Modern-day financial institutions (FIs) exist at a time of great change. Trends such as growing customer expectations for omni-channel engagement and the move towards open banking could be viewed as challenges, but they can also be seen as opportunities.
As I discussed in a recent interview with Finextra, devising and implementing the most effective strategies in these areas will be crucial for FIs that want to stay competitive in an increasingly diverse marketplace.
Meeting customer expectations in the omni-channel era
In our current era of unprecedented choice and flexibility for consumers, customer experience really is the battleground of financial services.
There is a growing demand among consumers to be able to interact with their financial services provider whenever they want, in the channel of their choosing – and they will expect a consistent, coherent service every time.
For example, someone who has tried to open a bank account using their mobile device but encountered a problem, will expect to be able to make a phone call or go into a branch and resume that process, picking up from where they left off.
This raises some challenges for FIs, particularly established institutions that are still at least partly reliant on legacy infrastructure. The focus now should be on making the journey towards omni-channel systems and platform architecture – an investment that will prove worthwhile for banks that don’t want to be left behind by forward-thinking competitors.
Another big consideration is cultural change within organizations. It isn’t just technology that needs to evolve, but the mindsets and attitudes of the people within the business.
Adjusting to open banking and PSD2
Only time will tell, of course, but the current consensus seems to be that the phenomenon of open banking – and regulatory reforms such as Europe’s PSD2 that are helping to enforce it – will have profound implications for the financial services industry.
It’s possible that there is very real change on the horizon, not only in terms of the ecosystem of providers, business models, price points and available services in the marketplace, but more broadly in how businesses compete and collaborate with one another.
What is really encouraging is that there are more and more opportunities for service providers of all kinds – from emerging fintechs to the biggest banks – to innovate and challenge the established notions that have defined the industry for many years.
There is no doubt this is a time of great opportunity, but in order to be truly successful, FIs will need to implement a robust collaborative or competitive model, or perhaps a combination of both.
The most successful organizations of all will be those that have invested in the right technologies and solutions – namely those that enable them to respond quickly to market opportunities and deliver genuine value to their customers.
Digitizing the enterprise
Digitization is another defining trend of the modern financial services industry. It offers some big advantages for banks, most notably the potential cost savings, productivity improvements and efficiency gains that digital processes can offer.
Beyond that, digitization is important simply because it is what today’s customers expect from all service providers, not only their bank. They want the ultimate choice, convenience and accessibility that digital technologies help to provide.
Of course, making a wholesale digital migration can be a massive challenge, particularly for institutions that remain reliant on legacy infrastructure. This established architecture is not particularly well-suited to digitization and the digital economy. But for those institutions that are ready to commit to it, there are massive advantages to be gained from taking an enterprise-wide approach to digital transformation.
End-to-end digitization enables interoperability and collaboration between every team and department within the business. This is crucial to omni-channel engagement and service delivery, which will be vital for FIs that want to maintain a close, positive relationship with their customers in the years to come.
Are you ready for the future?
Omni-channel service, open banking and digitization are distinct themes in the financial services industry today, but there are actions your business can take to ensure you are prepared for change and ready to seize opportunities in all of these areas.
Firstly, you should be moving away from outmoded, silo-based models. Rather than focusing exclusively on one service area or channel, the various teams within your organization should be broadening their horizons to encompass multiple products and delivery methods. This is vital to successful omni-channel engagement and enterprise-wide digital transformation.
Furthermore, it’s important to have a strategic roadmap in place that provides a framework for short-term decision-making. Trends such as open banking and omni-channel consumer expectations are indicative of a rapidly evolving marketplace, so your business must be able to respond to new challenges and opportunities.
This sort of agility will put you in a stronger position to achieve something extremely valuable: quick wins for your customers and the organization itself.
With so many changes taking place and questions yet to be answered, FIs today need to prepare themselves for an uncertain future. Investing in technology platforms that enable flexibility and adaptability will help to ensure that, however unpredictable it may be, the future is bright for your institution.
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