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Managing banking transformation in a customer-centric world

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Amanda Beesley, MD Financial Services & Insurance Division at Paragon Customer Communications

 

Along with other service sectors including retail and business administration, the UK financial services sector helps to provide 80% of the total UK economic input.

So, it’s unsurprising that in this sector there is a continuous drive towards reducing operational expenditure while maximising value for money.

Financial services organisations are keen to evolve alongside changing customer needs. In March2022, Lloyds announced that it would be closing 60 branches, following similar announcements from HSBC and NatWest Group, which plan to shut 69 and 32 branches respectively this year due to the shift to mobile and online banking. Clearly, businesses are increasingly moving away from traditional services in an effort to make sure they can offer a wider range to their customers.

Customer experience and revenue growth are the main drivers of this shift but ironically transformation initiatives often divert from other areas that enhance the customer experience. This was highlighted by a recent report from Forrester, which discovered that while businesses prioritise  meeting the demands of younger digital natives, they may actually be damaging their wider customer communications processes. Ultimately, the best approach for most customers is likely to be a blend of print and digital. But, how can your organisation find the equilibrium?

 

Omnichannel vs (mainly) digital

Regardless of sector, operational transformation is often most successful when customer communications is thought of with an omnichannel mindset, rather than digital by default.

The push to digital is driven by the ever-increasing number of digital natives – namely, Millennials and Gen Z. These groups have spent nearly their entire lives surrounded by computers, digital devices and the world of social media. This makes a huge difference to how these people engage with financial services in comparison to earlier generations. Millennials and Gen Z expect to be able to access everything they need digitally and are therefore considerably less likely to choose face-to-face services.

Despite this, as of April 2022 there are over two billion people globally who are not part of the digital population. Even as this figure declines there will always be some people who, for reasons such as lack of access, confidence, or social concerns such as job losses caused by digitalisation, will be unable or unwilling to go fully digital. This means it is crucial that organisations put their resources behind both physical and digital communications strategies.

Forrester’s research suggests that while many banks have been pursuing digital transformation efforts for some time, they often start their journey without a coherent strategy. This leads to projects stalling or even failing. Even those that are succeeding with a digital-first approach, such as challenger banks, are sometimes struggling to deliver a seamless experience between channels and consumer contact points. In this crowded sector, consumers can easily move to a competitor if they don’t feel their needs are being met. This means the importance of a top tier communications approach can’t be understated.

Adopting an omnichannel approach means integrating all online and physical touch points. No matter how or when the customer chooses to communicate – via live chat on the website, an app, social media, phone or seeing someone face to face – the experience can be seamless and unified.

 

The importance of choice

Traditionally, the feeling has been that the dominance of digital is inevitable and that print communications will eventually be phased out completely. The figures suggest digital is emerging victorious, with the total number of addressed letters falling from 14.34 billion in 2011-12 to 9.99 billion in 2019-20. Yet, this doesn’t seem to be the case. Recent research shows that we could now be seeing a flattening of both the growth in digital and the fall in print volumes as organisations settle into a blend between the two.

While younger consumers might be more comfortable receiving digital communications, it doesn’t naturally follow that they will want all of their communications to be sent that way. There is clearly no ‘one size fits all’ approach. Customers of all ages will have different comfort levels and preferences when it comes to digital communication, which are likely to evolve over time.

Striking the right balance relies on an in-depth knowledge of how customers engage with their content, but it is also hinged on recognition of the myriad reasons why customers need this balance.

Too often, people who prefer physical communications are tarred with the same brush: they’re seen as lacking tech skills and unwilling to adapt to modern life. To really enhance customer experience, you need to make sure that your business isn’t biased against those who don’t want to go digital. You need to recognise that this can be based on a valid fear that increasing digital processes will decrease social and community integration by removing in-person opportunities.

Discussions of the advantages and disadvantages of digital and physical communications often come down to a debate of old vs new. This is an oversimplification that holds organisations back and damages customer relationships.

Physical communications shouldn’t be brushed off as outdated and therefore unfit for modern needs, nor should customers who prefer this method. While the digital demand is undeniable, it doesn’t follow that physical communications have no place in modern communication strategies. Thinking in this way will prevent you from harnessing the enduring powers of physical methods of communication and, just as importantly, will stop you from providing the service that physical users deserve.

 

Banking

The importance of Customer Experience (CX) for retail banks today

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By James Isaacs, President, Cyara

 

Today’s retail banks face considerable challenges. Open banking initiatives –  that make it easier for customers to switch accounts – and increased competition from emerging fintech brands, are making it harder for them to attract and retain customers. This challenge is particularly acute for traditional banks which are seeking to attract younger people, who are drawn to the range of innovative services offered by digital-first emerging ‘neo’-banks.

To stay competitive, traditional banks must improve the customer experience  they offer account holders. They also must look for more efficient ways of working, so they can service all customers in a consistent way, regardless of which banking channel they use – whether it’s banking online, at a physical bank branch, through a contact centre, using a mobile app, or (most often) using a combination of all these channels.

The challenge of consistency

The argument for an omnichannel strategy is compelling. Fuelled by the pandemic, demand for digital banking services has grown. McKinsey suggests that 71% of European banking clients prefer multi-channel interactions, whilst 25% express a desire for a fully digitally-enabled private banking journey with remote human assistance when needed.

The delivery of such systems, however, is not without its challenges. Embracing omnichannel often means transitioning to a cloud-based infrastructure – away from the legacy on-premise systems prevalent in banks. Even when this hurdle is overcome, delivering banking services through multiple channels requires a significant investment of time and resources. Due to these common barriers, many banking CX projects fail to get off the ground.

James Isaacs

At the other end of the scale, there are the banks who have sought to implement numerous channels to cater for every possible customer demand, with varying degrees of success. The key to the delivery of a stellar CX is consistency – ensuring that every stride a customer takes in their journey is seamless, irrespective of the path or the channel they choose to take. The chance of ensuring a consistent service across all these channels is negatively impacted if organisations attempt to simultaneously deploy services to mobiles, website, in-person channels, messenger, chatbots, contact centres, alongside the adoption of newer open banking services.

Selectiveness is key

Organisations looking to optimise CX through the adoption of an omnichannel strategy are therefore advised to be more selective in their approach – adopting one or two new channels or approaches before expanding their omnichannel offering further.

An ideal starting point for retail banks is to look at automation within the customer journey. When applied correctly, automation can be used to help improve customer service in a way that also delivers efficiency gains.

The power of automation

Automation can have a significant impact on the CX delivered within retail banking, which saves valuable time for the customer and enhances the customer journey. Most customers getting in touch with their banks have fairly routine queries, such as a change of address, so the need to speak to an advisor is often unnecessary.

Automated customer-facing support solutions, such as chatbots, offer a faster way for customers to self-serve and secure the answers that they need to certain problems without having to phone an agent. Chatbots are programmed through a knowledge bank that can easily be updated with new information, enabling customers to source the information they need quickly and easily. Chatbots can also be used to direct customers to an agent if they are unable to resolve the issue.

For those customers who do still need to speak to an agent, there are Interactive Voice Response (IVR) systems, which capture information from a customer when they call into the contact centre. IVRs help customers complete simple tasks themselves and route them automatically to the right department. This directly reduces average call handling time (AHT) for agents and the length of time that a customer is on the phone.

The importance of automated CX testing

Yet, offering omnichannel and automated journeys is not enough to satisfy customers. These journeys must be flawless if they are to deliver a seamless customer experience. Forward-thinking organisations understand that the only way to assure perfect execution is through adopting automated testing that places a spotlight on the omnichannel customer journey from the customer’s perspective.

Automated testing can be enabled by leveraging an intuitive testing solution that develops test cases based on existing customer journeys. Retail banks can use automated testing to track various paths through IVRs, chatbots and then base test scripts on those journeys to ensure their flow or functionality is as it should be. Using this strategy, financial organisations can create thousands of automated test cases that cover the full swathe of customer journeys, shortening testing operations to a fraction of the time of equivalent manual tests.

While automated testing provides easily measurable benefits, certain alerts flagged by automated testing are more critical than others. Distinguishing a true failure that requires immediate action as opposed to failures that can be addressed in time is essential to achieving the true return on investment (ROI) of test automation. In doing so, banks can ensure that the customer journey remains smooth, and the CX delivered remains outstanding.

The path to good CX is paved with automated testing

Delivering omnichannel services for banking is key to satisfying customer demand. However, whether it is the delivery of a chatbot, IVR or an open banking model, retail banks are well advised to stagger the roll-out to ensure the delivery of a consistent service to customers. Automation plays a critical role here – both in the delivery of omnichannel services to customers, but also ensuring its ongoing success through rigorous, frequent and automated testing.

Financial organisations that want to remain frontrunners in the market will stand out against the competition by delivering stellar digital and in-person experiences for customers. To assure high-quality CX, walk in the shoes of your customers, testing their customer journey in each and every scenario to confirm there are no cracks in the road. Of course, there may be bumps along the way, but when those are addressed in a timely manner, retail banks will continue to attract and retain customers for the long haul.

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Business

Why do Traders Need a Managed Service Partner?

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Jeff Mezger, Vice President of Product Management, Financial Markets, TNS

 

Does your financial institution have the understanding, resources, talent and bandwidth to execute an effective data center strategy in-house? If not, it needs to, as behind every transaction is a labyrinth of algorithms and networking infrastructure technology that converge in one location: the data center.

For most, the answer will be ‘no’. There will not be the resource or skill in-house to keep ahead of the maze of technical and logistical options to execute the fastest and most profitable trades. Trading success requires accessing extremely powerful servers, with the best data lines and connections close to where the trade is physically taking place. Processing close to the source of the input data provides the lowest possible latency between input and response – and speed matters. Milliseconds can mean the loss or gain of millions of dollars.

 

Latency Matters

Low latency is vital for algorithmic trading. Many factors affect latency, especially hardware location and network connections. Trade execution speed is critical in maximizing profit and loss, and a competitive advantage comes from having the best communication links to hardware in the best location.

TNS’ ultra-low latency Layer 1 technology for exchange direct access inside the data center was the first architecture of its kind to be offered and deployed globally and remains the most advanced solution in the market. It eradicates the need for multiple switches by using a simple, single-hop architecture to deliver direct exchange connectivity in as little as 5 to 85 nanoseconds – impressive when you consider that the human eye takes 400 nanoseconds to blink!

So, acknowledging that speed and colocation are vital for executing a trading strategy, what can firms do to underpin trading success? Many will outsource operations to a specialist managed hosting, colocation and connectivity service provider.

 

In-house vs. DIY

A recent independent report Colocation of Financial Markets Trading Infrastructure’, identifies the pros and cons of in-house management (a “DIY” approach) versus a managed service model. The report found that managed service providers offer beneficial value-added services for capital markets clients. Advantages include cost savings, trade efficiency, and simplified access to data and network infrastructure support, enabling trading firms to focus on their core business competencies. Industry analyst firm, Celent, which authored the report, interviewed trading firms and data and trading technology providers and found that the key decision criteria when deciding to engage a managed service provider included:

  • Consultation and expert advice on the ideal configuration of hardware, network connectivity, location, data feeds and network bandwidth.
  • Agility and flexibility to take advantage of ever-changing investment opportunities by rapidly and easily deploying trading strategies in new markets.
  • Access to high-end network services, leveraging high-speed solutions, including ultra-low latency, in-data center Layer 1 connectivity to link to trading venues, new customers and other service providers.
  • Operational efficiency and future proofing, with access to the latest technology, and highly experienced staff in all global jurisdictions who help to navigate cultural, linguistic, and regulatory obstacles.

 

Challenges

Managed Service Providers offering remote data center space and connectivity are on a quest to deliver a uniform global experience to ensure trading in, for example, Singapore or Tokyo is the same as trading in London or New York. They are also constantly investing in technology and new locations. For TNS, this means responding to customer requests to deliver a service in any location, most recently announcing a managed hosting and colocation offering in Madrid.

On rare occasions, perhaps instigated by political or economic events, firms may need to move from their existing data center location, as seen recently when key exchange, Euronext, relocated its primary data center and related colocation services from Basildon in the UK to the Aruba Global data center IT3 in Bergamo Italy. Such a physical move is a big undertaking and firms need differentiated support and solutions to ensure that they can seamlessly move and trade continuously, regardless of their size, requirements and the exchange location.

So far, TNS has moved nearly 20 existing and new customers to Bergamo, providing traders with uninterrupted, seamless trading. Our customers have been able to focus on their core business while we have managed the global supply chain issues to ensure a smooth migration. With suppliers quoting lead times of a year for some equipment, our buying power compared to smaller firms or those attempting to DIY a move, has proved invaluable in ensuring a smooth transition.

 

Future-Proof

Firms need to future-proof their trading infrastructure by working with a provider that has experience in managing access to vast amounts of raw market data, can support multicast requirements and is able to offer scalable solutions to accommodate the demands of ever-expanding bandwidth. As traders diversify their portfolios, their market data needs can place excessive network capacity pressures on their infrastructure, sometimes running into tens of gigabits. Seek a provider that can easily accommodate these requirements and handle data bursts during high activity periods, such as those seen on many recent occasions due to market volatility caused by political and economic events.

 

 

 

 

 

 

 

 

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