Better Experiences, Driven by Data: The Top 2017 Trends in Financial Services and Insurance

The finan­cial ser­vices indus­try (FSI) is rapid­ly catch­ing up in terms of cus­tomer focus—but exe­cu­tion lags behind inten­tion. Those were the pri­ma­ry take­aways from the 2017 Dig­i­tal Trends in Finan­cial Ser­vices and Insur­ance report, the lat­est edi­tion of Adobe’s annu­al col­lab­o­ra­tion with Econ­sul­tan­cy. The record-break­ing 14,000 respon­dents includ­ed near­ly 840 FSI exec­u­tives, pro­vid­ing a broad cross-sec­tion of insid­er per­spec­tives on the bank­ing, insur­ance, and invest­ment sec­tors. While most respon­dents were based in North Amer­i­ca and Europe, they hailed from all regions of the world, offer­ing a tru­ly glob­al per­spec­tive on cur­rent FSI trends.

In the 2016 report, exec­u­tives describe a year of increased dis­rup­tion. Non­tra­di­tion­al banks and third-par­ty ser­vices drove a sweep­ing shift in focus from prod­ucts to cus­tomer jour­neys; and that shift con­tin­ues to serve as a major dri­ver of change in 2017. How­ev­er, as new tech­nolo­gies and data reg­u­la­tions fur­ther dis­rupt FSI, high street banks and invest­ment firms—long defined by their con­sis­ten­cy and stability—will be forced to trans­form to keep pace with their dig­i­tal-first com­peti­tors.

Evolv­ing com­pe­ti­tion; tight­en­ing reg­u­la­tions

In com­par­i­son to oth­er indus­tries, FSI start­ed its dig­i­tal trans­for­ma­tion rel­a­tive­ly late, and under­took it fair­ly slow­ly. This means that, while many banks and insur­ance firms recog­nise the impor­tance of dig­i­tal mar­ket­ing, they lag far behind oth­er indus­tries in their usage of it. A full 51 per­cent of exec­u­tives sur­veyed said that dig­i­tal per­me­ates most of their mar­ket­ing activ­i­ties, yet only 9 per­cent of com­pa­nies claim to be dig­i­tal-first organ­i­sa­tions, and that num­ber sinks to a mere 5 per­cent for insur­ance firms. Com­pare finan­cial ser­vices against the retail indus­try, where 13 per­cent of organ­i­sa­tions claim to be dig­i­tal first, and it’s clear that FSI lags behind.

Dis­rup­tors have been quick to cap­i­talise on this lag—and on the loss of cus­tomer trust in many high street banks fol­low­ing the finan­cial crash of 2007. Com­pa­nies like Atom, Fidor Bank, Mon­do, and Star­ling have moved swift­ly into the gap, offer­ing sleek, intu­itive dig­i­tal-first prod­ucts. Many of these new com­peti­tors are also invest­ing heav­i­ly in mobile wal­lets and con­tact­less pay­ment technologies—a per­cep­tive choice, giv­en that 25 per­cent of all card trans­ac­tions in the UK are now made via con­tact­less.

Expe­ri­ence oppor­tu­ni­ties; data chal­lenges

Finan­cial exec­u­tives clear­ly recog­nise all these chal­lenges. More than a third of FSI mar­keters (34 per­cent) report­ed that “opti­mis­ing the cus­tomer expe­ri­ence” will be their most excit­ing oppor­tu­ni­ty in 2017; fol­lowed close­ly by “cus­tomer jour­ney man­age­ment” at 31 per­cent. Fur­ther­more, a full 55 per­cent of mar­keters plan to increase invest­ment in per­son­al­i­sa­tion in 2017. Some banks, like Roy­al Bank of Scot­land (RBS), have even appoint­ed spe­cialised teams of “jour­ney man­agers,” empow­ered to analyse entire cus­tomer jour­neys from start to fin­ish, and order spe­cif­ic func­tion­al changes at any prob­lem­at­ic touch­point.

In fact, 63 per­cent of exec­u­tives marked cus­tomer expe­ri­ence as their top pri­or­i­ty for 2017—a 17 per­cent increase over 2016. Those mar­keters are well aware that improved data ana­lyt­ics will be a cru­cial com­po­nent of bet­ter cus­tomer expe­ri­ence, but they also acknowl­edge that their capa­bil­i­ties lag behind their ambi­tions. A full 99 per­cent of respon­dents con­sid­er “improv­ing data analy­sis capa­bil­i­ties” to be a key ele­ment in bet­ter under­stand­ing cus­tomer expe­ri­ence require­ments; and more than half of respon­dents (53 per­cent) plan to increase their mar­ket­ing ana­lyt­ics bud­get over the next year.

Even so, data tac­tics such as join­ing online and offline data are a long way down the list of pri­or­i­ties, com­ing in at only 11 per­cent. This is due, in large part, to con­cerns over pri­va­cy reg­u­la­tions. At the same time, many FSI com­pa­nies are held back by lega­cy data stor­age sys­tems, along with tech­nol­o­gy stacks con­sist­ing of many incom­pat­i­ble lay­ers. The pro­por­tion of organ­i­sa­tions claim­ing to have “access and con­trol over cus­tomer and mar­ket­ing appli­ca­tion data” remains unchanged since last year, at 64 percent—significantly low­er than the aver­age of 75 per­cent across oth­er sec­tors.

AI excite­ment; tech­no­log­i­cal ner­vous­ness

Despite these dif­fi­cul­ties in inte­grat­ing and analysing in-house data, a grow­ing num­ber of FSI mar­keters see great poten­tial advan­tages in using advanced arti­fi­cial intel­li­gence (AI) to lever­age that data. While only 4 per­cent of FSI mar­keters see “using arti­fi­cial intelligence/bots to dri­ve cam­paigns and expe­ri­ences” as the most excit­ing oppor­tu­ni­ty for 2017, a full 33 per­cent see it as the most excit­ing oppor­tu­ni­ty for 2020. In 2016, no few­er than 658 AI ven­ture financ­ing deals were com­plet­ed, totalling more than $5 bil­lion.

Some banks have already begun rolling out “robo-advisors”—see, for exam­ple, Wealthfront’s direct index­ing ser­vice, Brol­ly AI-pow­ered “concierge,” and RBS’s “robo-banker” Luvo. AI also shows applic­a­bil­i­ty in mobile wal­lets and finan­cial plan­ning tools, where robot­ic assis­tants can pro­vide noti­fi­ca­tions and rec­om­men­da­tions based on cus­tomers’ per­son­al spend­ing habits and goals. How­ev­er, banks also recog­nise the risks posed by inad­e­quate­ly secure AI. At a recent CB Insights Inno­va­tion Sum­mit, Ram­nek Gup­ta, Man­ag­ing Direc­tor at Citi Ven­tures, warned, “Slow [adop­tion of AI] is not a bad thing. It’s absolute­ly impor­tant to be slow, espe­cial­ly in finan­cial ser­vices.”

Still, FSI dis­rup­tors have also begun to roll out AI ser­vices, as part of stream­lined dig­i­tal-first cus­tomer expe­ri­ences dri­ven by supe­ri­or data ana­lyt­ics. Banks that aim to com­pete effec­tive­ly in this new land­scape will need to watch these chal­lengers and learn from them, view­ing data as an oppor­tu­ni­ty to deliv­er con­sis­tent mes­sag­ing, rather than as a bar­ri­er.

Read the report today for a more detailed analy­sis and addi­tion­al insight, includ­ing action­able tips to future proof your FSI busi­ness.

Leave a Reply

Your email address will not be published. Required fields are marked *