Top five barriers to beat for better customer experience
To say that the financial services sector has been transformed by financial technology is somewhat of an understatement.
During recent years we have borne witness to a whole host of digital-only banks luring more and more customers away from the traditional high-street banks. This has resulted in the established banks ramping up their own digital offering to keep up with these new entrants.
Indeed, we are likely to view any provider with suspicion nowadays that doesn’t provide customers with the digital tools to open accounts or manage their existing ones 24/7.
According to Cornerstone Advisors’ 2022 What’s Going on in Banking study, to date, three-quarters of banks and credit unions have launched a digital transformation initiative. Another 15% are busy developing a digital transformation strategy this year.
However, some banks have an infinitely bigger budget to invest on digital tools than others. A staggering fact in the world of financial technology is that, on average, each of the world’s top 100 banks spends 26 times more on IT than the individual 900 banks that follow them.
Therefore, what can smaller and mid-sized providers, many of whom will be part of this group of 900 and will not have a bottomless pit of money to spend on financial technology, do to keep up with big banks, big tech, and the many digital-first providers?
If you are one of these smaller or mid-sized players, before embarking on your next CX improvement program, it pays to understand the obstacles in your way.
Here we analyse the top five barriers you need to anticipate.
A potentially long list of priorities in financial services can push customer experience improvement off the top of IT’s agenda. These include operational risk, cybersecurity risk, and regulatory and conduct risk.
Such burning issues can leave customer experience improvement projects stuck in a lengthening IT queue. Cruelly, the regulatory burden for mid-tier financial services firms is much the same as for larger institutions. Consequently, many mid-tier incumbents have lengthier IT backlogs than digital leaders.
If your digital banking requirements languish for six months or longer, you fall further behind more agile competitors.
Legacy technology consumes a disproportionate amount of IT’s resources.
Even minor changes can take a long time. And given a choice whether to prop up creaking systems or work in a dynamic team using the latest cloud tech, it’s obvious where the best IT talent will gravitate.
Simply put, if your firm is burdened with old systems, you’ve got fewer resources available for innovation, and digital projects will take longer.
The global shortage of IT talent is getting worse. According to The Computing Technology Industry Association (CompTIA), the UK’s net tech employment has grown between one and two percent each year, in recent years, which is woefully short of demand.
Forty-seven percent of IT decision-makers say they have accelerated digital transformation plans because of the pandemic1.
Unfilled cybersecurity jobs have grown 350 percent in the eight years to 20212.
In these market dynamics, it’s becoming increasingly difficult for mid-tier financial services firms to attract and retain the digital talent they require.
Lack of digital fluency
Like any team sport, agile product development requires match practice to build confidence and fluency. Unlike digital leaders, laggards lack the necessary experience to develop such fluency.
And with a quarter of project managers likely to change jobs in 2021, mid-tier financial services firms are particularly vulnerable when head-hunters come calling to fill posts at bigger banks and fast-growing digital-only providers.
Consequently, even if mid-tier firms succeed in recruiting the latest digital development skills, they risk wasting such talent on projects that run into difficulty. According to the Financial Conduct Authority, 24 percent of high severity incidents result from IT change failures.
History of “making-do”
The heroic efforts of operations teams can make building the business case for digital customer experience improvement more challenging. They mask the inefficiency of disjointed systems with human integration—the manual steps, rekeying, and workarounds they’ve used for years.
Customer onboarding is a great example: Digital leaders integrate web forms with back-office systems and third-party AI-powered web services for KYC and AML checks, credit risk checks, and more. They automate every step of the onboarding process—making the customer experience lightning quick and the straight-through execution cost minimal.
Digital Laggards lack integration and automation. They often use paper-based application forms. When using web forms, they result in little more than an email to a shared inbox. Applicants wait while staff perform slow, repetitive, and error-prone tasks. Decisions can take days. Applicants often need to visit a branch to prove their identity. The execution cost is sky-high, especially considering the high abandonment rate.