Lessons learnt: What financial technologies will survive post-COVID?
By James Mingard, Head of Retail & Finance at Maintel
The pandemic has caused a sea of change in the adoption of technology amongst those in the financial sector. Established banks and financial institutions have opened their eyes to the benefits of innovations such as AI and chatbots. This has enabled them to automate their services and make themselves more efficient when they needed it most.
Even as travel and quarantine restrictions ease and bank branches reopen, many of the innovations introduced during the pandemic still align very well with a new customer landscape, where increasing numbers of customers are happily ‘going digital’. Institutions will need to balance digital efficiency and human customer care in order to provide an effective and competitive customer experience.
When bank branches across the country were forced to close under national lockdown measures, a swift and coordinated response was required. Even now finance and insurance organisations need to deliver an optimal blend of innovative and cost-effective technology to drive operational efficiency, whilst providing differentiating customer experiences. Any inefficiencies or gaps in the process can cause delays and stretch customer patience thin.
Yet using a variety of technologies and siloed solutions from disparate vendors has been complex to manage and not always cost-effective. Even after a year of digital-first banking, legacy systems and technical debt still represent an enormous share of banking’s technological infrastructure. Nearly 50% of UK banks don’t upgrade old IT systems when they should, and 43% of US banks still use COBOL – a programming language developed in the 1950s.
Fortunately, over the course of the pandemic, digital transformation has offered a convenient opportunity to simplify infrastructure and streamline processes by consolidating to a smaller number of suppliers. By replacing existing technologies with a multi-channel contact solution from a single vendor, architecture can be simplified, costs reduced, and resilience enhanced. In this way, integration solutions have made their mark on the financial services landscape, and it’s clear they have much work still to do.
Machine learning technology, such as Robotic Process Automation (RPA), has also played a crucial role in the drive for efficiency. By streamlining customer service and automating processes throughout the ecosystem, teams can focus on providing an excellent customer experience. This is particularly true in finance and banking, as real-time, personalised products demand vast amounts of data to be processed instantaneously, adding burdens in terms of time and resources which AI applications can help to alleviate.
RPA and machine intelligence will only grow in importance in the new environment. RPA is best for automating high-volume, repetitive and rule-based human to computer interactions, such as copy-paste tasks or moving files from one location to another. However, where data is unstructured, where there is a decision-point in a process or where systems are customer-facing and need to be smart, self-learning and adaptive AI is essential.
Automated decision management provides companies with the best approach to make better operational decisions based on customer behaviour and data directly within an organisation’s digital touchpoints. The use of AI at key moments of the customer journey will reduce operating costs and increase efficiency whilst improving service speed, relevance and customer satisfaction.
A human touch
However, even if financial institutions continue to operate a banking model that’s digital-first they should avoid the temptation of going digital-only. Physical bank branches and offices, as well as human customer agents, can’t simply be replaced by a digital banking app. Digital and physical channels both play a necessary role in the complete customer journey and need to be blended.
A large number of services traditionally expected of a bank can be completed online or through an app. But when it comes to financial advice and enquiries, customer agents are still the best placed to help. More than a third (34%) of British customers say they distrust digital communications from banks, with 33% of 55+ year-olds suspecting paperless banking to be more susceptible to fraud and scams. Natural language processing has advanced greatly in recent years, but when it comes to complex queries people prefer the certainty and responsiveness of dealing with a customer agent.
There is also the issue of access. A large number of customers – whether elderly, disabled or constrained by a lack of technology – can’t rely on access to purely digital services in order to manage their money. Indeed, a quarter (24%) of UK customers never used online banking in 2020. Physical branches and in-person interactions are needed to service these customers and ensure they receive the experience they deserve.
The best and most complete customer experience depends on both the latest technologies and a strong foundation of human empathy. Integration technologies and AI have secured a powerful beachhead in the financial technology estate, one that will only grow larger over the next few years. However, the appetite for a totally autonomous, purely digital banking experience remains small. To deliver a responsive and competitive experience, digital and physical must work together.
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