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Income diversification is not just the future: it is now

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Ali Hamriti, Co-Founder and CEO at Rollee

As the “self-employed status” is booming, younger generations have embraced the changes in employment that have come with it. More and more, new technologies and platforms require task-based and freelancer missions—pushing workers to pursue income diversification and entrepreneurship.
But how can financial institutions streamline how they evaluate customer’s income in this new age of employment?

What is income diversification?

Diversifying one’s income means pulling earnings from several sources rather than from just one job.
In recent years, more and more workers have joined the gig economy by becoming drivers and couriers for ride-sharing and food delivery services. Almost half, (48%) of gig workers in the UK also have a full-time job, offering them work flexibility while providing two or more streams of income.
Today’s digital world gives workers countless opportunities for side hustles. In addition to task-based work, workers can increase their opportunities by using several platforms instead of just one. One can be a driver in the morning, a teacher in the afternoon and working on a side project in the evening, providing the right service at the right time and optimising one’s income and time.

Ali Hamriti

Why is it happening?

Traditional employer-employee work relationships remain uncertain as new technologies and trends reshape the workplace. Full-time workers aspire to more flexibility & ownership of their work. The pandemic has been a trigger for many employees to focus on their expertise and aspirations, instead of being stuck in a 9-5 job.
This newly created labour market breaks down traditional full-time jobs into targeted tasks and projects.  Studies have shown that up to 19.2 million Europeans now identify as independent workers, 4.4 million of which are based in the UK.

Millennials and future generations

The strained financial reality for many millennials has also spurred the need for income diversification. Student loan debt, low wages, and a scarcity of work have forced younger generations to modify their job search, seeking innovative and skill-targeted work. This presents a major break from their predecessors who sought stable long-term employment relationships.

Their financial worry has also given rise to the sharing economy, which prioritises access over ownership to services and goods. Fewer people from younger generations are buying homes, cars, or luxury products. Instead, digital natives rely on technology and platforms to source and pool goods—complete with instant access to product information and peer reviews.

The sharing economy feeds the gig economy by producing more demand for targeted platforms. As a virtuous circle, every platform needs gig workers to keep it running, and every person has a new opportunity to earn additional income thanks to the sharing economies platforms. Income is getting more complex: we are moving from a regular one-time income at the end of the month to several income sources, paid from multiple sources.

What are the benefits of income diversification?

There are several benefits of having a diversified income. With multiple incomes, a worker can gain more financial security than in a single job. For example, if one of several jobs is cut down, you can still invest your time in other ventures.

Another benefit of having several incomes is the gain of flexible work. A worker can focus on the income that delivers the most at a given time, and flexibly shift to his other activities if the income is stagnating.

The flexibility that comes with diverse income sources leads to a greater choice of investing in the area that will help a worker reach its ideal life: be it investing in a new skill to develop an additional income source, or reaching your financial goals. Having different income sources (and protecting your income with insurance) allows workers to adapt and continue to provide labour when and where possible. All employee benefits are also available for self-employed workers.

Case studies in the developing world

As developing nations continue to see surges in their economic development, several recent studies have shown a positive correlation between income diversification and poverty mitigation. These studies have shown that a diversified income can help empower families to overcome systemic issues embedded in poverty. Access to food, water, housing, and eventually, education become more realistic as multiple income streams pave the way for a stable livelihood.

Researchers with the IFPRI (International Food Policy Research Institute) found that the general surge of economic activity in Vietnam since 1990 can be largely traced to income diversification.

Navigating the economy of freelancers

The reality is that task-based, freelance, and on-demand work is here to stay. Continued changes in automation and a need for financial flexibility have pushed us to the point of no return. The new focus is now on how to adapt our current financial and banking systems to account for an economy of freelancers.

Current financial systems operate manually to administer and verify the data of an individual who is self-employed. With multiple income streams, this data is separated and dispersed from one platform or paper record to another. This makes it painfully time-consuming for financial institutions to verify an individual’s employment and income data making it difficult to make decisions such as granting mortgages. Often, financial institutions do not have the time which is resulting in freelancers being excluded from accessing financial services.

The missed opportunity

An untapped market of 4.4 million freelancers in the UK presents a wide business opportunity if financial institutions can analyse data faster without the current barriers. To increase business, they must move from manual to automated data verification processes. This requires adopting a fully digitised process to enable secure access to multiple dispersed data sets in real-time.

Automation plays a key role in consolidating and standardising the data to avoid going through painful manual processes. It can help save significant time and money spent on analysing the data to inform financial service decisions. By speeding up the process, business conversions such as selling mortgages can be made quicker with the ability to verify the data much faster than before.

To make this a reality, data sets must be compatible which is often a barrier that financial institutions come up against. However, data verification APIs can securely provide compatibility between payroll records and systems. They can also help to guarantee the reliability of the data and protect against fraudulent documents. Financial institutions can also benefit from enhanced data security as data is managed in one central, monitored system. It also empowers individual workers to remain the owner of their own data, giving permission to share on-demand access to the data without sharing the data itself.

Stay competitive

As the number of independent workers grow and accumulate multiple income streams, financial institutions have no choice but to evolve towards adopting digital processes to verify employment and income data to stay competitive. It will be the only way to do business with a currently excluded market that partly represents the customers of the future.

Finance

The penny has dropped – the finance sector needs Data Governance-as-a-Service

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By Michael Queenan, Co-Founder and CEO at Nephos Technologies

 

In our data-driven world, the amount of data is growing exponentially and it’s predicted that the amount generated each second in the financial industry will grow 700% this year. Leaders of financial services organisations have realised two things since the start of the pandemic – that data on their customers and services is their greatest asset and that they must embrace technology to make intelligent business decisions to grow successfully and outperform competitors.

Since the financial sector holds arguably the most valuable and sensitive information, organisations must do more than just store this data. They need to ensure its security, integrity, and governance so that it’s useful in improving the brand’s customer experience, innovating products and services or predicting future trends to improve risk management.

Yet without a robust data governance model – a strong set of rules and processes for what data means, and how it is categorised, owned, accessed, stored, and used – data is worthless. Only when an effective data governance model has been established, will data meet regulations and be secure. Data leaders must shift gear in their data processes to avoid hefty compliance penalties and unlock potential value from their data assets.

 

The data governance challenges faced by financial sector organisations

The barriers for achieving ‘good governance’ are many and varied. Ignorance of the benefits of data governance is a major hurdle for developing a governance strategy. Many financial firms have invested – at significant cost – in data governance tools, but struggle to deliver the benefits they are looking for. Many don’t have the right skills and resources to maximise or set the right metrics to measure the business value. Some are compromised by unoptimised gaps in their approach.

With many different elements to master, data governance is complex – from identifying the right tools to managing the challenges presented by encryption, all whilst ensuring that data quality is sustained and data is managed responsibly.  The negative impact of misplaced investment in ineffective data governance strategies can be significant, for the short and long-term.

 

Why data governance matters

With the acceleration of digital adoption in the financial services industry, it has become crucial to deliver seamless, intelligent customer experiences. Data governance is the key to managing data flow, ensuring compliance, and scaling up. Proof that data governance matters is evident in the Master Data Management Market growth prediction, from $16.7 billion in 2022 to $34.5 billion by 2027.

Data governance is a comprehensive methodology for ensuring the quality and security of the company’s data. The various benefits of an effective data governance strategy include minimised risk, coherent policies, metrics and processes, and better implementation of compliance and enhanced data value. However, for financial services, there are significant advantages as a result of the following:

  • Data governance saves the company money by increasing efficiency. Precious time can be saved by having good quality data and a single source of truth, with less duplication of data, and less time needed to correct data errors.
  • Good data governance gives the business confidence in having accurate and trustworthy data, the holy grail for delivering outperforming customer experiences.
  • A data-driven culture can also be introduced to your business through good data governance. With the ability to gather critical customer and market insights that can guide the direction of your business, data governance allows financial institutions to drive innovation and gain competitive advantage.

 

Bridging the governance gap with Data Governance-as-a-Service (DGaaS)

Increasingly organisations are turning to the ‘as-a-Service’ model to bridge the gaps in their data governance capabilities, as well as ensure critical alignment between objectives and results. This dedicated approach aims to minimise the risk of investments and delivers the strategy and proven technologies required to ensure data governance success.

DGaaS can be applied across each major component required to deliver good data governance. First, it uses software tools to scan all data within a typically complex financial services data infrastructure in its data discovery and classification phase. Without this detailed insight, organisations can’t always identify their data assets, any data mishandling and the level of risk generated.

The next part of the process is creation and documentation. This means organisations can drive their governance objectives through to execution, while removing the operational and recruitment overheads, which means they can purely focus on value created from data. In doing so, organisations can convert the raw outputs from the toolsets into meaningful business outputs.

With a holistic approach, DGaaS allows financial services organisations to focus on the transformational potential of data while critically staying compliant.

 

Reaping the benefits

Data is a vital asset to enable financial sector organisations to build the right capabilities to deliver their services and remain competitive. With a robust data governance model, financial firms can assess risk, predict trends, and seize market opportunities based on data-driven insights. Only data-driven processes, built on high quality and effectively governed data, will enable them to build outstanding customer experiences. It’s essential that leaders realise data governance is a fundamental discipline, not a luxury, and establish an effective model to formalise processes and responsibilities before their data lets them down.

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Seven tips for financial services brands using mail

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By Cameron Russell, Head of Marketing at Marketreach

 

Customer experience (CX) is a powerful differentiator for modern brands. If customers have a series of positive experiences with a brand, they will buy more, be more loyal and become advocates who influence their surrounding networks. In fact research from Gartner finds it to be the most important competitive battleground for 89% of companies.

Recent research from Trinity McQueen, commissioned by Marketreach, shows that functional teams – whose members come from different organisational levels – often have specific communications with customers. Yet they might not realise the importance of look, feel, content and tone in reinforcing the brand when they send out mailings. It’s essential that organisations recognise the role of all communications in building good customer experience and their brand – and this includes the use of mailers.

The marketing team isn’t the only representative of the brand – teams across all organisational levels need to be considered. Simplifying internal processes ensures marketing and functional teams remain aligned. Establishing a designated ‘owner’ should also be considered.

Cameron Russell

Customer experience is the sum of all the sensations, thoughts, feelings, and reactions that someone has in response to a brand. A good experience comes from speed, trust, consistency and convenience – and knowing when to use technology and when a more human touch is preferable.

People want to feel valued by the brands they engage with. And a powerful channel for this is Customer Mail. Mail provides a differentiated way for businesses to deliver their messages. It is a channel that offers unique benefits thanks to its tangibility, trustworthiness, and the way customers appreciate and interact with it.

Customer Mail is an important part of the overall brand experience for banking and financial services brands. So how can brands leverage this medium to make more of an impact on their customer experience and retention?

 

#1 Use simple language

Never underestimate the power of plain English. Especially when you need your customers to pay attention and retain the information you share.

TSB wanted customers to read their contract terms & conditions (T&Cs) because they protect them. Most T&Cs are dry, hard to understand and consequently go unread.

Knowing this, TSB humanised its T&Cs and adopted a warm tone, clear language and simple icons. The bank helped make customers feel valued by creating something easy to understand, that makes banking better, and changes how clients bank.

When asked, 82% of customers agreed it was easy to understand the changes. So much so that it received its first ever thank you letter for a T&Cs document!

 

#2 Use it at the right time

Customers are now in control of their relationship with brands. Expectations have shifted – and brands are judged on how well they meet these expectations.

Customer Mail works best when it is used in the right moments. So if you are sending information which is important, complex or requires attention and action – Customer Mail is particularly effective.

Its physicality sends an immediate message. And people are twice as likely to understand complex information when it is in physical mail as opposed to digital. Moreover, it requires less follow up and reduces possibility for missed information.

When asked about specific recent communications by mail or digital channels, 57% of respondents to Marketreach’s research said that they are less likely to miss something if it comes to them in a physical format. By increasing consumer understanding and confidence, mail can help to reduce costs and lost revenue by lowering calls to contact centres, missed appointments or even customers lapsing.

 

#3 Surprise and Delight

Three-dimensional, physical objects have innate sensory power. Mail’s tactility can evoke specific feelings and images associated with the brand through creative and considered uses of messaging, paper quality, print, finish, and stunning visuals.

EE needed to improve its welcome journey for customers. Research told them their Net Promoter Score (NPS) dipped after the first impression and continued to decline. One reason was the mailing containing a customer’s brand new, shiny phone showed up in an unmarked, scruffy, slightly damaged bin liner-looking package. Certainly not befitting the UK’s number one network.

EE upgraded the welcome mailing, switching to premium materials and including a link to an augmented reality video featuring Kevin Bacon talking through some of the extraordinary things customers could do with EE.

With over 175,000 AR views, EE outperformed the market during the campaign duration in ‘Better level of service’, ‘Reliability’ and ‘Customer service’.

 

#4 Personalise

Personalisation is table stakes in modern marketing. But doing it right still gives brands a boost in the minds of consumers. Neuroscience research conducted by Neuro-Insight in Marketreach’s  ‘Why Mail Cuts Through’ report shows that personalised mail from companies makes them feel valued more (70%) than email does (30%).

Waitrose recognised that its loyal customer base was eroding. Its solution was to introduce a new programme – Just for You, Best Customer – which rewarded high-value customers. It sent targeted, personalised mailings 5-6 times a year, offering vouchers or incentives based on shopper history. Voucher redemption was over 50% and Waitrose’s net promoter score (NPS) increased by more than 55 points.

Banking and finance brands could employ similar tactics in situations that demand loyalty.

 

#5 Use in combination with digital

Mail and digital used together deliver a powerful partnership because they are distinct channels with unique strengths, when used together they reinforce and enhance each other. Businesses should not see mail and digital as interchangeable channels, but as complementary ones.

Marketreach’s research from Neuro-Insight – which used neuroscience to investigate the effect on marketing channels – showed that physical and digital channels together are more than the sum of their parts. For example, a person who has seen a piece of mail from a company will look at a social media ad from the same brand for 30% longer. And the memory recall of a social media ad is given a 44% boost by a person who has already received mail from that brand.

 

#6 Enable behaviour change

Mail is particularly useful in situations requiring multiple steps – it provides much-needed clarity when a range of options are available. Recipients are encouraged to make behavioural changes.

Thames Water leveraged these qualities effectively. It found that customers were flushing cooking fat and wet wipes down drains, causing blockages and sewage back-ups at their homes.

Thames Water created an integrated campaign, Bin It, Don’t block it, and sent a mailing to over 260,000 households in the highest risk areas. The information pack included a free cooking fat trap, which created a strong visual reminder every time the resident used the sink. It is at such key moments, when ‘the brand is in the hand’, that physical mail can really outperform digital in responsiveness.

The result was a 26% reduction in sewer blockages in targeted areas – with 70% of residents surveyed after saying they had changed their behaviour.

 

#7 Design matters

You don’t get a second chance at a first impression.

Design matters because it reinforces a customer’s experience of the brand in a sensory and significant way. Mail design has been measured and proven for decades, and this learning is especially critical to spur successful CX. Everything about the communication is reinforcing the brand through colour, tone, message, imagery, design and production quality. It should be produced to the same standard as all brand messaging.

 

Sealed and delivered

Experience is the most decisive battleground for brands and consumers. And shaping this isn’t the responsibility of just one marketing team – or just one marketing channel.

Mail isn’t a one-stop-shop or fix-all channel. And no medium is. But mail is a strong channel for informing action and facilitating specific responses from customers. For financial services and banking brands, mail is a trusted media that shows customers you care and that you value them. And as a result it can help to forge loyalty. It is a compelling means for the right message to appear at the right time – when it is done right.

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