A Tale of Two Cities: Starting from Digital vs. Transforming to Digital

Customer engagement isn't what it used to be in the financial services industry. To quote Bob Dylan: 'The times they are a-changin'. In the digital era, consumer behaviour, attitudes and their channel preferences through which they interact with brands are all evolving to reflect a growing reliance on digital technologies.

Just look at how much the banking industry has changed over the past 50+ years. From the arrival in London of the first automatic teller machine in 1967, to the launch of the first banking websites in the mid-nineties, to the emergence of digital-only banks — also known as neo-banks – the banking industry has significantly transformed and will continue to do so in the years ahead.

I can even remember a time that I carried around a bank book and waited in line after work, or on my lunch break, to withdraw or deposit money, ask a question or solve a problem. Those kinds of interactions were personal, but in 2019, it’s become difficult to imagine leaving my office or home to speak with a customer service agent in person when I can easily connect with a representative online.

It’s no wonder digital transformation is top of mind for today’s financial companies as they work to upgrade their business models, products and services with next-gen technologies. Today’s young consumers gravitate toward mobile utility, with Millennials and Gen Zers preferring to handle their banking via digital means first, then in branch if necessary. To drive this point home – by the end of July of this year, neo-banks, such as Chime, Empower and Aspiration, had secured $2.5 billion in venture capital funding, according to CB insights.

Modern consumers don’t just expect a seamless customer experience, they also demand personalisation and transparency. A growing familiarity with mobile technologies and social media makes them more likely to interact with banks through digital platforms. It stands to reason that traditional banks should be reinventing their customer experience to satisfy consumers’ wants and needs.

And they are taking note. According to recent research conducted by the International Data Corporation (IDC), businesses the world over are expected to spend $1.18 trillion on digital transformation by the end of the year. That’s an increase of close to 18% over 2018.

Today’s highly competitive business landscape requires that financial services brands integrate digital enablement into their existing infrastructure and leverage next-gen technology to derive actionable insights and intelligence from the data they capture via customer interactions. DX (digital experience) and CX (customer experience) are closely linked, and financial brands of all kinds will benefit from successfully making this connection.

Traditional Banks Play Catch Up

Most traditional banks will tell you they have an airtight strategy for DX. Most will also tell you that supercharging their operations is a big challenge. In fact, IDG’s The State of Digital Business Transformation 2019 study reports that while 91% of companies plan to implement a digital-first approach to business processes, just 48% have done so to date.

The rapid evolution of coveted technologies, and the speed with which competitors are adopting them put pressure on businesses to address digital transformation. But with the urgency to evolve comes trepidation, and that can lead to stumbling blocks. Many traditional banks are left wondering about the best approach.

FinTechs Face Challenges of Their Own

It’s clear that traditional banks must work to transform themselves. But what about the neo-banks and FinTechs? Unlike traditional financial institutions, these organisations have been built on a foundation of digital technology. FinTechs have an advantage in that they can set up their digital infrastructure in a tech-forward manner.

Today’s young consumers gravitate toward mobile utility, with Millennials and Gen Zers preferring to handle their banking via digital means first, then in branch if necessary.

And yet, FinTechs must navigate hurdles of their own. While they have a leg up on traditional banks when it comes to technology, they may find themselves lacking in another area: human capital.

Having skilled human agents on hand to handle more complex customer queries is something traditional banks tend to have in spades because they understand the value of high-touch service. Personal attention, empathy and the ability to address even the most complicated of customer issues makes human agents a critical component of customer service, regardless of how much technology you have on hand.

As noted by the Harvard Business Review, “Service can be emotional; technology cannot.” Because humans are inherently social creatures, “taking away the opportunity for this kind of connection can undermine service performance.” And that, in turn, can undermine your brand.

DX + CX = Comprehensive Customer Care

All of this is to say that both traditional banks and FnTechs have unique advantages, and it behooves them to take a cue from each other’s approaches. As they continue to evolve and transform to meet the needs of today’s customers, they must ensure they’re providing both technology and a human touch.

This will require a road map that’s customised for their business. Traditional banks are likely to find themselves focusing on digital customer service channels and using artificial intelligence to better gauge consumers’ needs.

Based on the results of its retail banking study — which shows that Millennials are switching banks at a rate 2.5 times higher than Baby Boomers and 1.5 times greater than Gen Xers — Gallup recommends that banks invest in technology that can predict their customers’ problems, ease communication across channels, and take a more data-based approach to shaping the customer journey.

For FinTechs and neo-banks, the emphasis should be on making CX more human. Using data to tailor solutions to customers’ needs is useful, but be sure to have a skilled customer care team in place to answer the questions that will inevitably arise.

Personal attention, empathy and the ability to address even the most complicated of customer issues makes human agents a critical component of customer service, regardless of how much technology you have on hand.

At TELUS International, we address these different yet congruent needs by helping financial companies embrace digital transformation through learning solutions and process consulting. By way of our financial services priority vertical, we help clients establish a game plan to dramatically improve the overall customer experience.

Providing customers with effortless interactions wherever they go, and however they choose to engage with your brand is the key to creating a positive customer experience and building loyalty and trust. Going beyond this would be through offering personalised and anticipatory interactions for customers, along with human agents ready to step in whenever needed.

Whether a financial brand is starting from digital or transforming to digital, a simultaneous focus on customer-centricity and the incorporation of emerging technologies will be what drives sustainable success.

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