With the expansion of financial markets into the digital space, how financial institutions do business is changing at a rapid pace.
The transformation of customer service in the financial services industry can be broken down into three main parts: personalization, open banking, and omnichannel communication. These three factors not only reimagine the customer experience, but help institutions to maintain a much-needed competitive edge.
Understanding why these three components matter is essential for financial institutions to find success in the coming decades. In this article, I will explore the growing importance of a customer-centric approach and how customer service has transformed within the industry.
A Quick History of Customer Service in the Financial Industry
In the mid-1900s, the financial industry was growing like never before.
As economies around the world worked to recover from the global financial crises of the early 1900s, financial institutions adopted enterprise-centric business models that focused on fortifying banks and building closed relationships with customers.
At the time, this approach was effective, albeit not very inclusive of all classes.
Enter the 21st century – the age of the Internet that brought about the rise of digital customer demands.
At first, banks and other institutions were hesitant to embrace digital change. However, the preference for technology-based services only continued to grow – and with Gen Z entering into the financial scene as full digital natives, the importance of technology is more apparent than ever.
Refocusing the Financial Industry to be More Customer-Centric
Banking and financial services in 2021 and beyond look very different to the traditional services of the past.
Rather than being focused on the enterprise, financial institutions must now work to adopt more customer-centric approaches. This is due, in part, to the fact that customers have exponentially more choices than before. As a result, institutions must be more cognizant of the value offered to customers to help boost retention and maintain a competitive edge.
In May of 2020, Deloitte Digital released an interview with Olaf Tennhardt – one of their principals at Deloitte Consulting LLP – on transforming financial services through human connection.
In this interview, Tennhardt states:
“By aligning leadership around a single customer experience vision and how data and technology can enable it, a company is in a much better place to function with purpose and deliver more human experiences.”
Many banking and financial institutions are finding that they can no longer prosper from closed business models. The increasing availability of digital services combined with the rise of FinTech companies has drastically heightened the need for collaboration within the industry.
With this in mind, let’s examine 3 factors that have become new priorities for financial institutions working to improve the customer experience.
3 New Priorities Transforming the Customer Experience in Financial Services
While there are many differences to note between the financial services of the past and the state of the industry today, 3 key priorities stand out:
Customer expectations are shifting when it comes to how they receive services.
The invent of artificial intelligence (AI) and other advanced technologies have opened up a whole new world of customer service. This has led to customers expecting more from the services offered by their financial providers.
A primary expectation of customers in today’s financial landscape is the preference for personalized solutions and recommendations. Customers want their individuality to be recognized and appreciated – and, in turn, want the services offered to them to take into account their personal needs and goals.
2. Open Banking
These days, financial services are available to customers with just a tap of a finger on a smartphone.
With more and more third-party financial services popping up each day, customers are growing weary of tedious and drawn out information-sharing processes. This has given rise to open banking. Open banking allows customer data to be shared instantaneously between providers under a set of specific rules with the explicit consent of the customer.
Compared to the traditional closed business models banks used to rely upon, open banking enables a much higher level of collaboration. It also allows institutions to gain significantly more insightful customer data that can improve other areas of their financial services – such as personalization.
3. Omnichannel Communication
Above all else, customers are looking for financial service providers who can offer them choice and cater to their preferences.
Omnichannel communication is a method of opening up channels for both customers and financial teams. When coupled with DevOps methodologies, it is able to remove departmental barriers and allow for faster service and greater productivity.
Traditional banking limited what customers were able to accomplish without being physically present at an in-person branch. With omnichannel banking, customers can receive a full range of services no matter which channel they are arriving from.
The financial industry is actively evolving – and with it, customer service within the industry is transforming as well.
For institutions to reach beyond the limited scope of past business models, adopting a customer-centric approach is essential. To do this, business leaders must re-focus their attention away from fortifying their enterprise and towards improving the customer experience.
The factors discussed here are key enablers to heightening customer service in a way that is both satisfactory to clientele and profitable to the institution.
When considering a digital transformation, customer service must be the main priority that governs transformational efforts.