Top five things banks need to embrace to traverse the changing landscape of personal finance
By Shaurya Sharma, Senior Client Partner, Publicis Sapient
As we usher into another year of uncertainty, financial services companies must continue to stay ahead of the one constant: rising customer expectations. The key question is which trends deserve the greatest focus as companies strive for transformational growth.
In addition to the acceleration of digital transformation that we’ve seen over the last few years, financial institutions are increasingly expected to promote positive change that extends beyond making money. Factors such as expanding products to underbanked populations and building trust with younger customers are going to play a significant role. In 2022, banks must ensure they’re ready to seamlessly deliver these services.
Make Purpose The New Profit
The financial industry plays a crucial role in shaping society. At their best, financial services firms facilitate economic activity that is dynamic, accessible and safe. Today, when choosing a provider, consumers consider a company’s statement of purpose and its willingness to take bold and decisive actions that drive positive impact. Future-fit organisations will prioritise accessibility, responsibility and sustainability.
Integrating these values into the fabric of the industry will require companies to invest significantly in digital architecture that helps make banking more accessible to everyone; incorporate sustainability considerations into their investment approaches; and take a leading role in confronting the climate crisis. These actions will help build trust with a younger, more impact-conscious generation of customers, and endure for the long term.
Put An End To ‘One Size Fits All’ User Experience
Personal finance is exactly that – personal. So customers’ banking experiences should follow suit. The fintech revolution has seen tech startups and nonbanks successfully embed financial products into their digital offerings. To stay competitive, banks will have to rethink their current digital platform offerings, and do away with the generic, linear customer experience if they hope to retain and grow their customer base.
The user experiences of the future must be more customised and represent a deeper understanding of the customers’ specific needs. Always-on targeting solutions will replace linear journeys, giving financial institutions greater agility and banking customers a sense of inclusion. To accomplish this, banks will have to collect and integrate a wide range of metadata around race, ethnicity, gender and literacy. In turn, this will make customers feel assured, understood, and empowered to handle their finances.
As banks move towards being hyper-personalised to individual customers, they need to evaluate ecosystem plays through which they can fulfill a variety of needs. An ecosystem strategy helps banks to push the boundaries into adjacent non-FS propositions and design for needs throughout a typical day to offer a breadth of engagement opportunities within the ecosystem.
Transform Into Platforms
Platform business models—those that facilitate exchanges and transactions between parties, usually service providers and consumers—are rapidly replacing standard distribution channels.
Legacy banks need to build platform businesses or partner with them, but they cannot afford to ignore them. Consumers are drawn to platforms because they are easy to use, meet the needs of the user and have minimised transaction costs to the extent that they become negligible. Once they’ve achieved scale, platforms are tough to displace. By harnessing cloud computing to support this model, incumbent organisations can create brand new platform designs that power innovation and efficiency.
Lay The Groundwork For An AI Revolution
With the ability to collect and analyse vast quantities of data, AI can enable a deep understanding of customers and deliver highly personalised services at scale. But to achieve realistic AI goals, companies will need to focus on: improving technology infrastructures; developing robust AI strategies; and delivering personalisation at scale. Only when these roadblocks are overcome will financial services institutions be able to unlock the powerful potential of AI to revolutionise personal finance.
Make Friends With The Fintechs
At the heart of it all is coming to grips with the fintech revolution. Fintechs have and will continue to grow in prominence, and established financial services firms will not only have to work in concert with them, but consider taking a few pages from their playbooks.
Banks must appreciate the significance of several emerging technologies and concepts that are reshaping their industry. By understanding these developments—the rise of platforms, the potential of AI to power personalisation and the importance of action-oriented corporate responsibility—banks can actively shape the next chapter of financial services rather than be shaped by it.
