Sandra NgGroup VP, IDC Asia/Pacific Practice Group
In today’s economy, everyone is a customer — and, ideally, your organization’s customer. How do you court and retain them? You invest in the right IT infrastructure, people, and metrics.
IDC predicts that worldwide FSI investment in IT will grow at a 4% CAGR through 2019, with total investment in both third-party and internal IT resources reaching $500 billion by 2017.
No doubt, much of that spend will be on developing a frictionless digital experience for the consumer.
The reality is that loyalty to a product or company is gone. Today’s increasingly tech-savvy customers seek experiences, expecting their financial services provider to deliver information and services in a seamless, interconnected, reliable, secure, and on-demand fashion.
In line with this, IDC predicts that omni-engagement levels will become a barometer of customer profitability for financial institutions as the number of interactions increases 10% year over year.
Forward-looking FSIs will move away from the “build it and they will come” mindset and focus on the mandate to “engage once they are here.”
To this end, IDC expects further investment in digital channels to outpace overall IT investment. However, penetration rates for certain channels will max out at around 80%, in particular for online banking. Mobility penetration will continue to flatten out around 40%.
The answer to this digital banking paradox lies in digital transformation (DX). Early adopters like Citibank, DBS, Deutsche Bank, Commonwealth Bank of Australia and Westpac in the Asia/Pacific region are overhauling their digital front doors to engage customers and create customer intimacy.
IDC defines DX as the continuous process by which enterprises adapt to or drive disruptive changes in their markets by leveraging digital competencies to create new business models, products, and services. This blending of digital and physical business and customer experience delivers on the promise of improved efficiencies and organizational performance.
While it can be tricky trying to modernize and integrate the existing IT infrastructure with next-generation digital systems, FSIs that focus their transformation strategies on creating a “digital customer experience” will reap benefits including customer retention, improved employee productivity, and FTE revenue savings.
For instance, a customer walks into a branch and asks for information regarding a new loan. Equipped with the latest desktop and devices, the customer representative leads the customer through the various options available. A comprehensive dashboard gives the rep real-time access to the customer’s complete, updated account status, including credit and interaction history, needs, and preferences. The rep is fully informed and handles the customer’s questions expertly and easily, while the customer is empowered to make better, more informed decisions. At the center of this is the device, which is empowering the employee in its customer engagement.
Such customer service standards form today’s new digital reality. The days of paper forms, manual processing, and heavy reliance on personnel for sales are almost gone — they remind of the inefficient past. And, this new reality requires organizations to rethink the way they acquire, deploy, manage and update these devices so that they can deliver the performance required to improve employees’ productivity, and in turn, contribute to the goal of CX.
Disruptive organizations in other industries — like Uber, Amazon, or Airbnb — have shown consumers how to live quicker, easier, and cheaper — and now they want the same experience from their banks and insurance providers.
As customers redefine the rules of the game, FSIs are also looking at transforming critical areas of their business to deliver on their evolving customer expectations; as well as considering more effective ways to acquire, deploy, manage, and update their infrastructures in the pursuit of cost savings and efficiency.
Indeed, the focus of DX is as much on employees as it is on customers; it extends into creating flexible and efficient workspaces. A key enabler is cloud (and the overall as a service shift) – financial services firms are warming up to the idea of scaling up technology infrastructure on demand and paying only for what is used.
In fact, IDC predicts that top-tier banks will double workloads being put into cloud technologies.
Over the next two years, there will be a clear tipping point in cloud in financial services. This growth, supported by gradual efforts in modernizing legacy core platforms, is the culmination of investments by banks into the standardization and virtualization of their assets leading to greater use of dedicated private clouds and virtual private clouds.
Large banks will continue to set the pace and best practices for location, control, ownership, and management of data in the cloud. Importantly, banks are ensuring compliance with the very stringent industry guidelines for security, business continuity planning, and privacy. These efforts have resulted in an appeasement of regulators and their initial misgivings concerning cloud.
The use of as-a-Service models for various processes can help FSIs profit from more visibility into hidden costs as well as to optimize costs. IDC believes that the use of the as a service model for various processes will become more widely accepted, in the FSI industry overtime, as organizations seek to become more agile.
Providing a frictionless digital experience for customers is the new normal; now the only thing you want them to walk away with is a smile.