Financial Firms Gain Traction in Digital and Customer Focus

by Christopher Young

posted on 06-07-2018

For too long, financial services firms have suffered an inferiority complex when it comes to digital transformation. The reasons are many.

“We’re regulated.”

“We have tons of legacy processes and systems to change.”

“We’re complex when it comes to customer data and trust.” __

While these excuses are just as valid as ever, the state of the industry is shifting.

New data from Ovum Research shows a combined 86 percent of financial services respondents reporting they’re either in the early stages or well on their way to digital transformation suggests that financial services firms are making serious headway in becoming digitally advanced. Ovum found that compared to other industries, financial firms see digital transformation as a more urgent priority.

Orbiting around the customer

While this is an important finding, to me the real news is financial services firms are clearly orienting around the customer as the center of gravity in their digital journey. For instance, we see closer alignment with the customer as the primary motivator for the survey respondents’ digital investment.

Ovum isn’t the only one seeing this focus on holistic customer experiences. Digital Banking Reports’ 2017 Retail Banking Trends and Predictions survey found that the number one trend — and top strategic priority — among global banking leaders was improving the customer journey and providing a positive customer experience.

Digital is paying off

Not surprisingly, we’re also seeing digital transformation directly benefit customer experience. When asked how has digital changed the way they market, 74 percent said they‘ve advanced their understanding of customers’ needs, 71 percent said they can reach more potential customers, and 69 percent improved customer retention.

The natural advantage of financial services firms

Financial firms have natural advantages that lead them to this customer-centric approach. The data they have about their customers is vastly greater than other industries. Think how much your brokerage or insurance provider knows about you versus a retail provider. They’d kill to have that type of insight.

The very business of financial firms is centrally important to our lives. From banking to insurance to investments, these transactions matter to everyone, much more so than experiences in retail, travel, or other industries.

Financial services marketers have realized that by thinking holistically about customer experiences, they can become the trusted partner for their customers, building loyalty and delivering maximum value. After all, if a wealth management firm delivers a personalized and helpful experience after a key milestone in your life — say having a baby or getting married — imagine the loyalty and competitive differentiation that brand will receive for a lifetime.

Vanguard gets it

At last month’s Adobe Summit, Rusty Rahmer, head of enterprise digital intelligence at Vanguard, spoke eloquently about the state of digital transformation in financial services: “Differentiation today is based on customer experiences and the journeys we’re providing.”

Financial services marketers are realizing that simply pushing the gas on what you do today will not get you where you want to go. You have to rethink what you do and how you do it — and the customer has to be at the center of it all. This research shows they are.

I expect the financial services industry to continue to make gains, ultimately leapfrogging other industries in their transformation to become true experience businesses. For now, all of us in financial services can hold our heads high while we walk the halls of our favorite marketing conference. We are digital laggards no more.

Download the full report

If you’re interested in these ideas, please dive into the full report from Ovum Research, “Financial Services: Disrupt or Prepare to Be Disrupted.”

Topics: Industry, Financial Services

Products: Analytics, Campaign