Financial Services: The New Frontier Of Customer And Digital Experiences

Mathew Bailey

Australia’s financial service providers have been on the front lines of the digital revolution, building high-quality services and processes that have delivered unprecedented convenience to customers.

But the rise of fintech companies and the broadening ambitions of the world’s digital titans is putting increased pressure on traditional banks, insurers, and other players. Customers no longer expect their bank to provide the best digital experience (DX) amongst its peers, but amongst all the organisations they interact with.

According to SAP’s 2017 Australian Digital Experience Report (DXR), financial services companies are setting a high standard for DX compared to other sectors. The challenge now is to continue lifting those standards when consumer expectations are also rising, and increased competition is the new normal.

Bridging the gap

Since the launch of online banking more than a decade ago banks have been leaders in providing great DX. But as more and more services have been translated into the digital world, challenges have arisen in taking complicated processes and delivering them online, especially when they are based on aging technology.

Despite these drawbacks, Australia’s financial services companies have proven adept at providing strong DX. This year’s SAP DXR showed a 16-point uplift in the banking sector’s score, to leave an overall positive rating of 7%. The insurance sector reported a 6-point improvement, but still came in with a negative overall rating of -5%.

Getting closer to customers

While much of the positive response can be attribute to functional attributes such as ‘safe and secure’ (62% for banks and 50% for insurance) and ‘allow me to interact/buy at any time’ (43% for banks and 25% for insurance), banks in particular made significant gains around more human attributes.

For example, the result for ‘listens to me and is interactive’ rose to 8% this year, well up from -7% last year, while the result for ‘make me love the company’ rose from -22% to -4% and ‘make me feel important’ rose from -20% to -7%. While there is clearly still work to be done, these results show that banks are making the right investments today.

The insurance sector failed to match these gains, although the result for ‘listens to me and is interactive’ moved from -2% to 5%, while ‘make me love the company’ climbed 4 points from -22% to -18%. This may be due to the lesser frequency of engagement between an insurer and its customers were outside Claims and Quote/Renewal process, insurers largely remain isolated for their customer.

Bank customers are also responding positively to investments being made in personalisation. For the attribute ‘create a customised journey’ banks rated at 1%, well up from the -18% reported in 2016, while the response of 0% for ‘associate with my own identity’ was also well up on the -15% reported last year. Again, whilst positive in its change, it still highlights a largely unsatisfied customer.

A more urgent need for change

While banking and financial services have made strong steps towards personalisation and using data to improve DX, they nonetheless face a significant challenge to their long-term prosperity. Interest in the fintech component of the Australian startup community continues to grow, with a steadily expanding cohort of companies proving capable of raising capital and more importantly, winning customers.

At the same time, financial services companies face a threat that the world’s digital giants will expand their ambitions into financial services. Many of these companies already provide specific financial services, such as payments, and are expanding into new areas including offering credit. These companies have broad reach and strong customer relationships, posing a potential existential threat to traditional players.

It is critical for existing players to continue investing in excellent digital experience at the front end, while also implementing new technologies to streamline service delivery.

The emergence of open banking is an example of where banks should be exploring from a platform up perspective to ensure they can stay at the forefront of delivering a connected customer experience. Similar for Insurance, being the connected insurer in a world of increased collaboration with external ecosystems, where it matters the most around the Customer, to deliver a fully connected experience.

The strong positive response to personalisation specifically is a clear signal that this is an area ripe for additional investment. Advanced and predictive analytics can enable more granular market segmentation right down to segments of one and enable the creation of personalised offers on-the-fly that more exactly match the needs of customers; machine learning can ensure that responses are captured and future efforts are fine-tuned. Blockchain distributed ledgers are proving to be highly useful for streamlining complex and manually-intensive projects such as clearances, leading to faster service delivery for customers and hence pushing up overall satisfaction.

Conclusion

Customers are demanding in their expectation and rarely rate the same experience or journey the same way when faced with it again. Agility in delivering this experience which morphs to the near real-time expectation of the customer will put pressure on traditional, heavily process centred organisations and continue the pressure that open banking will bring. Insurers and their providers face significant intermediation of the customer and their data unless they can find a way to foster a relationship more than once a year or during a claim. With such a small percentage of customers ever claiming, the value of insurance beyond covering a specific event needs to find a way to be involved in a customer’s life on their terms and at the times they need it most.

Banking and financial services companies have deep experience when it comes to providing excellent DX, but must be constantly elevating these capabilities. The onslaught of new competition is only just beginning, and in finite markets, players that fail to keep pace with customer expectations have significant ground to lose.

To find out more about more about how the banking and financial sector is performing, and strategies to improve DX, download the SAP Australia DX Report or watch the recent webcast with FST Media, “Be Connected, Be Disruptive, Be Revolutionary.”


Mathew Bailey

About Mathew Bailey

Mathew Bailey works for SAP Australia/New Zealand with a focus on the Financial Services & Insurance (FSI) vertical. He has worked in the FSI sector for almost 15 years, mainly in Retail Banking and Personal Insurance. He has also worked in various roles across Consulting, Sales, Presales and Practice and Program Management in different parts of the world, including four years in Hong Kong, one year in Singapore, as well as short stints in the Philippines, Malaysia, Belgium and the USA.