The Four Benefits of Digital Transformation in the Finance Industry
Paul Wilson is a consumer finance expert at Financial Conduct Authority authorised credit broker Little Loans. Paul has over 20 years experience in financial services and during his career has witnessed first-hand the incredible impact that a clear digital transformation strategy can have on financial products and services. In this piece, he shares his key findings.
It’s fair to say that the UK finance industry has very much embraced digital transformation in the past decade. Every high street bank has an app of some form and open banking and the use of API’s has created greater possibilities for technology to deliver customer benefits. We have even seen the emergence of online-only financial services such as digital challenger banks like Starling and Monzo, as well as other online-only financial services such as the loan markets that we at Little Loans we operate in.
There are many benefits that digital transformation has brought to our financial services and the way the finance industry operates here in the UK. Below are 4 of the key benefits and how we have seen them improve the finance industry for customers and businesses alike.
Improved customer experience
The true digital giants of the current era such as Amazon, Uber and Netflix have changed customers’ expectations of how quickly and conveniently services can and should be delivered, and this shift in expectations has extended to how customers deal with their finances.
Through digital transformation, money can be moved around accounts, payments made, and cheques deposited without leaving home. Loan brokers such as ourselves are able to accept applications and evaluate a customer’s eligibility in minutes, and the providers we work with are able to approve or decline the loan equally as quickly. This process would traditionally have taken several days and a visit to the high street. This improved spend and customer experience could only have been achieved thanks to digital transformation.
Better analytics and data analysis
Digital analytics has become absolutely critical for financial business. Analytics allows businesses to learn in granular detail how customers are finding their products and thus evaluate how successful their marketing efforts are proving – this allows for intelligent marketing investment decisions and strategies and helps to ensure that marketing efforts provide maximum return on investment.
Robust analytics data also allows financial businesses to more accurately forecast and model expected customers and transaction numbers and make sure that the business strategy is set correctly. And if it isn’t, analytics data can help more quickly identify the things that are running off course and need to be adjusted.
Better customisation and individualisation
In the pre-internet era, it could be extremely difficult to provide tailored offers to customers. Mailshots could be wide blast-outs to a large chunk of customers with the hopes that a certain proportion would engage with the offer. Very much a ‘throw mud at the wall and see what sticks’ approach. This wasn’t particularly satisfactory for customers or companies – the former receiving a bunch of irrelevant or unsuitable communications, and the latter wasting money and running the risk of annoying their customers.
But digital transformation has made delivering customised offers, deals and messages incredibly quick and easy for financial businesses.
Customers can be very simply divided into ‘buckets’ based on the data a business holds on them – be that age, location, gender, demographic, past transactions with the business, income, number of dependents – the list goes on. All of this information can make a big difference in the quality of the communication the customer receives and improve the conversion rate on offers for the business.
Much of this customisation can also be automated, making for a very efficient process, and can help ensure that the right messaging is delivered at the exact right time to maximise conversion.
Customer security has always been a big concern in financial services for obvious reasons. Security failures can lead to financial losses for customers, fraud and data leaks.
Data encryption has vastly improved the security of transactions and fraud detection systems help to weed out a greater proportion of counterfeit applications or transactions.
Digital transformation has changed financial services for the better and given how far the industry has embraced technology in the past decade, there is no doubt that there are still a lot more changes and improvements to come – particularly as emerging technologies such as AI and machine learning continue to grow apace.
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