What Does Finance Need to Know About Digital Business Transformation?
From a customers’ point of view, digital transformation in the financial sector might start and finish at their shiny new mobile banking app. The digital presence of a company could be measured by whether their customers can successfully complain about a rude staff member via Twitter. But if you think digital is covered by marketing and technology, you’ve got a lot to learn.
Technological innovation is now in the top 5 long term risks for businesses for the first time in history. Increasingly, Digital Business Transformation is more than just a powerful buzz word, and has very real ramifications for every element of your company.
The competition are picking up on this fast. Financial software specialists Temenos found that the majority of retail bank executives made implementing a digital strategy their top priority between now and 2020.
It’s a good thing too. While the financial sector might put on a convincing front, with omni-channel banking and some feature-rich mobile apps available, it has a long way to go before it can be celebrating real digital wins. To put it simply, focusing on front end functionality might give the illusion of being digital frontrunners but could actually mask the frightening truth; you are being left behind.
Digital Transformation Behind the Scenes
Digital Business Transformation often means taking a look at your core systems, processes and offerings from the ground up. Think about a company like Netflix who started out sending DVDs in the post to customers, and now stream all their content online. The result is the same, providing customers with entertainment in an efficient and simple way. But the systems and processes are entirely different.
I-Scoop report that 96% of bankers agree that the industry is evolving towards a digital ecosystem, and yet 87% say that their core systems can’t currently support it. 70% of bank executives say that their operational processes are incapable of adapting quickly enough to external changes.
“Digital transformation on the customer experience level is not just a matter of the front-end and customer-facing functions. It’s a matter of the whole organization and requires involving the back-end as well.”
While spaces are definitely being made in many financial industries for digital roles and projects, it’s not enough. As long as the business is constrained by keeping the digital focus on any certain channel, function or department, companies and customers will never reap the benefits. Your digital transformation process has to be all-encompassing, and curated for your individual needs. And the needs of the financial sector are certainly unique.
Unlike many other industries, the focus in the financial industry today has to be on controlling costs and minimising risks. In large part because of the 2008 global financial crisis, customers are finding it increasingly hard to trust banks and similar services, which means they also need to regain and retain customer confidence.
What the financial sector needs to get on board with, and fast, is the very measurable results which digital transformation from the ground up has on both profits and customer loyalty.
Making Digital Business Transformation Work for You
Looking at projections for digitization in 2017, Daniel Newman writing for Forbes is convinced that digital transformation opportunities are where companies in 2017 are going to find their space for “almighty customer experience.” And it starts with making sure you have a powerful centralized knowledgebase.
“Digitizing back office processes and automating back offices, leads to cost savings on levels such as core banking replacement, document management systems and Business Process Management. [It removes the] costs of manual labor and paper-based processes while creating efficiencies that lower customer service costs and reduce churn.”
Manual information processes are slowing you down. Disconnected systems and resources are making you less efficient. A lack of a centralized knowledgebase is inhibiting your staff from working together or even, as Newman predicts, alongside the latest technology such as AI. In 2017, “AIs will be able to work collaboratively with human professionals to solve intensely complex problems” if the digital transformation processes are in place.
The right self-service solution can put those systems into place for you, providing a support bot that works to improve efficiency and customer hold times, a bot that has access to the same customer and company information that your staff do, and has the ability to seamlessly channel queries and concerns to the right department or personnel.
This kind of holistic business strategy transforms customer experience. I-Scoop report that 60% of customer dissatisfaction sources originate in the back office, and 50% of submitted paperwork in account opening gets rejected. As a sector, while they might be impressing on the front end technology, financial companies now need to focus on how to identify opportunities. They are failing to look at the entire customer service experience, and to see changes or trends in consumer behavior. This inevitably leads to the inability to keep customers loyal and reduce churn. Being aware of your customer experience from every angle, and keeping track of the wins and fails is essential if you want to combat these issues.
Keeping Your Business Ahead of the Digital Transformation Curve
If it wasn’t clear already, Newman continues. “Every important decision can and should be supported by the application of data and analytics … Analytics drive business by showing how your customers think, what they want, and how the market views your brand.”
Take Nanorep’s innovative Voice of the Customer software. It spots trends, keeps track of interactions, and helps you make the leap from guessing what your customers want to understanding what they need.
With digital transformation working from the ground up, every single interaction is paper-less and centralized. This means that every customer encounter is a learning opportunity, creating a virtual hive mind for your staff, wherever they are in the business. This kind of back-end automation doesn’t just create happier more loyal customers who are dealt with more efficiently. It has also been shown to cut costs by as much as 30%, while tearing down organizational silos which stand between cross-functional and department organization.
The EFMA are known for promoting innovation in retail banking and the financial sector. Less than 5 years ago they found that between 60%-80% of processes in the European banking sector are not digitized, and that 90% of banks invest less than 0.5% in digital. Since then, the financial sector’s eyes have been opened, and we’re seeing huge changes being made across the industry. What will you be doing to transform your digitization process in 2017?