More and more aspects of daily life are taking place online, and customer expectations for a seamless digital experience continue to rise across all industries, including the finance sector.
While financial institutions (FIs) have traditionally leveraged in-person interactions to nurture relationships, 68% of consumers said the pandemic increased their expectations of a financial institution’s digital capabilities.
The one clear lesson of recent events for FIs is the importance of incorporating new technologies cannot be overstated, especially those that ensure proper communication with customers which are critical in maintaining and growing relationships.
While change is never easy - there are always a host of internal barriers faced when acquiring new digital technologies - customers are not fooled by the industry’s stasis: only 23% think FIs handled the pandemic well and a meager 27% think it is customer centric, dispiriting statistics for an industry that thrives on healthy customer relationships.
And many FIs – either unable or unwilling to identify their own internal barriers to innovation - are being outpaced by those keen to embrace digital customer-oriented transformations and invest in technologies, like business text messaging, that make them more agile, stronger and more profitable.
It is important to know what is preventing you from changing before you make a change. Fortunately, the window for FIs to evolve is not yet shut, especially if they move quickly to embrace digital modernization by dismantling the following roadblocks.
Dated structures and systems
It is far too common for FIs to run their daily operations on legacy structures and systems. Whether dependent on top-down siloed decision-making or an aging tech stack, the costs of “legacy” - doing business the same way simply because “that’s the way it’s always been done” - are exponentially damaging: increasing transaction costs, unused customer data, and a worsening customer experience.
Legacy structures and systems impede change by preventing FIs from anticipating and understanding customer needs, which comes with the risk of either losing potential customers or turning off existing customers. An example would be asking a digital-savvy customer to come into a branch to obtain a loan when the technology is available - with straight-through processing, digital fraud monitoring, and remote meetings. It is likely that they will find a financial institution that will allow them to do this from the comfort of their own homes and on their mobile devices.
Legacy messaging – whether technology or strategy - is just as damaging. Customers are now displeased with impersonal messaging, be it cold calls, email blasts, or having to dig through websites to find FAQs. People want to be spoken to directly and in a way that is seamless and convenient to their already busy, information-laden lives – explaining the success of a business text messaging platform like Statflo, which gives people exactly what they want.
Leadership that lacks a technological perspective
Arguably the most important internal barrier to digital transformation lies at the top. Built and run as analog companies for decades, FIs often lack tech-forward leadership. Instead of client-facing, most FI leaders are oriented to a more financial/B2B mindset and lack the motivation to modernize the customer experience through digital technologies. Wary that innovation will disrupt their operations, FI leaders find it difficult to assess the risks and ROI of digital solutions, ending up change-averse or paralyzed by indecision.
This gap at the top is unfortunately replicated throughout the entire infrastructure, bereft of the tech-savvy personnel with the motivation to champion new technology and the skills to implement it. For example, without a proper and skilled in-house data and analytics team, customer information remains trapped in silos and is never properly optimized to generate critical insights, an inexcusable misstep when data is necessary to understand and anticipate customer needs. Failing to rectify this gap locks the FI into a downward spiral where the customer experience consistently suffers and leaves the institution lagging behind competitors.
An internal adoption strategy that runs both vertical and horizontal is always necessary for digital solutions to stick; without one, organizations are more likely to either overlook or mismanage the wide slate of innovative technologies currently available that would otherwise enhance the customer experience with the user-friendly, seamless digital capabilities and messaging people now expect.
Compliance and data protection
The foundation of the relationship between FIs and their clients is based on trust, so it is unsurprising that data security is top of mind when considering new technologies. But while digitally-secure banking is commonplace, some FIs still hesitate to adopt new technology because of security issues.
From cyber-attacks to costly lawsuits, online fraud or data leaks, the consequences of failing to follow compliance regulations and protecting the privacy and security of sensitive business and customer data – whether intentional or not - are steep and far-reaching.
Data breaches put an FI at risk, making compliance and data security non-negotiable requirements for the adoption of any new digital solutions. This means any outside technology partners need to have strict guidelines and certifications that guarantee the protection of customer data.
Thankfully, innovation and security are not mutually exclusive. Statflo’s business messaging platform, for one, is specifically designed with security in mind, coming with built-in features that automatically ensures regulatory compliance.
Taking a step forward
Given today’s shifting climate of innovation and customer expectations, FIs need to upgrade their systems, structures and strategies by adopting innovative technologies if they want to weather the storm and find solid ground in the new digital landscape.
Data-driven conversation platforms like Statflo - agile and responsive to the contemporary customer – let FIs optimize the full potential of their customer relationships while always staying compliant.
Only by adopting innovative technologies, will FIs be able to dismantle legacy structures and systems and overcome their internal barriers to digital transformation in a way that creates an exceptional, data-driven customer experience.
To learn how Statflo can identify and circumvent internal barriers when adopting new technologies, book a demo today.