an opportunity to improve.

This means ensuring that back-office processes and systems can return rapid, risk-assessed credit and loan decisions. Credit assessment processes involving manual, paper-based operations don’t cut it. To meet customer needs and stay on top of changing market conditions, including evolving regulation, financial institutions need to automate, reduce duplication, speed up information processing, cut costs and pave the way for continuing innovation.

Such improvements will be felt beyond consumer credit and lending. Complex, manual processes deliver poor commercial lending experiences too. For small businesses it can be particularly frustrating. The time and effort required to pull together a credit or loan application can be daunting, especially when faced with the prospect of failure. The small business owner often manages all financial aspects themselves; for them, investing time in funding matters can be an unwelcome distraction from their core business.

For service providers, digitisation – which should have within its scope every platform and process – should be recognised not as an IT project but as a transformation programme with the goal of delivering customer value at its heart.

Many banks are embracing the opportunity for customer engagement through digital channels and the potential that can come from a digital transformation of back office infrastructure and operations. New market entrants and small banks may be nimble in adapting and adding to their portfolio of offerings but institutions with heritage have established customer bases and a wealth of data to draw upon as they execute their strategies. It’s a competitive market, with a high – and growing – level of choice for consumer and business customers alike. With so much choice, those customers can be particular about not just the product or service they’re after, but how they get it too.