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The financial services industry has seen the effects of
digitalization earlier on the retail side of the business.
Driven by changing client behaviors and needs,
crowd-funding of ventures, mass-customized
services, smartphone banking, and new payments
technologies have been emerging over the last few
years.
Today, new technologies are changing the way
customers and financial service providers interact and
introducing a new demand for how banking services
are delivered. In particular, Millennials — under 30
years of age — have distinct preferences regarding
financial services and digital technology.
More than just an enabler, technology is cresting the
curves of ubiquity, connectivity, adoption, and cost to
a degree in which they are effecting huge changes in
industry and business models. Mobile platforms,
social media and robust analytics are bridging the
entry briars that once prevented small-to-medium-
size companies from entering different banking
domains.
CATERING TO THE ME GENERATION
We are living in an era Forrester calls, “The age of
the customer”. And in this era, there is clear evidence
that consumer behavior and expectations regarding
service and experience are changing.
This transformation is led by the Millennials.
Born between 1980 and 2000, they already carry very
heavy wallets, which this year alone are projected to
account for between $600 million and 1 billion in
sales. In decades to come, their economic impact will
increase dramatically as the generation becomes
completely of age and reaches peak buying power.
“Millennials will account for nearly one-third of total
U.S. spending by 2020. Even through the economic
tumult of the past five years, their spending has
grown by three percent a year. (According to
McKinsey & Co. Pew Research, calling them “The
Next America.”)”
To say technology is a significant factor in how this
generation communicates is an understatement.
As they are digitally-aware customers, they want
banks to help make their financial lives easier and to
enable them to manage their money more proactively.
Their purchasing pattern is much different than
previous generations. They use their comfort with
technology to their advantage - by comparing prices,
learning about the latest trends and getting the best
deal possible before making a decision.
Both as customers and as employees, they want to
feel empowered, to get a question answered or an
issue resolved at any point during their journey with a
company; and they expect their service interactions to
be painless.
They want a bank that’s nimble and proactive, that
can be a part of their daily lives. The idea of
“convenience” in banking is undergoing a shift
toward digital products and services that mesh with
consumers’ “smart” mobile-powered lives. This is
particularly true among younger customers, who are
less interested in convenient branch locations and
more in accessing digital services at the time and
place of their choosing.
Banks that do not craft a meaningful response risk
losing customers — and revenue – to other more
digitally focused financial services providers.
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STRYKER REGULATORY COMPLIANCE
Regulations are a factor, as well. New rules will
increase capital requirements and cost the average
bank 2.5-3.5 percent in pretax ROE (according to
Accenture research)
A grim economic outlook for the next few years —
with the Federal Reserve aiming to keep benchmark
interest rates at historically low levels — will prolong
the industry’s current headwinds. New entrants, once
regulated, may not survive if they fail to price for the
impact of regulations early.
THE IMPACT ON CUSTOMER
SERVICE
The contact center technology ecosystem has grown
more complex over time, as new communication
channels and touch-points become available. The
complexity of the technology ecosystem affects the
quality of service that can be delivered.
In order to cater to the new breed of customer, service
professionals need to focus on effortless interactions.
They need to harness the new technology to their
advantage and to explore new communication
channels (such as video chat with screen sharing and
annotation, as well as remote control of customer
devices to perform tasks on the customer’s behalf). In
addition, a greater focus should be placed on mobile
customer service interactions, which will provide
support for value-added mobile usage scenarios.
HARNESSING ANALYTICS TO GET
PERSONAL
Contact centers will use digital technology to learn
more about what their customers want. Delivering
proactive advice and services through a consistent,
OMNI-channel approach will give them a winning
edge that places them ahead of the trend.
They will extend the power of predictive analytics to
offer services tailored to the customer’s profile, past
interactions and transactions, and current situational
data (such as geographic location, device, and
browser). In addition, predictive analytics will be
used to connect a customer to the right customer
service agent.
Contact centers will need to streamline processes to
deliver the right answer to a customer question at the
right time in the customer’s journey. Pain-free service
is a win-win for customers and customer service
organizations: customers are satisfied because service
is efficiently delivered at the point of need, upon first
contact; and companies are satisfied because they can
contain costs.
From a total cost of ownership (TCO) perspective,
customer service organizations will continue
replacing or complementing existing solutions with
SaaS. Small- to midsized contact centers will increase
their SaaS usage, while large contact centers will
retain a mix of on-premises and SaaS solutions.
HOW SHOULD BANKS FIGHT
BACK?
Banks will have to develop new capabilities and
strengthen existing ones.
Digitally aware: Offer digital personalized
financial advice and counseling to customers
to help them better manage their financial
needs
Become truly omni-channel: by seamlessly
integrating the customer experience across
in-branch, assisted, and digital interactions
Internal efficiency: dramatically improve
efficiency and business processes to match
those of new entrants (to stay relevant in
price wars)
Customer-centricity: organizations built
around customer needs, instead of products,
allow for increased flexibility and a
ubiquitous banking experience
Culture of innovation: open innovation
infrastructure, taking into account the
ecosystem of customers, employees, and
partners.
Redefined business boundaries and
models: collaborate to provide superior
service and meet customer demand; make
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banks hubs of capabilities and services - part
of larger value networks
Agile: agility will be a key success factor
replacing scalability – driving players to
quickly reorganize around customer needs,
instead of around products
Specialized: become best-of-breed relying on
partnered ecosystems and collaborations,
instead of on proprietary investments
There is a clear imperative for fresh and action-
oriented responses to changing consumer trends
related to satisfaction, loyalty, experiences using
digital technologies to deliver banking products and
services more effectively.
By truly focusing on customer needs and integrating
data, analytics and insight with product development
and delivery, banks can transform not only the
service proposition they offer to their customers but
also the perceptions of their brand. That, in turn, will
help drive overall loyalty. The adoption of digitally
enabled services presents a unique opportunity for
banks to deepen the relationship with their
customers—going beyond daily banking to helping
themselves better manage their financial lives on a
daily basis.
Banks that meet this need by using digital to learn
more about what their customers want, and delivering
proactive advice and services through a consistent,
OMNI-channel approach will give themselves a
winning edge and get ahead of the trend. Such banks
will have a clear opportunity to build stronger
customer relationships and improve their overall
performance.
About NICE Systems
NICE Systems (NASDAQ: NICE), is the worldwide
leader in intent-based solutions that capture and
analyze interactions and transactions, realize intent,
and extract and leverage insights to deliver impact in
real time.
Driven by cross-channel and multi-sensor analytics,
NICE solutions enable organizations to improve
business performance, increase operational
efficiency, prevent financial crime, ensure
compliance, and enhance safety and security.
NICE serves over 25,000 organizations in the
enterprise and security sectors, representing a variety
of sizes and industries in more than 150 countries,
including over 80 of the Fortune 100 companies.
www.nice.com.
