At this time, guidance on how to stay relevant within the financial services sector is more important than ever.
Customer needs were already changing fast, but now things seem to accelerate on a weekly basis. With this in mind, we organised a webinar: Prioritising innovation for new customer needs. It included insights and practical advice to help banks stay innovative and keep serving customers during times of crisis.
Facilitated by our CMO Melanie Palmer, a former Nordea Digital Strategist and our COO Nikolai Hack examined how customer expectations are shifting in the banking space, what innovation really means in the current climate and how banks should respond.
The panel identified three main themes we are seeing around client behaviour at the moment which have been exacerbated by Covid-19. For a while now, banks have no longer been competing against other banks, but consumers expect the same service as they receive from other organisations such as online shopping or travel services. Just like these offerings, today’s customer expects a more individualised experience.
As the boundaries between these different verticals blur even further, tech firms are no longer just tech firms. Some are entering the financial services space as key players and, in turn, financial services companies need to become multi-offering. User experience is a priority now more than ever, with customers valuing ease of use over the details offered by a product.
Customer service in a crisis
Adapting to all of these new expectations is always a challenge, but it’s certainly an uphill battle in times of crisis. The stresses and strains brought about by Covid-19 and the widespread lockdown have created a “double squeeze” for banks, as both the work environment on the inside and the market environment on the outside come together with different needs and necessary adaptations.
Amidst all these challenges banks are still striving to demonstrate value for their clients. Now, people are sitting at home and spending time looking at their finances. Many have lost income so need to feel supported by their bank, and more still have turned to digital platforms to see what is on offer and even decided to switch their accounts.
Increased volatility in the market means authentic communication is a must. Banks need to forge genuine connections with their customers to make them feel valued and reassured, which will be possible due to long-standing, trusted relationships – but can’t be achieved without digital innovation. Customer service must be able to respond to high demand with scalable processes and systems; meanwhile, many clients will want to self serve so the right information needs to be at their fingertips.
The state of innovation
Banks recognise that innovation is a must as they strive to keep up with customers’ needs despite the challenging forces at play. These include challenges within the bank, such as remaining compliant while trying to get new services to market as quickly as possible; industry-wide challenges such as neobanks that have moved the goalposts and introduced consumers to the art of the possible; and of course the struggle to keep up with technology companies while dealing with less agile cultures and legacy systems.
When it comes to technology companies, banks have realised that if you can’t beat them, you have to join them. In order to thrive, it’s necessary for a bank to behave more like a technology firm – but this can be constrained by the skillsets available and willingness to accept the risk that comes with innovation and experimentation. Banks must look at what skills are available within the organisation and what can reasonably be achieved – versus the benefits a particular development will have in terms of differentiation in the market.
Buy, build – or something else?
There are several options for banks to deal with the challenges we have outlined. Doing nothing is one – but this will make survival pretty unlikely.
There’s also the notorious “buy or build” conundrum. Banks may choose to build their own tech if it will become a strategic aspect of their business, elemental in creating a core value and setting the organisation apart. But this is an ongoing task, and the time and resources involved will always be necessary to some extent.
Alternatively, they will choose to buy a new product or solution. This is a good option when function is key but owning the intellectual property is not a priority. Buying can save time and put less strain on internal resources, but banks will be beholden to a certain supplier, so must take time to make a careful decision.
The third option? To partner. Joining forces with a tech provider offers access to a unique and complementary technology that works with the bank’s existing setup, and would not be easy to reproduce. Partnering can leverage the technology prowess of another organisation while ensuring a customised, easy to integrate solution is developed rather than something “off the shelf”. The risk is shared, and so is the reward.
Especially within investment and wealth management, there is a clear case for partnering. But the most important thing at this time is for banks to carefully consider all the factors at play and not be blinkered by the need to keep up with the impossible pace of change we are experiencing at the moment. It is necessary to look both within the organisation to decide what is realistic, but also at outside influences – and opportunities.