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THE LOYALTY-TRUST PARADOX AT THE HEART OF FINANCIAL SERVICES AND HOW TO OVERCOME IT

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By Andrew Warren, Head of Banking & Financial Services, UK&I at Cognizant

 

There has long been a paradox at the heart of the financial sector – customer loyalty remains high despite overall trust in the banking system being very low. In any other sector, low trust would lead customers looking for services elsewhere. Generally, however, the major banks have been able to retain their clients despite, rather than because of, trust.

This customer loyalty does not always pay, with research suggesting consumers could be overpaying by £2.9bn in areas such as mobile, broadband, home insurance, as well as, notably, mortgages and savings. Whether the result of customer lethargy, lack of awareness of the possible cost savings or low expectations of the service banks provide, this has encouraged complacency in the banking sector.

This could, however, change as our post-pandemic reality begins to bite. People may have used the extra time from the lack of a commute to do some research and shop around for better alternatives, as well as harbouring frustrations over a perceived lack of support in recent months. Coupled with the possibility of a period of negative interest rates, we could soon be heading towards a perfect storm, where both retail giants and small local businesses start to question the value their banks actually provide.

 

Digital native challengers are shifting the landscape

One viable reason for the supposed loyalty consumers have towards the major banks has been the lack of real alternatives. With all of the traditional high street institutions offering services that were largely interchangeable, switching services seemed more effort than was really worth it when perceived benefits were so minimal. However, this changed with the arrival in recent years of challenger banks such as Monzo, Starling and Revolut, which continue to grow in popularity due to ease of use and better customer experience from sign-up through to their intuitive apps.

The primary advantage of the big banks is their liquidity, historical reputations and longstanding customer base. However, the agility and user-friendliness of the challengers is shifting the landscape, and the continued reliance on legacy systems leaves the traditional players struggling to surpass, or in most cases match, the innovative services and products fintechs are able to bring to the market.

 

Customer expectations setting a new standard

As personalisation and smooth technological integration in other sectors, such as retail, raises expectations of similar offerings across all service industries, this could soon become a key battleground for banks.

With the challengers currently looking better equipped to respond to these consumer needs, here are some of the steps banks can take to modernise their offerings and retain customers’ loyalty:

  • Embracing human science – the financial sector has long favoured data science in its behavioural analysis. Almost anyone can understand basic data; it is how semiotic algorithms can be used alongside this that will reveal real insights that can be used simply to help understand people better, their fears, their hopes and their aspirations.
  • Adapting to modern trends – the lockdown has, by necessity, modified and in some cases accelerated, many of the established habits of both individuals and businesses. These range from an increased adoption of cashless payments, to remote working, the propensity for saving vs investing, attitudes towards fraud and risk appetite, and loyalty. As a result, some customer journeys, which had become the cornerstone of banks’ or lenders’ strategies, will now need to be adapted. For example, products, pricing and customer treatment strategies will need to be updated, and the entire value-chain of customer touchpoints should be digitally enabled. Financial institutions will now need to ensure speed and quality of their response to this change.
  • Using innovation to level the playing field – the systemic advantage the big banks have over more agile challengers is in liquidity access. It is an advantage that potentially will be scrutinised in the COVID-19 enquiries we can expect to see in the near future, particularly around the provision of the various governmental support schemes and loans for which these big banks initially had responsibility. As that advantage then reduces, the need for real innovation grows. This means building business models and deploying technology that can deliver value and differentiation. For example, the major banks have more channels than their digital-only counterparts and, therefore, more data to draw on. The result is a better focus on customer journeys, with modern cloud-based data management platforms central to this. The quantity and detail of data can play in banks’ favour, allowing constant ongoing improvements to customer communications and simplifying self-service options in an increasingly remote world. It is important that banks continue to ensure they are thinking outside the box and keeping pace with other industries that are innovating in their response to the pandemic.
  • Personalising the process – technology is already helping to speed up processes and improve self-service banking operations, particularly with predictive and smart decision-making through AI and ML. The advanced use of chatbots is an example, along with increasing tailored content and interfaces in apps and on digital platforms. However, the end goal is personalisation across the whole customer journey, not only through technology but also call centre operatives who still form a critical role in trouble shooting and need an up to date view of the customer in order to be able to do their job. Technology can also help analyse how these human interactions can then become more personalised.

The major banks retain a crucial position in UK society for the support and confidence they offer their customers. However, as in so many other sectors, the coronavirus pandemic could come to be seen as a watershed moment in their evolution. With the challengers continuing to gain momentum, banks certainly cannot afford to stand still. It is the ability to have a data- and technology-driven approach, as outlined here, that can help them retain their dominance and justify customer loyalty now lockdown is beginning to lift. Should they fail to do so, we may find ourselves in a very different landscape than we do today. By focusing on the steps above, banks will start to level out the playing field.

 

Finance

HOW FINANCIAL SERVICES BRANDS CAN TRANSFORM THE MUNDANE INTO MAGIC

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By

Ben Williams, Global Chief Experience Officer at R/GA London

 

We are living through an era of generational change. The last twelve months have been defined by uncertainty, and as we stepped into uncharted territory we witnessed society shift and consumer behaviour change occur at breakneck speed.

For businesses, the speed and scale of this change has felt at times daunting. There are questions at every corner. How do we navigate working from home? When will we return to normal? How are the lives of our customers changing? How are the lives of our employees changing?  What are the rules of the new normal? How does this affect our proposition? Are we changing fast enough?

But just as uncertainty creates anxiety, change creates opportunity.

To help financial brands and the commodities industry navigate this uncertainty and focus on opportunity, we at R/GA have highlighted five key areas of focus. These pillars allow financial services and commodities brands to transform the mundane into magic, adapting to surpass consumer expectations and rise above the competition.

 

View your brand as an operating system

The core DNA of a brand shouldn’t just be a poster in the cafeteria, or slapped onto a brand’s website and as a message to the world. The brand’s active purpose should truly inform all the different ways a brand shows up, across physical and digital and inform things like service offerings, business decisions, as well as marketing messages. Those words in a mission statement should mean something, and be proven in how a business operates and engages with people. With consumer expectations at an all-time high, people expect it. The world expects it.

 

Understand the power of experience and use it to differentiate 

Don’t underestimate the power of an elevated experience – regardless of industry. By focusing on the needs of your people, customers and employees, challenges quickly open up and become areas of opportunity.

Creating a category defining experience often means looking outside of your own category – just as consumers will do. When a service or experience is elevated in any category, it has a huge impact on expectations of people. This experience sets the bar, and consumers will then expect similar levels of service, innovation and thoughtfulness to be applied to all aspects of their life from any brand they interact with. When people see something better, they want everything to be better. This is the concept we call ‘Service Transference’ – and it is defining how brands are experienced in the modern world.

Commodity based industries have a huge opportunity to differentiate themselves from their competitors through an elevated and differentiated experience when engaging with the brand, product or service.

For years, computers were a commodity, some were a little faster, some had better/minor features, but for the most part the differences were minimal. Apple changed the game by focusing on the experience. It differentiated itself beyond the speed of chips and processors. Insurance and other commodity-based industries should look to do the same. Insurance companies, as an example, could look to understand people dynamically through technology, and respond with services and experiences that can tailor solutions to serve their individual needs.

 

Innovate at all scales and for all people 

Innovation has become a term thrown around as a catch-all for teams or people thinking about what is next. Too often however, teams fall in love with the idea of being credited and becoming famous for the next idea that changes the world.

Instead, brands should focus on elevating some of the smaller things. This means taking a deep-dive into the fundamentals, giving time to the less sexy things, because these are often the factors which have the most impact on people’s experiences with brands and their lives.

Beyond the emotional value, there is a functional value insurance companies can, and should be delivering. The experience of engaging with an insurance brand should go well beyond filling out a form. It should know me, who I am, my goals, my personal or family situation, and adapt accordingly over time. It should respond to the world around me, and to my life as it happens. Enabling your service offering to be tailored and customized will provide real functional value that what they are paying for is exactly what they need and want. Responding to real human needs and events as they happen is the clearest way to show you care.

 

Recognise that life has changed.

Brands that can adapt and be there for people will ultimately win. Insurance is an industry founded on the principles of being there for people when life happens. And life is happening right now.

Insurance brands have to deliver emotional value by supporting customers. To do this, brands need to strike the right balance between being active and present in a customer’s life, and knowing when to get out of the way. Beyond the annual insurance payment reminder, ask yourself, “When are the other moments throughout a year, or in someone’s life that they should feel supported?”

Insurance brands have a huge opportunity to shift what they are famous for and how they show up in the world. Given the changes we have seen in consumer expectations, the industry itself and the technology landscape, insurance brands that want to win should be focusing on delivering peace of mind and offering customers agency over their own solution.

 

Always dream big and act small

For commodities businesses, the opportunity for blue sky thinking is massive. But don’t forget that often the most meaningful change comes from innovating some of the smaller, more foundational pieces of your business and experience. The impact you can have on someone’s life, especially at times when they most need support, should never be underestimated – or mismanaged from an experience perspective. Listen to people, their needs and what they want. Your customers, and the world will thank you.

 

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Finance

TECH TRENDS: THE FUTURE OF FINANCE IS DIGITAL

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By

Simon Bull, Sales Operations & Business Development Manager, Aqilla

 

Everywhere you look across the modern working environment, there is pressure to ‘digitally transform’ by using technology in areas where manual work and processes have previously been the preferred option. Despite growing momentum in general, progress across the finance function has been somewhat slower than other core areas of business, not least because it is highly regulated and teams must exercise caution to ensure introducing change does not also introduce risk.

One familiar scenario is the approach finance departments take to storing data, particularly any sensitive information, on their own premises and their own hardware. While keeping valuable assets such as this close to hand offers a strong sense of security and control, it illustrates the limitations finance teams face in changing traditional approaches and, as a result, the relatively slow pace of technology-focused innovation overall.

However, the case to embrace tech-led change is becoming irresistible, with businesses everywhere highlighting a huge range of digital transformation benefits, from cost savings and technology performance to IT security and compliance. In the current environment, many finance teams have also experienced first hand the impact of digital transformation, with remote working bringing new technologies and digital services into focus.

Simon Bull

But, where are we heading? As digital transformation gains momentum across the finance function, where should teams be looking for opportunities to update manual processes or to replace outdated technologies? And where might the trends at the heart of this movement – such as cloud computing – have the biggest impact on the day-to-day experience of finance professionals?

The role of cloud computing raises a key point. For finance teams, digital transformation also requires a change of mindset, perhaps best illustrated by a willingness to move away from outdated in-house technology infrastructure and software products to flexible and more financially efficient cloud-based services. In doing so, it becomes possible to focus on opportunities and priorities:

 

Cost savings

One of the most important is the cost of technology. The cloud-based Software-as-a-Service (SaaS) approach that can offer users the convenience of a monthly pay-as-you-go payment model for a range of key technologies, such as accounting software. This is in contrast to traditional IT procurement models where businesses have to invest significant sums in one-off software purchases. What’s more, because SaaS users typically only need access to a laptop and internet connectivity to use cloud-based applications, it also saves money on the server hardware that has previously sat in the corner of the office, and in fact, it may no longer be needed at all. In selecting cloud-based finance software services, organisations should always compare pricing from several providers to make sure they are getting the most competitive deal.

 

Technology Performance

Today’s cloud-based finance software solutions are available with a growing range of options, starting with simple, entry-level functionality to the opposite end of the scale to products offering powerful performance designed to fit the needs of even the biggest and most complex finance departments. Important features and functions to look out for should include: extensive analysis, proper periodic management and business calendars, multi-currency, multilingual and multi-company operation, full VAT handling International coding, tax and language flexibility, automatic reconciliation / bank integration, built-in key performance measurement, advanced search, selection and drill-down, document and image scanning.

 

Stronger security

Many cloud providers now have security at the top of their list of capabilities, but checking their accreditations, policies and security track record should always form part of any selection process. This should include areas such as data protection, backup services and their ability to deal with common security issues, such as ransomware.

 

Service standards

When looking at cloud service providers, finance teams should also focus on the quality of service on offer. At its best, cloud-based customer support and service can deliver an outstanding experience where the provider really feels like an extension of the in-house IT Team. The best way to check on the service capabilities of any cloud provider is to ask for references from existing customers, check online reviews and evaluate their Service Level Agreement (SLA) to understand the small print of any terms and their impact on service levels.

 

Compliance

Compliance is front of mind across the finance function and is an area where the specialisation offered by many cloud software solutions can be of huge benefit. Even for the most niche requirements, there is often a software provider out there who has a solution designed to meet very specific needs, and in embracing these technologies, the efficiency and accuracy benefits can be truly transformational.

The challenges seen across the economy over the past 12 months have significantly accelerated the pace of technology-led change, finance teams included. But, cloud-based finance software services can help teams to widen their approach to innovation, embrace the flexibility offered by remote working on a permanent basis and deliver a range of operational and customer-focused benefits for the long term.

 

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