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THE FUTURE OF FINANCIAL SERVICES IN THE DIGITAL AGE

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By Gurpreet Purewal, Associate Vice President Thought Leadership, iResearch Services

 

The pandemic has changed the face of financial services and banking, especially in the short-term. Financial service organisations have had no choice but to accelerate their digital service offerings to cater to the older generation of customers who found themselves unable to enter a physical store because they fell into the high-risk category of Covid-19.

However, through the many trials and tribulations of an unprecedented year, financial service providers and banks have emerged stronger with an increase in consumer sentiment, often being praised for their efficiency and understanding of many Covid related issues.

In January 2021 iResearch conducted a survey into how banks and FS firms should look forward to a post-Covid world and develop upon goodwill to create a trusting, transparent and technology-focused strategy, improving communication with customers and increasing market share. Over 1,000 consumers were polled as part of the nationwide survey.

As the vaccination programme is now well into its tens of millions, and the UK moves along the government’s lockdown exit roadmap, what will financial services of the future look like? Have the digital advances of 2020 changed how banks and FS firms communicate with customers, forever more?

 

How to get digital transformation right

To demonstrate the scale of the opportunity for firms that ‘get digital right’, there are now more people than ever accessing their services through online channels. For example, research found that more than 90% of people aged over 60 have used online banking for the first time during the Covid-19 pandemic. In comparison, 17% of people aged under 30 said they were accessing services via an app or web browser for the first time. A real life example of this is how you can now sign loan agreements and other financial documents online or through a mobile app, significantly speeding up the process and more flexibility for customers.

Gurpreet Purewal

More than half (54%) of respondents said they are less likely to attend a physical branch after the pandemic. This demonstrates a seismic shift in the way people will access banking services now and into the future.

But with lockdowns and branch closures, are these new digital customers doing so willingly, or because they have no choice? The results show us that banks must work harder to earn the trust of older customers who are less familiar with online services. The overwhelming majority (97%) of 18–24-year-olds said they trust their bank with their data, compared to only 33% of people aged over 66.

 

Capitalising on goodwill

Almost two-thirds (63%) of respondents said their bank acted in their best interests during the pandemic, but a third said they would consider switching their bank for better, more personalised communication.

Asked how financial service organisations can improve their communication with customers, ‘connecting on a personal level’ ranked highest, followed by ‘more honest and open dialogue’, a ‘demonstration of how they are helping customers’, ‘more creative campaigns’, ‘consistent messaging across channels’ and finally ‘responsiveness to major events’.

Before the Covid-19 pandemic, it may have been difficult for banks with hundreds of thousands of customers to achieve personalised communication, yet the globe has, for the last 12 months, been going through a shared experience. According to research from Motista, consumers that have made an emotional connection with a brand will be more loyal than those that did not, staying as repeat customers for on average 5.1 years versus 3.4 years. They will also recommend and refer brands to their friends and family 20% more times than those that did not make that connection.

Therefore, the need to develop tailored communications, driven by purpose and meaning, are demanded by customers and must be front of mind for communications strategies going forward.

While banks have spent huge time, money and resource in bolstering their digital estates, it is clear that communication – that often intangible yet entirely controllable factor – can be the difference between success and failure in the post-Covid world.

The results clearly demonstrate the lasting impact of Coronavirus on how people will access banking services from now on. As a consequence, financial service firms will be required to refocus on really understanding customer needs in order to engage with the different requirements of each individual customer. The good news is that banks and financial services have the tools at their disposal to create campaigns driven by genuine industry insight to win the hearts and minds of customers.

Many of the effects of the past year continue to be felt and as we emerge from the rubble of 2020, a continuation of support is essential. Retail banking may have been changed by the pandemic in its functionality but perhaps the banking and financial service sector’s real differentiator can be seen in its customer interaction. Meaningful, empathetic communication and leveraging digital to better understand customer’s needs, has never been so important.

 

Finance

THREE STEPS TO ENSURE RECOVERY OF COVID LOANS GOES SMOOTHLY

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In the wake of the pandemic, the government acted quickly to provide financial Covid support packages to help struggling businesses. With the economy now recovering, Mike Hampson, CEO at Bishopsgate Financial explores the range of options available for banks to ensure that those loans are repaid.

 

Since the start of the pandemic, businesses have raised over £75bn[1] from banks and financial markets, through interest-free emergency support schemes. But the harsh reality is that not all loans will be honoured as the economy recuperates.

As a result, banking professionals with client relationship management experience and skills in supporting clients to repay loans in a challenging business environment, will be in high demand.

 

Mike Hampson

Setting up training capabilities for client support post-pandemic

Commercial bankers estimate 60% of new coronavirus scheme loans[4] will default or suffer other repayment issues that will drive previously unseen levels of non-performing loans. It’s a tough balancing act and one that demands careful management of the lending transaction lifecycle, from origination through to collection, recovery, and handling bad debts. Banks no doubt already have frameworks in place to manage these elements, but it’s highly important to make customer interactions as easy as possible and ensure their genuine concern for their customers is clear.

Subsequently, hundreds of workers at major banks including HSBC, NatWest and Metro Bank[5] are understood to be receiving training in how to deal with vulnerable customers and “demonstrate empathy” as the first wave of repayments for coronavirus loans fall due. Staff ‘sensitivity[6] training builds on client-support and workout capabilities, such as improving sensitivity to early-warning systems, developing short-term forbearance solutions and loan modifications, and providing guidance on alternative products.

This approach may further avoid the additional pressure on the UK’s mental health crisis as financial institutions prepare to call in loans issued during the pandemic.

HSBC, which now has 400 staff in its debt collection team,[7] said the aim was to ensure staff had a “consistent understanding of vulnerability” and are “aware of the factors that could make an individual vulnerable” when having repayment conversations with customers.

An executive at another bank said its expanded debt collection team was being trained in “empathy, vulnerability and listening skills”. The individual told The Telegraph: “Ultimately, we don’t want to damage the economy by being overly aggressive.”

A peculiarity of a crisis situation is that customers don’t always know what they will need until that need is pressing. Finding that their bank is prepared to help in unexpected ways will go a long way toward reassuring them.

[2] https://www.law360.com/articles/1355897/

[3] https://www.bishopsgate-financial.com/insights/the-change-perspective/the-change-perspective-2021

[4] https://www.grantthornton.co.uk/insights/how-to-manage-upcoming-non-performing-loans/

[5] https://industryslice.com/NewsLetter/8_33

[6] https://www.telegraph.co.uk/global-health/climate-and-people/covid-19-has-amplified-parallel-pandemic-poor-mental-health/

[7] https://www.msn.com/en-gb/money/other/bank-staff-get-sensitivity-training-before-calling-in-covid-debts/ar-BB1fNMte

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Finance

FOUR STEPS TO INTEGRATING INTELLIGENT AUTOMATION IN THE FINANCE DEPARTMENT

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Marieke Saeij, CEO of Visma | Onguard

 

It’s clear that Intelligent Automation (IA) is still very much an emerging technology, with one indication being that is has only been mentioned a handful of times on Twitter since the beginning of 2021. Results from our latest annual FinTech Barometer reveal a mixed picture in terms of awareness, with half of finance professionals having never heard the term before. Whilst this is unsurprising for a technology concept very much in the ‘early adopters’ stage, organisations can stand to gain real benefits from embracing Intelligent Automation now, particular within the finance department. With this in mind, we explore some of these benefits and share a step-by-step best practice to implementing it into business operations.

 

Intelligent Automation ensures a predictable order-to-cash process

Such is the speed of introduction of new technologies that it’s a challenge for businesses to keep pace. As the newest innovation in finance, Intelligent Automation is one that organisations can’t afford to let pass by. It truly takes financial process automation to the next level. In addition to helping maintain a high-quality customer service, it also complements the existing skillset of finance professionals in the industry.

Marieke Saeij

While Robotic Process Automation (RPA) and Big Data are key innovations for the sector, IA can be likened to an additional layer that enhances existing technologies. By combining applications, this layer is capable of independently assessing situations and determining the appropriate process sequence. It can, for example, fully determine the risk of a specific customer, and can also predict at an early stage which invoices will be paid late, or even not at all, ensuring that finance professionals can then plan accordingly. The result is a reliable and predictable order-to-cash process.

 

The four steps to an IA-proof organisation

While the benefits of IA are numerous, implementing the technology can prove complex, although some are already treading the IA path without knowing it. In this instance it’s crucial to become aware and begin the purposeful process to full integration. Below are the four key steps to becoming fully IA-proof.

  1. Exploring the potential: Brainstorm where automation can be applied

Step one is to examine the extent to which automation can help your organisation. Blue sky thinking is the key here. What is the ideal relationship with the customer? What does the ideal order-to-cash process look like? In this phase, involving multiple departments from within the organisation is key, from management to operations. The finance professionals who have the most contact with customers are likely to have the strongest knowledge of which processes they would like to see automated. With no limits to ideas, it’s best to explore all the opportunities in the entire order-to-cash process and describe broadly the potential value to the organisation.

 

  1. Decipher which data and technology is needed

The second step is to map out which data and technology is required. Working with a specialist, either external or from the internal IT department, is beneficial at this stage to see where the opportunities lie. In many cases, off-the-shelf solutions are already readily available to help make the difference, so it pays to do the research and gain advice where possible.

 

  1. Firm up the strategy

With the plan mapped out, it’s time to fit the pieces of the puzzle together. Which technology and accompanying software is proving most valuable? It’s vital at this stage to analyse the results the organisation is achieving from deploying the right technology and software. It’s also important to outline any limitations and emphasising the potential risk of failure. This is the business case and the basis for the elevator pitch that will be presented to internal stakeholders.

 

  1. Draw up the roadmap and start benefitting from agility

The fourth and final step is prioritisation. The roadmap will describe step-by-step how to move from the undesired current situation to the desired end goal. In the first step, choosing a subproject that is relatively easy to achieve will help gain support from other departments within the business, and provide invaluable experience that can be applied to the more complex components that follow later. This agile approach facilitates a learn-by-doing mindset and allows the following steps to be tackled in a smarter and simpler way.

 

Effective preparation is half the battle

Exploring the potential of automation, mapping the required data and technology, establishing the strategy and laying out the roadmap are the four crucial steps to ensure the foundation for Intelligent Automation. Effective preparation and estimating which technology and accompanying software is needed will help to create a streamlined and error-free order-to-cash process. To ultimately save time and costs, empower finance professionals and maintain customer loyalty, the time for Intelligent Automation is now.

 

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