By Steve Rackham, Senior Solutions Engineering Manager, EMEA Global Finance at NetApp
Digital transformation is imperative for success in the financial services industry, and this has been the case since well before the COVID-19 pandemic hit. As technology has developed, customer expectations have risen, demanding instant and personalised services from financial services.
Technologies such as Artificial Intelligence (AI) and cloud-based technologies can enable financial organisations to offer customers the services they demand. For example, AI can analyse customer data collected from previous interactions to help organisations understand their customers better and provide hyper-personalised experiences, which consumers have come to expect.
But some of the traditional players in the industry have been slower to adopt these emerging technologies.
Traditionally when adopting new technologies, many financial services have had to deal with one change at a time. For example, deploying new IoT sensors, or installing a new data centre. But now, the industry is facing many different changes happening simultaneously and are under pressure to keep up. Trends such as AI, cloud, security and more continue, to intertwine and make things more complicated than adopting one new technology solution.
Added to this is the emergence of fintechs. These digital-first businesses are born in the cloud-era and, as a result, are more agile and adaptable to change, making them capable of changing their business model overnight if needed. Fintechs have shown traditional players what is possible when it comes to technology. Also, while fintechs are subject to the same FCA regulations as bigger financial services, these agile platforms highlight how businesses can be disruptive and take a data-driven approach to be successful.
The COVID-19 impact
So how has COVID-19 impacted the digital transformation journey of the financial services industry? The biggest change is undoubtably the shift to online-only, where banks and other traditional financial services have had to move most of their customer interactions to a digital platform. This includes prioritising enabling customers to complete the most common service journeys remotely, such as resetting PINs, changing loan terms, paying for groceries or filling in forms electronically.
But this has also accelerated the way we as consumers interact with digital services. For example, the move away from cash and towards digital payment methods and the way we use banking apps to check balances, make payments and submit credit card or loan applications.
It is clear we are working towards a digital future and we’ve had an indication of what’s possible. It’s also likely that we’re moving to an era of more permanent change. This makes it more important than ever for financial services to have the right digital capabilities to serve their customers properly. Fintechs already have an advantage here and the bigger financial services have started to adapt. But for many, it’s time for a step up.
A mindset change
This starts with having the right mindset. It’s easy for traditional companies to remain stuck in their ways and continue working in the same way. Particularly as the banking industry is one of the oldest industries in the world. But by not embracing change, it becomes even harder to adapt when external events force change.
Of course, COVID-19 has accelerated this and forced many to be open to change. Financial services have been put in a situation to adopt more technology and new working principles as they haven’t had a choice. But this isn’t the time for the industry to be complacent. Financial services businesses must learn from the pandemic and keep the mindset of adaptability, agility and change moving forward.
Future of financial services
The pandemic has accelerated the shift to a more digital world and in turn, customers are using digital channels more than ever. If financial services don’t adopt a different mindset when it comes to embracing new technologies, they not only risk being left behind by their competitors but also risk losing customers. Many consumers don’t want to interact with companies whose systems feel outdated and complicated.
Technologies such as AI and cloud can offer huge amounts of benefits to financial services, and following the last 18 months, should give companies massive amounts of information about their customers. Financial services have the opportunity to analyse this customer data to understand and redefine the customer experience moving forward in this new landscape. By also adopting a mobile-first view, from contactless banking to account access, organisations in the financial services industry can ensure they are providing accessibility whenever the customer needs it.
After all, the customer is always right