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WHY DIGITAL TRANSFORMATION IN FINANCIAL SERVICES IS ABOUT CULTURE FIRST, TECH SECOND

FINANCIAL SERVICES

Stuart Templeton, Head of UK at Slack 

 

In today’s world, there’s no such thing as a ‘non-tech fin’. Every financial services company needs to consider itself a fintech in order to bring about the innovation, speed, and transparency that customers expect, and that’s why most are pumping significant investment into their digital transformation efforts.

Part of the challenge faced by traditional incumbent banks is that they rely on legacy core systems that stifle the speed of change. These core systems were not built in an API first era. The good news of course is that the obligations of PSD2 and open banking have gone some way to facilitate future innovation.

While legacy banking platforms do continue to present a technical challenge, the human one can be even greater. Traditional institutions are often faced with the prospect of rebuilding their culture from scratch in the pursuit of becoming digital-first. Like many industries, the fundamental challenge is one of coordination: the creation and maintenance of alignment over time.
Couple this with the fact that the expectations of today’s workforce are changing, then companies in the industry have a real job on their hands. A growing percentage are digital natives, and millenials – who greatly value trust and transparency – make up the largest proportion of the workforce today. So how have businesses in the industry historically ingrained culture, and how does this need to change?

 

Old ways of working – Team A, and Team B

Traditionally, the culture within large financial organisations has been separated by two distinct teams: operations, and tech. They are driven by seemingly opposing forces – one by GANTT charts and lofty business goals, the other by agile software delivery and customer obsession. Often, the two don’t even speak the same language, let alone collaborate and share ideas. Of course there are digital projects, but they aren’t the embodiment of the business, and often tech teams find themselves battling to get buy-in from internal stakeholders who are somewhat removed from those that drive innovation.

Part of the problem is even the notion of having digital transformation projects – there is no such thing in today’s environment – as digital is an overarching movement, and financial services institutions must think of themselves as ‘digital factories’ in order to see a marked change. It is no longer enough to deliver tech updates both internally and externally once every few months, with speed diminished by layers of bureaucracy.

What needs to happen, then, is that these two business segments need to find a way to blend that helps the old incumbents forget their binary ideas of teamship from time gone by and instead let them come together to become one unit. Flattening the established hierarchy so that workers from across all lines of the business can communicate, share ideas and identify problems in real-time is, after all, the key to addressing the transformation gap. They need to think on their feet and iterate as they go: it’s agile thinking, but permeating outside of just the software delivery cycle.

 

Eating the elephant – one bite at a time

The solution, in theory, is relatively simple: companies need to break open the silos of information created by technologies like email and ensure anyone within a business has access to the knowledge and skills they need to make their projects a success. But of course, in practicality, this can present a seemingly insurmountable task.

Using technology to create an agile and transparent working environment that fosters collaboration is key for many financial services organisations that want to see real tangible results from their investments. Digital natives such as TransferWise and Starling Bank are getting this right by prioritising a decentralised business model, one that empowers collaborative working and knowledge sharing that in turn has a positive impact on employee satisfaction and retention.

They do this through collaboration hubs that provide a rich, permanent, searchable record of knowledge for everyone in the organisation.

 

Looking ahead: Team ‘us’ 

Predictions are very difficult, but in five years’ time we can expect to see a greatly altered perception of the financial services industry. We can expect that digital communications tools will continue to play an integral role in the evolution of their workforce culture, helping to bring the right people together internally within the business, as well as strengthening relationships externally with partners and customers alike.

Ultimately, in order to keep learning and improving, banks need to ask questions of themselves as competition and customer demand becomes more fierce: “Why are we doing this?” “What’s the benefit here, and who are we considering in the pursuit of this goal?”

To answer these things, a culture of collaboration and openness is key – underpinned, of course, by the tools that empower it.

 

Technology

COMPETING IN A DIGITAL WORLD – SMES FIND THEIR FEET

– Stefano, Product Manager

Digital transformation is different for small and medium-sized companies. Or is it? In this article, we take a look at the current state of digital in SMEs and look ahead to see what is in store.

 

“Changes in business operations, and in the way customers are served, driven by digital technologies.”

That is a compact definition of digital transformation. And the digital technologies in question? They range from IoT (internet of things, or connected devices like smart sensors), to Robotic Process Automation and AI, to cloud computing.

 

SME rate of digitisation

Whether your business employs ten people or 10,000, the ingredients for digital transformation are the same. So how are small and medium-sized companies faring? Are they even interested in digitisation? Research1 says they are, and UK SMEs are doing better than many of their European counterparts, with high scores for adoption rates of cloud computing, Big Data and AI. To put this statement into perspective, 58% of companies have adopted cloud computing, but only 27% use some sort of AI-based technology.

Still, only 40% of SMEs report that digitisation is a top priority. An important fact, as the European SME survey 20191  shows a correlation between prioritising digitisation and investment. Those companies that say getting digital is a top priority invest more than companies that give digitisation a lower priority. The companies that prioritise digital also expected to export more than companies who see digitisation as less critical.

 

Naturally, as SMEs are a very heterogeneous group, there are differences in the area of digitisation as well. Some sectors are further along than others. Roughly speaking, finance & accounting firms, manufacturing companies, and the logistics sector are a step or two ahead of firms in the construction business and the legal profession2.

 

The big gain

So, what is it that drives digital transformation? What do SMEs stand to gain?

The short answer is a competitive edge, or even just remaining competitive (enough). Digital transformation is not an option; it is a must. The 24/7 economy demands fast service and quick supplies, and that goes for B2B markets just as much as for B2C. Digitisation enables companies to satisfy such demands.

The predictive capability of AI can reduce downtimes, for example – it will know in advance when machinery is likely to break down and can schedule preventive maintenance accordingly. Another example is increased productivity through the use of RPA or software robots. With RPA, a company can automate routine jobs like checking invoices relatively quickly and cheaply, freeing up human capital for other tasks.

 

The digital future

To look ahead, we also need to take a look at some constraints SMEs face with regards to digital transformation. The main issues UK firms face in this respect are around cybersecurity and the lack of skilled workers. In other countries around Europe, insufficient IT infrastructures also ranks high on the list of concerns.

Dealing with cybersecurity risks and especially ransomware attacks, is a significant worry for companies, as they are costly, difficult to prevent and have the potential to damage their reputation. Financial constraints are also a leading problem firms face when trying to skill up. Salaries for highly skilled IT talent have risen to a level that is prohibitive for many. At the same time, it is also hard for SMEs to attract and retain people, as candidates consider them as less attractive in terms of opportunities for growth.

According to Hays2, most employers say the lack of skills of existing staff prevents them from taking full advantage of the opportunities digital technologies provide. They are turning to solutions to train their employees and outsourcing work.

Nonetheless, digital transformation also provides plenty of opportunities. Look at fintech. Not what you were expecting, perhaps, but the rise of fintech has undoubtedly been advantageous for SMEs. Where SMEs have traditionally been caught in the middle between large corporations and consumers, as far as banking services were concerned, fintech is now providing smaller companies with choices that were not available before. A survey by EY3 shows that, in the UK, 18% of SMEs have adopted fintech services. These services include banking, payments and financing.

SMEs have taken essential steps, but they have some way to go as well. What lies ahead seemed brighter in January 2020 than it is now, just a few months later. Still valid for any company setting out on the digital transformation path, though, is that investing in people – skills, communication and culture – is crucial. Although the survey done by Hays found that many employees feel that ‘going digital’ is not a bad thing, the human factor does seem to be a stumbling block for many SME’s. One possible solution is for organisations to cooperate in creating training programmes and offer employees a challenging, cross-company career path.

 

Sources

1 KFW Going digital – the challenges facing European SMEs | European SME survey 2019

https://www.kfw.de/PDF/Download-Center/Konzernthemen/Research/PDF-Dokumente-Studien-und-Materialien/PDF-Dateien-Paper-and-Proceedings-(EN)/European-SME-Survey-2019.pdf

2 Hayes What workers want

https://www.hays.co.uk/documents/34684/4771753/What+Workers+Want+2019.pdf/7d7c1264-6df5-c2cf-2c7c-581b9a5b01dd

3 EY Fintech is a world of choice for small and medium-sized enterprises

https://www.ey.com/en_gl/banking-capital-markets/how-fintechs-are-a-world-of-choice-for-small-and-medium-sized-enterprises

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Finance

AI: CUSTOMER FACING EMPLOYEES’ BEST FRIEND IN THE FINANCIAL SERVICES INDUSTRY

By Ryan Lester, Senior Director, Customer Experience Technologies at LogMeIn

 

We’ve all heard the old saying “money talks.” Well when it comes to customer loyalty and retention, good customer experience talks much louder, with 30% of customers leaving a brand and never returning due to a bad experience.

The truth is, there are a lot of companies with similar products and services, but that doesn’t mean that differentiation is impossible. So, what’s the solution? For financial services, large and small, customer experience is becoming the key competitive differentiator and the best way to deliver an impactful experience is to empower customer-facing employees to do their best work. Artificial intelligence (AI) is enabling these employees to create remarkably better customer experiences, resulting in customer loyalty, advocacy, and overall growth.

For financial institutions that have been considering new strategies for improving the quality and efficiency of their customer experience, here are a few ways AI can enable them to deliver the “human factor” that good customer experience demands whilst ensuring customer facing employees can provide a more positive experience for customers.

 

Increase employee productivity

How much of employees’ time is spent searching for answers to questions? Do they ever have to put customers on hold or even step away to get additional help? AI helps provide front-line employees real-time guidance so they can spend less time looking for information and more time solving problems. An AI-powered chatbot, for example, can be listening in the background of a conversation helping point employees to the right data, solutions, and processes to resolve customer issues faster than ever before.

 

Deliver a consistent customer experience

When banking customers engage with their financial institutions, they measure the speed and accuracy of the service through two criteria. First, how quickly can the system access their account and deliver the correct information? Is it faster than a human could type it in and share it? And second, if they eventually do need to be connected to a live customer support agent, is their information captured and passed along accurately? AI technology takes those general queries off the customer support team’s plate, providing a quick, accurate, and effective response. If a query needs a more in-depth response, AI can hand it off to support staff to address.

Not only this but leveraging a centralised, AI-powered knowledge solution ensures every employee has access to the same, updated information, so no matter who the customer speaks to, they can be assured that employee responses are both consistent and accurate across the board.

 

Accelerating employee training and onboarding

Like any industry, employee turnover is inevitable and can be costly. But, not training new employees correctly or in a timely manner could be much more costly. When it comes to financial services there is a lot to learn, whether it is something simple like the process for checking an account balance to all the nuances associated with mortgage loans. AI can support on-the-job training by helping new employees answer questions confidently, correctly, and much quicker than they could before.

 

Improving employee satisfaction

Today’s banking customer has all kinds of new ideas about their banking experience. “The Amazon Effect” has successfully raised consumer expectations to the extent that a consistent, personal, and relevant experience is the new normal. As a customer, how many times have you been told “I’m sorry, I don’t know the answer?” Customers want solutions to their problems and employees want to be able to deliver those solutions as efficiently and effectively as possible. AI assisting in the background helps minimise those negative moments – making employees job easier, less stressful, and overall more enjoyable.

 

Identify knowledge gaps

Do you know all the questions employees are getting asked? Do you know what’s easily answered and what’s not? Real-time insights allow knowledge managers to keep up to date on frequently asked questions and gaps in current resources. This allows them to strategically improve or add content where needed.

 

Augmenting customer service

Whether talking with an AI chatbot or a personable customer service team member, the modern banking customer has high expectations for convenience, speed, and security. Which means that the technology you choose to deploy and how you deploy it is now just as important as who you hire and how you train them.

Today’s AI solutions won’t replace customer service agents or get in the way of the human factors that drive the customer experience. On the contrary, they augment it, allowing the business to do more without adding human resources. The higher the quality of a AI chatbot solution, the better it will be at taking the routine requests off the plate of customer service agents—giving them more time to provide a personalized and positive experience for customers.

 

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