New Survey: Leveraging real-time data delivers higher revenue growth and increased developer productivity. Learn more.
Digitization has the banking, financial services, and insurance (BFSI) sector firmly in its grasp and is radically changing the business models of established financial institutions, just in time to help them recover.
Not only have banks been struggling with a still-tarnished image since the financial crisis, current studies also show that the majority of consumers find their banks and their services interchangeable—they simply see no differences between the individual financial institutions. Add to this the new fintechs—fresh players on the market who are in the process of outstripping the top dogs with innovative digital approaches—and you have the recipe for total disruption.
The fintechs benefit above all from the ubiquity of the smartphone but also from new regulations and guidelines, such as the European Union’s Revised Payment Service Directive, which opens up completely new possibilities for third-party providers and also BFSI customers themselves.
Today’s BFSI customers have an entirely different standard of “customer service”. They want real-time advice, analysis, and recommendations, all via their smartphone. In short, they want the kind of customer experiences they get from online giants like Amazon, Ebay, or Google.
How can BFSI players stay competitive in this “Right-Now Economy” and retain the loyalty of their customers? What approaches and technologies should they embrace to deliver these amazing customer experiences?
A Comprehensive View of Customers Across All Channels
There two most commonly cited reasons for the loss of market share and performance in the banking sector are: 1) financial institutions not knowing enough about their customers; and 2) financial institutions not personalizing their offers.
Banks sit on a treasure trove of customer data from many channels, including branch business, telephone support, websites, mobile applications, and the usage of their diverse financial products.
However, legacy technology makes it very hard to unlock the full potential of this data and put it to good use. Most often it ends up “siloed”, or stored away in separate areas.
Relational and other traditional or legacy technologies simply can’t keep up with today's customer applications and data volumes. Core banking systems weren’t designed for real-time interactive customer applications; they were designed to meet complex regulatory and legal requirements, which limits their flexibility.
When customer information and transaction history are trapped in data silos, it’s extremely difficult for financial service institutions to derive a comprehensive customer picture, let alone understand the customer enough to provide highly personalized customer experience.
These days, concentrating exclusively on current data records is no longer enough. You need to merge siloed data via a managing data layer and you need to be able to use external and internal data records together to glean powerful, real-time insights.
Redesigning the Customer Relationship
Today’s banking customer may already do their day-to-day banking business, such as payments or account inquiries, online, but that doesn’t mean they aren’t starved for a more personal touch. In the digital age, trust, experience and know-how are the central values with which financial service providers can differentiate themselves in their efforts to serve their customers.
Thus, the focus should be on the entire communication lifecycle with all customers.
But how can a company redesign these intensive relationships with its customers in the digital age?
Millennials are the first generation to grow up in an almost completely digitized world, and their affinity for new technologies and social networks is much higher than that of their parents. They expect their apps to be available for all their needs at all times, anywhere.
Social media allows financial services institutions to offer personal advice and develop individually tailored offers without physical branches. Multi-channel integration is thus improved and customers can enjoy a seamless and holistic experience.
This knowledge can also form the foundation of new financial products. Institutes that have been communicating intensively with customers via Twitter, Facebook, or YouTube for years and have built a 'community' clearly have an advantage.
Putting Smart Data into Context
When you use modern databases and data management systems to manage your data, you are creating the necessary context across all data sources, which in turn serves as a basis for well-founded decisions.
Accessing and evaluating this data in real time is often the difference between an intelligent decision and a missed opportunity. In order to make the right decisions, it’s important for BFSI companies to store and analyze every customer interaction across every data silo and every channel.
What Does the BFSI App of the Future Look Like?
No matter how you answer this question, the basic prerequisite for every new, innovative application is that it meet the demands of the Right-Now Customer.
This means it must perform extremely well in the areas of:
- Relevance: Can the application use data in context so that the customer gets exactly what he/she is looking for?
- Availability: Is the application available at any time, any day of the year, without interruption? Can updates solve a problem in a data center or cloud provider’s database without the customer being aware of it?
- Responsiveness: Does the application provide the right service at the exact moment a customer makes a decision, not afterwards?
- Accessibility: Can the app be used via any channel at any location?
- Engagement: Does the application use data to provide a beautiful, seamless, and holistic customer experience?
All of the above makes it possible, to, for example, develop innovative mobile banking apps which, in addition to the usual account management, savings bonds or credit card management, also allow investments in foreign currencies or precious metals, Twitter transfers, social lending, social trading and trading in virtual currencies.
Furthermore, via community functions, customers can reach financial advisers directly or through video chat, or interact and share information and knowledge with other customers. And then there are other features such as real-time transaction categorization (food, car, gas etc…) and open APIs connecting to other financial products.
All of this can only be made possible with an enterprise data layer that allows you to bridge your legacy tech to your new and innovative mission-critical applications.