The past decade has been a challenging journey for the Banking and Financial Industry. From the 2008 financial crisis to the birth of FinTech giants and evolving consumer dynamics, this industry is not only attempting to stabilise itself and its reputation, but also aiming to prepare for the digital disruption yet to come.
Within the next series, we will be discussing the challenges that the Banking and Financial Industry faces, eliminating ambiguity around technological solutions paving the way for this digital revolution, and highlighting areas of improvement in order to thrive in this hyper-competitive landscape.
Traditionalist approaches are no longer applicable in this digital era and cause a series of hurdles that the BFSI industry needs to acknowledge prior to adopting digitalisation.
An Actively Disengaged Workforce
One of the biggest challenges that the Banking and Financial Industry faces nowadays is an actively disengaged workforce, as highlighted in the video below. The workforce is detached from their work, constantly looking for new captivating experiences.
Its root cause dates back to the 2008 financial crisis, which resulted in serious economic implications for the Banking and Financial Industry as customers weren’t willing to take much financial risk. Due to the fact that customers were not utilizing much of the banks’ services, profit margins have declined, forcing banks to improve their overall internal operational efficiency and reduce the cost of customer service in an effort to retain profitability.
This has resulted in more and more customers getting frustrated with the banks’ services and employees becoming actively disengaged with their work as they deal with mundane tasks and repetitive complaints.
Customers are Looking for Quick Solutions
The days of standing in long queues and filling out endless amounts of paperwork to access banking services are long gone. Customers are now looking for answers to their financial questions immediately. This is forcing banks and financial institutions to address this need or risk losing their customers’ confidence and loyalty and look for alternative banking and financial services that have been early adopters of technology, from chatbot solutions to fraud detection.
The Introduction of New Millennials
It is no secret that New Millennials are digital natives. As an increasing number start using Banking and Financial services, there is more and more demand for automated processes to facilitate interactions. Gartner predicts that by the year 2020, an estimated 85% of relationships between customers and the bank will be managed without direct human interaction.
The use of messaging apps has risen and the way New Millennials use Social Media to interact with businesses is changing. Most of social interactions are not happening in public anymore but rather through the use of various messaging apps and private groups. With one-to-one messaging dominating the Social Media world, new opportunities are being created. As shown below, according to Statista over 2.5 billion people have at least one messaging app installed with WhatsApp and Facebook messenger coming up on top.
Within the next couple of years, Activate say that the new figure will reach 3.6 million. This means that instant messaging platforms are not only places where people connect and communicate in real-time, but are also where New Millennials would like to interact with businesses. In fact, when asked by CGI, 58% of respondents wanted their services to be offered to them digitally.
An Increasing Need to Create a More Personalised Experience
Banking and Financial Services involve a relationship with customers. Recent Nielsen reports suggest that 1 out of 3 complaints that accountholders make on Social Media end up getting resolved over the phone. The fact that customers are ready to escalate an issue they are facing and look to other channels to find an answer, illustrates the importance of offering more personalised experiences by being there, ready to help them through the channels that they prefer.
Keeping Up with the Competition – The Race for Adopting New Technologies
The competitive nature of the market, more sophisticated customer demands and rigid regulatory and financial requirements paved the way to the emergence of technological solutions. Technology firms have recognised this and have started to create various applications that can assist Banking and Financial Institutions to manage their services, from automated customer service solutions provided by AI chatbots to intuitive mobile applications.
This has caused the competition to increase with various Banking and Financial Institutions adopting new technologies with an aim of putting them ahead of the game.
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As the Banking and Financial Industry is facing digitalisation, are you ready to embrace it? It all begins with the desire for innovation, aligned with evolving customer expectations.