The financial services sector has experienced seismic shifts in its business over the past year. Digital transformation brought on by changing customer needs was accelerated by the rapid shift to online brought about by the pandemic. Organizations that didn’t make digital transformation a priority before the pandemic were forced to pivot quickly as a matter of business continuity.
A survey conducted by PwC in 2020 showed banks and other financial institutions were doubling down on their digital transformation efforts to reinvent their business and better serve their customers. Sixty-three percent of CFOs were planning changes to products and services, while 41 percent looked at altering the pricing of their services. And as they looked to transform their businesses, nearly one-third of CFOs were investing in tech-driven products and services.1
Today, as a result of their digital transformation initiatives, financial services organizations are well-positioned to meet the needs of a customer base that is more focused on the digital experience— having worked, shopped and been entertained almost exclusively online for the past year. The focus for financial services firms today and moving forward is on customer experience—taking advantage of the opportunities afforded by technology to provide seamless and personalized customer service across all channels (in-branch, mobile and online), and offer services ranging from personal financial health education to complimentary financial tools to enable customers to take greater control of their financial futures.
At the same time, organizations are investing in tools and technologies to help keep sensitive customer data safe, as the risk of data breaches steadily increases in a transaction environment that is mostly, if not all, digital. The financial sector was hit by hackers more than any other sector during the pandemic, garnering 25.3 percent of attacks, according to a BIS report.2 Attacks range from phishing scams, which 47 percent of individuals fall for while working from home3, to new malware strains not seen before the pandemic. During the pandemic, 35 percent of cyberattacks used previously unseen malware or methods.4
Moving forward, financial services organizations are approaching their business with a two-pronged strategy of providing exceptional and secure customer experiences. Digital transformation across financial services increases the need for more reliable connectivity and network agility, as organizations adopt infrastructure, back office and customer-facing products and services that not only delight the customer but also provide opportunities for greater revenue.
The onset of digital technologies and emergence of a highly competitive FinTech space has forced financial services organizations to rethink their customer services models. In a given year, the average customer attrition rate among retail financial institutions is 15 percent and each point of customer attrition represents 1 percent to 2 percent of net income loss. Considering it takes on average $500 to acquire a new customer5, financial services organizations recognized the need to become more customer-centric.
The pandemic exacerbated the need for technologies that improved customer experience, and financial services organizations have responded in kind. According to a Digital Banking Report survey, 75 percent of organizations have targeted digital banking transformation as their top banking priority through 2021, followed by improving customer experience, at 51 percent.6
To support this digital transformation, bandwidth is critical to help meet the demands of customers, who want ease of use and speed in conducting transactions, in real-time, no matter where and what platform.
Financial institutions are focused on making high-speed internet connections available to ensure employees and customers have the connectivity they need for smooth transactions. And as the need for more bandwidth, better cybersecurity solutions, and network reliability increases, technologies such as SD-WAN (Software-Defined Wide Area Network) are proliferating.
Customers increasingly are basing their satisfaction with their financial services provider on factors such as how easy it is to navigate the mobile app or how quickly they can access their account information to make purchasing decisions on the fly. Additionally, they want access to a customer service agent who can provide help at any time on any platform.
Similarly, customers want a personalized experience beyond simply being addressed by name. Today, financial organizations are expected to offer products and services that cater to individual customer needs based on their transaction history, goals, priorities, and preferences, such as receiving an alert on their smartphone when they are near a branch office. These should occur whether they are in-person or online, and could be as simple as a chatbot on the mobile app that provides personalized information.
As organizations move ahead, they need to ensure the focus remains on the customer and adopt services and technologies that provide an even higher level of customer engagement, which impacts both their current and future buying decisions and their loyalty.
With more consumers moving to omni-channel or even digital-only ways of interaction with their bank, the ability to provide consistent customer service across all channels will be a critical differentiator for financial services organizations moving forward. Ensuring the speed necessary to update customer information in real-time, across all back-office systems requires reliable connectivity and an agile network to prioritize data routing efficiently.
Customers also want to have a seamless experience regardless of whether they are interacting via mobile app, website, or in-branch with either a live person or a chatbot. While just 10 percent of customers today are considered “branch-only,” less than 30 percent are “digital-only,”7 which means the majority of customers utilize an omni-channel approach to their banking.
For example, they may start a loan application on their computer, use their smartphone to take a photo of their identification instead of having to scan it in, and complete and sign the application in the branch office while interacting with a customer service rep, either in-person or via video.
Financial services organizations also can take their personalization efforts a step further by offering financial health education tailored to each customer based on their current account activity. Proactively educating customers on their financial health and ways to manage their money more effectively will show customers the organization is invested in achieving their financial goals.
At the same time, organizations can arm their customers with tools to help them manage their financial health on their own. FinTech apps that offer financial personal management or the ability to send and receive money between other financial institutions are growing in popularity as customers increasingly conduct business online, and offer a level of simplicity and control customers crave.
Rewarding loyalty is another way financial services organizations can increase engagement among their customers. Loyalty programs have proven to work in other industries: According to a Clarus study, 88 percent of consumers are likely to choose a retailer whose premium loyalty program they belong to over a competitor that is offering a lower price.8
Perhaps the best way to increase customer engagement by financial services organizations is to listen to customers and then act upon their comments and suggestions. Providing a feedback loop to understand consistently what customers want or need is essential for continuous improvement; financial services organizations, therefore, must make interaction with customers simple and painless. Quick, one- or two-question surveys on the website or chatbot queries on the mobile app can be effective in gauging customer sentiment and helping inform the organization of areas where it needs to improve its customer service efforts.
The next phase of customer engagement in financial services requires an infrastructure that is fast, secure, and capable of supporting the services organizations rely on to provide exceptional customer experiences. Digital transformation has changed the way organizations do business; likewise, the technologies required for digital transformation are changing the way organizations approach their infrastructure needs.
SD-WAN can be an important element in enabling digital transformation due in large part to its speed of implementation, increased flexibility, and managed costs. In addition, SD-WAN can help secure data on the network, as it typically uses encrypted tunneling technology to help protect data in transit from man-in-middle attacks. By integrating SD-WAN with advanced security solutions such as firewall-as-a-service, secure web gateways, and cloud access security brokers, financial institutions may be better equipped to secure business activities increasingly reliant on digital experiences and cloud-based applications.
Cloud-based solutions and applications provide financial services institutions with the services they need to conduct their business more efficiently and positively impact the customer experience. Cloud-based apps can provide easy access to information and services for both employees and customers, extending the reach of the financial services organization for always-on, robust customer service and the ability to respond to customer needs in real-time.
The ability to communicate with customers on their terms is also critical to evolving customer engagement approaches. As such, technologies that enable multichannel communications, such as unified communications, can offer financial services organizations the ability to connect with customers via voice, messaging, or audio.
For organizations that require additional services beyond what their in-house IT infrastructure and staff can provide, managed services can help integrate systems and fill in the knowledge and staffing gaps that may exist to provide security and other services critical to help protect and serve customers effectively.
Digital transformation changed the way organizations approach how they conduct business; the pandemic changed the way customers interact with businesses. Both advanced a shift to digital technologies and interactions—so much so that customers today demand a digital experience that is on par with in-person.
In this new era of digital transformation, customer experience is king. Financial services organizations have shifted their practices toward servicing their customers to be less business-centric and more customer-centric, recognizing the ease at which unhappy clients can—and will—switch to another bank or lender if they’re not happy with the care they receive. The onus is on the financial services organization to provide the highest quality experience available.
Moving forward, organizations need to ensure the focus remains on the customer and adopt services and technologies that provide an even higher level of customer engagement, which impacts their current and future buying decisions as well as their loyalty.
Digital transformation across financial services increases the need for more reliable connectivity and network agility, as customer-centricity increasingly is data-driven. The technologies and services that support exceptional customer experiences are rooted in digital transformation and are able to provide the level of speed, reliability, and security necessary for financial services organizations to meet the needs and demands of a customer-centric business. Those technologies that organizations utilize to meet the needs of the business and their customers will be a combination of infrastructure, back office, and customer- facing products and services designed to enable exceptional customer experiences as well as provide opportunities for greater revenue.
PwC US CFO Pulse Survey, PwC website, June 15, 2020
“BIS Bulletin No. 37: Covid-19 and cyber risk in the financial sector,” Bank for International Settlements (BIS), January 2021
“Impact of COVID-19 on Cybersecurity,” article, Deloitte
FiWorks statistics, webpage
“Top 7 Customer Experience Trends in Banking for 2021,” The Financial Brand, December 2020
FiWorks statistics, webpage
2021 Loyalty Industry Data Study – The 5 Most Important Stats Retailers Need to Know,” TClarus blog, Clarus, 2021
Financial Services sector undergoing a digital transformation driven by customer demand.