Accelerating Digital Transformation: The Critical Role of CX Vendors in Financial Services
The digital transformation of financial services is well underway. Two thirds of Americans now prefer to bank via a mobile app or website, and digital banking use has risen 50% since the pandemic. The advent of FinTech has also created a hyper competitive environment, where many legacy banks are losing ground to technology companies that are often quicker to market with new digital solutions. In this ongoing competition for consumer loyalty, customer experience (CX) vendors have become indispensable, helping financial providers to reimagine their customer experience from a digital-first standpoint, while ensuring that the banking experience remains personalized and humanized, regardless of the channel.
The Benefits of Digitizing Banking Services
There’s no doubt that the pandemic accelerated the digital transformation of the financial services industry. It pushed banks to explore new ways to stay competitive and meet customer needs, as consumer preferences veered away from human-centric banking solutions and towards the speed and convenience offered by digital channels.
FinTech adoption, where customers use non-traditional financial services providers not affiliated with a bank or credit union, has risen over 80% since 2021. Even among traditional banks today, less than a third of Americans still use in-branch banking. Bank teller use is now down to only 21% of banking customers, while mobile banking is now the preferred method for accessing accounts for over two-thirds of Americans. Digital channels are also major contributors to topline growth, and according to Deloitte, now account for 61% of U.S. banks’ total loan sales.
By digitizing their banking services, not only can financial firms better compete in today’s complex market, but they can also take advantage of a range of benefits that will help them succeed. In fact, digitizing both front and back-end processes can help alleviate rising cost pressures by increasing efficiency and streamlining operations. A recent study showed that banks and credit unions can achieve a 20% increase in revenues and 30% decline in expenses simply by shifting to a more digital business model.
Additionally, CX vendors can work with banks to develop new cost saving, customer centric CX solutions, using technologies such as AI, chatbots, and automation to reduce manual effort and time spent on some customer interactions and related tasks. This frees staff to focus on ‘high-touch’ activities that require human interaction and judgment, such as mortgage applications or giving investment advice - something which 33% of Americans still prefer to do in person, according to a PwC survey, whether through video conferencing, in-branch, or via phone.
Technology also allows banks to increase customer loyalty and engagement levels over time by creating more personalized offers. With access to detailed customer data from digital channels such as mobile apps or web browsers, banks can tailor their offerings based on individual preferences or requirements, creating an enjoyable experience for users.
Understanding the Role of CX Vendors in the Digitized World
In this digital age, customer experience is playing an increasingly essential role in driving customer satisfaction and loyalty. In a recent Gartner report, 86% of financial organizations looked to their CX as their main competitive differentiator, and it has been proven that customers are even willing to pay higher fees in exchange for great customer service.
CX partners can also play a vital role with both traditional and non-traditional financial institutions, as they can leverage their existing operational infrastructure to quickly deploy new products and services at scale. Which may become an essential part of the banking sector’s evolution, especially as big tech companies, like Apple and Amazon, vie for the loyalty of digital users, many of whom are younger generations. According to Insider Intelligence, big tech companies could grab up to 40% of U.S. revenues from incumbent banks with new products that appeal to younger demos and digital natives. These include things such as ‘Buy Now Pay Later’ options or other embedded finance products within eCommerce platforms.
To compete, legacy banks and smaller FinTech organizations will need to offer the same level of convenience and superior user experience when it comes to digital banking, loans, and investments. This is where CX partners can prove invaluable by using their expertise in the banking sector to help develop custom CX solutions that automate and streamline processes, making them more efficient and user friendly. At the same time, they can also ensure that the banking experience is still highly personalized and more importantly, humanized, regardless of the channel.
This humanization is important, as consumers continue to use digital channels for transactional services but seek high-touch interactions for more complex needs. According to Deloitte’s report, the all-digital approach doesn’t always work when it comes to resolving complex problems. Over 80% of customers surveyed would not use automated features, like chatbots, for their issue resolution, as they find them generally less knowledgeable and less empathetic than human agents.
This gives traditional banks a unique competitive edge over purely digital banks, as they can offer the “phygital” approach, where digital touchpoints offer customers 24/7 convenience and the ability to self-serve for simple tasks, but also access to high-touch channels for more complex issues or financial products and services; channels such as contact centers, email support, and instant/video chat, which combined with the in-branch experience, offers the best of both worlds.
Again, this is where firms can enlist the help of technology centric CX partners, who can assist with digital channel development and delivery, while providing the best customer service through more traditional 'human touch' channels, thus providing a seamless, consistent experience across all main consumer touchpoints.
Analyzing the Challenges of Implementing CX Strategies
Yet, there lies the challenge. To create a superior “phygital” experience, will also mean creating a seamless experience from one channel to the next, as a common customer complaint is the need to repeat information every time a new channel is used. CX partners, with their expertise in data analytics and user experience design, can help to create that superior digital journey by supplying valuable insights into customer behavior, enabling banks and other financial institutions to better understand their customers’ preferences, needs, and pain points.
For instance, there is much improvement to be made when it comes to digitally onboarding new customers. The PwC banking survey showed why this first experience is crucial– 40% of banking customers will abandon the onboarding process if it is too lengthy or complex. However, 25% of consumers still find it difficult to open an account exclusively through digital channels. In many cases, there is no way to upload verifying documents or scan pieces of I.D.
Of course, with customers expecting personalized experiences and on-demand services, this leads to a secondary challenge of meeting customer expectations while adhering to stringent regulatory requirements, such as anti-money laundering (AML) legislation and know your customer (KYC) protocols. It also means ensuring the highest levels of data protection and security, something which has become more difficult due to the ever-evolving threat landscape.
CX solutions must consider both security measures, regulatory requirements, and user experience and this is where CX partnerships can offer the best of all worlds. With extensive experience managing sensitive customer data, CX vendors can offer the highest levels of data encryption, and fraud detection. At the same time, they are experts in user experience design and can use contact center and web data to ensure that the user experience is highly personalized, and enjoyable, while still adhering to data privacy legislation.
In fact, data-backed insights, gleaned from contact center data, could offer businesses a way to fast-track new product development, thus leveling the playing field with ‘Big Tech” players, who often benefit from faster development cycles than banks.
Unlocking the Potential of CX Vendors
Any financial services provider that wants to accelerate their digital transformation journey should look for an experienced CX vendor that can help them co-innovate and develop customer-centric solutions tailored to the needs of the digital era.
Yet, it’s also important to remember the ‘humanized’ approach to customer service. “At itel, we’re not just a digital solutions resource,” explains Chris DaRin, itel’s Vice President of Sales. “Our philosophy is that technologies like AI should make humans better, not vice-versa. That’s why we offer hybrid solutions, designed to enhance our agents’ capabilities and the overall customer journey. But human empathy and interaction are still at the core of what we do.”
itel has a wealth of experience and knowledge in the financial services sector and can help you take advantage of improved customer experience, increased efficiency, cost savings, and enhanced security measures. Moreover, we are well-equipped to handle the challenges associated with implementing CX strategies in financial services, as we understand regulatory requirements and can ensure that CX solutions meet those parameters.
Furthermore, by taking on the responsibility, cost, and R&D for developing digital technologies, we allow clients to focus on their core competencies while delivering successful outcomes in this everchanging environment.
It’s an integral role that CX vendors play - unlocking the potential of digitizing services. By leveraging our expertise in creating innovative, data-backed solutions, together, we can revolutionize the financial services industry, creating a user experience that fosters trust and consumer loyalty.
Want to learn how our customized hybrid solutions can support the evolving needs of the financial services industry? Stay ahead of the game. Contact us.