Trends in financial services over the last five years have focused on improving the lives of customers by adding mobile abilities and tailoring products and services to individuals. Those trends have evolved somewhat — from adding mobile payments in 2017 to invisible banking today and from personalization (showing content based on personas or on a user’s site history) in 2014 to hyper-personalization (showing content based on real-time user data) today.
But what’s more striking as a trend is the societal forces driving these financial service changes, most notably (but not only) covid’s isolation policies and long-stewing privacy concerns. This is slightly different from the required pivot of the last two years in that we now are considering the changes we want to keep and improve upon.
This is an increasingly important question for banks since, according to a yougov.com survey, the most well-known bank has only a 48% positivity rating. We’re in an age where consumers don’t like banks, while online financial interactions continue to grow. For the financial services industry, this creates discussions around more mobile services, more personalization, hybrid workforces, and security issues, both for employees and customers.
It’s worth asking the question: If financial services organizations are still trying to get mobile banking right, what do they need to do to answer the needs of a changing society?
6 Financial Services Trends to Dictate the Future of the Industry
#1: From Personalization to Hyper-personalization
Customers across all industries increasingly expect their experiences to continue across all digital channels.
Traditional banks can stand out by providing that ability to do so when customers are buying products and managing their finances. “They seek convenience and value through real-time, predictive, and proactive ﬁnancial experiences that serve their speciﬁc needs,” said Forrester.
But most commercial banking still falls short of this goal, relying instead on traditional marketing and sales tactics “focusing primarily on next best product, offer, and action.”
To provide truly personalized experiences, banks need to move beyond artificially created personas and use data to deliver seamless customer experiences.
#2: Banking Customers Will Share More Personal Data
To get digital offerings that are tailored to their specific needs, consumers are willing to give FSIs access to more personal data than ever before.
An Ernst & Young survey found that, “Across the board, clients are now more willing to share data with their financial services providers.
“Interestingly, clients are also willing to share more data about themselves, including sensitive data about their preferences, non-financial personal data, online behavior data, transaction data at other FIs [financial institutions] and work-related data.”
What’s more, banks have access to data from an almost-dizzying array of internal and external options – the most obvious of which is the customer data that banks already have.
Making sense of such data and how it applies to individuals is likely to involve artificial intelligence (AI) and machine learning.
#3: Data Security Has to Continue to Improve
With this increase in data sharing, there comes an increased expectation that the financial services sector will keep customer data safe. This is increasingly challenging since “many digital assets — and individuals — are increasingly located outside of the traditional enterprise infrastructure,” Gartner says.
Complicating cybersecurity is that much data has moved to the cloud. Identity-first security, which moves infrastructure access from a login and password combination to stronger protection methods, such as multi-factor authentication, has become increasingly important, especially since many of the processes that access applications are machine-driven.
Zero trust security uses an approach that is skeptical of any devices connecting to a network, even if it presents the correct credentials. It tends to limit user access to just in time and just enough access to do what they need to do. It also often uses end-to-end encryption to ensure that data is safe even in transit.
Financial firms must adapt such security measures to keep customer data and operations safe.
#4: Banks Will Empower Customer Service Reps Everywhere
The hybrid workforce presents another challenge for the financial industry: excellent customer service. As customers continue to share data with banks to get better, more personalized service, customer service representatives must be able to access that data. Security issues aside, finding data spread across many – and often old – data stores is an oft-cited challenge for established enterprises.
Machine learning can help by parsing and connecting interaction data, customer information, and content. This will allow customer service channels to provide relevant experiences that go far beyond returning good search results to anticipating questions customers will ask and showing them the answers to questions that they didn’t know to ask.
But banks need to move to the next step to understanding customer needs – even if the customer doesn’t always know to ask the question — and presenting customers with the precise information and products that they need. This will increase customer satisfaction and increase product sales that are specifically tailored to individuals.
#5: Finserv-Fintech Partnerships Will Continue to Drive Advances
All of these trends are already being driven by advances in technology – so much so that the terms finserv and fintech often are used interchangeably in popular parlance. The reality is that fintech can enable more functionality for finservs, which have struggled to achieve the technology gains they need to serve customers.
In earlier years, trends pieces talked about financial firms acquiring fintech firms, but the reality is more likely partnerships. That means ongoing challenges for unifying customer data, product lines, and making sure agents have visibility across the enterprise to answer customer questions.
AI and machine learning can help FSIs make sense of disparate data stored across repositories to serve clients with hyper-personalized products and tailored customer service, while helping financial firms find new revenue streams.
#6: Finservs Must Embrace Digital Transformation
Digital transformation is the process of adding modern IT capabilities to a business so that it can respond effectively to changes in the marketplace.
Though banks are trying to shift rapidly, they tend to suffer – like many organizations – from a lack of overarching strategic plan for change. This often means that they implement discrete technology solutions that solve only a small problem. The result is a proliferation of increasingly intertwined ecosystems or – worse – completely disconnected technologies and systems that don’t communicate.
This combination can “result in a pervasive and pernicious technology trap, which can prevent banks from realizing the full potential of their investments,” Deloitte said in its “2022 banking and capital markets outlook”.
Financial services organizations must find a technology strategy that works for the entire organization and that allows for rapid change to be able to achieve their technology goals.
To achieve true advances and deliver on the promise of hyper-personalization, financial service providers must commit wholeheartedly to digital transformation.
As a leader in applied AI, we help financial institutions accelerate their digital transformation while prioritizing customer satisfaction. By harnessing the power of AI-based personalization, you can deliver the most relevant information, advice, offers and products. All tailored to each client.
What does this really mean?