The challenges of modern CX in financial services

On 1 October JP Morgan launched its new digital retail bank in the UK. As one of the largest consumer banks in the US with its broad range of financial services, this new entrant into an increasingly competitive UK market will no doubt challenge British rivals on their home turf.

The launch adds to the already growing wave of Fintech spreading across the UK, Europe and globally. As banking moves from physical branches on the High Street to the screens on our mobile devices, competition in retail and commercial will only continue to rise.

Within this development, Europe and the UK are probably the regions facing the most challenging revenue environment. Many financial services companies are looking to invest in technology modernisation and digital transformation but, at the same time, need to focus on cost reduction to drive higher return on equity (RoE). This is not to mention the intense pressure they are under from low interest rates and the complexity of local regulations. So it’s no surprise that revenue growth is difficult.

The wave of Fintech has also changed customer expectations. Customers have come to expect flexibility, personalisation, real-time accessibility and ease-of-use. And they also want the experience they receive to be outstanding, and from a brand they know they can trust.

As a result, the industry is shifting towards becoming more customer-need-oriented, focussing on the use of real-time data and delivering on jobs-to-be-done. Adopting digital solutions is key to address this shift and create the businesses of the future. By building modular platforms of digital, cloud-based technologies the power of data is harnessed to deliver excellent customer service.

However, many legacy financial institutions face massive challenges in creating such businesses of the future from the legacy they have today. Indeed, their infrastructure and technology capabilities weren’t built for a digital world. So the question many have is how can they prepare for the future and drive their institutions forward?

CX plays a vital role here as it has the ability to eclipse typical motivators of price and product. However, while every FinServ firm is unique, when it comes to customer service and CRM all face similar challenges across the board. These include:

• Modernising the existing tech stack. Modern digital architectures are completely different from rather monolithic legacy systems. They’re built modularly, from a multitude of micro-services, each one fulfilling a specific action, rather than from tightly coupled applications. But to completely rip and replace a tech system for an established player is extremely challenging, not least of all as considerations of data security and privacy need to be taken into account.
• The proliferation of new channels – Prioritising 24/7 access and offering services via non-traditional channels, such as social media, is becoming very important to meet customers where they want to be met.
• Lack of resources for self-service content. Enabling customers to find answers themselves via the website or app helps them feel empowered.
• Difficulty with using available customer data. In today’s world, customer data is a key asset but companies need to overcome the challenge of siloed systems and create one, easily accessible place to gain a unified view of a customer. In turn, this enables a greater personalised experience.

Meeting customer expectations and service levels, whilst also delivering secure and personalised services brings further challenges. All organisations want to build positive, long-term relationships with their customers, however the methods and tools to do so are evolving faster than ever across verticals and industries. So offering support in the most scalable way often becomes complicated.

As these methods evolve and technology advances, it in turn leads to changes in consumer behaviour. Online banking, for example, grew fastest among the over-45s during the pandemic with many now accessing financial services and carrying out transactions via their mobile devices. This obviously has an effect on the visits to retail bank branches. Indeed, in a study carried out by IT-firm CACI, the number of people visiting their nearest bank to conduct any financial transaction is set to drop by 36% before 2022. Millennials between the ages of 18 and 24 who currently visit their bank around six times a year, will only visit twice a year by 2022.

But despite the rise of Fintech and digital technologies, customers are still demanding human experiences rather than just transactional. This means that the user experience and creating products with customer-centric design is more crucial than ever for Financial Services firms.

The challenges are many. Ensuring a good CX means leveraging the inherent advantages of incumbency – brand, customer data, loyalty and know-how – with the latest digital technology and ways of working. While “digital” has become better understood and its benefits more widely known, the reality, however, is that a huge amount of work is still needed to build the CX for Financial Services firms of the future.