The Weekly Extracts from Extractable is a condensed roundup of digital experience news for financial services institutions, and our take from San Francisco.
Covid-19 Impact on Financial Services
This week we saw a number of webinars dedicated to the impact of the current crisis on financial services. A few were nothing more than thinly disguised sales pitches. We won’t be calling those out.
We joined webinars by Aite Group, Javelin Research, Backbase, and ath Power covering the topic. All were excellent and covered the actions taken by banks and credit unions dealing with the crisis. Most covered recommended practices to consider, either from the analysts covering the industry or from the institutions directly. We covered the Javelin webinar in this article, and the Backbase webinar here.
As we listened to the stories of banks trying to help their employees serve customers in a remote fashion, we couldn’t help but think about UX from an employee standpoint. The industry has just begun to apply design thinking to digital customer experiences. Yet, a well-designed digital employee experience could make the process to move to remote work easier.
This week, we read this article from Forbes examining that very question. We agreed with the statement that “Good EX consistently leads to good CX and vice versa.” The article states that “Deloitte notes that 80% of executives rate EX as important for their company…Unfortunately, only 20% feel that their EX actually is excellent.”
We at Extractable expect that the crisis will be a wake-up call to the industry to greatly improve the digital customer experience. We cannot stop there. We need to also use design thinking to address the employee experience.
Also this week, we attended a webinar by Forrester and Episerver regarding content intelligence and personalization. While multinational and megabanks have invested in personalized content, the opportunity for small to midsized financial institutions is vast. For these institutions, letting go of cultural complacency and taking the risk of standing out in this sea of sameness will be paramount in winning market share. Episerver’s recent acquisition of Idio enables them to offer dynamically personalized content experiences.
It’s clear that in digital today, transitioning from a data-driven institution to a customer insight-driven institution is of chief importance. In looking to the future, we can establish some foundational truths which will allow financial services to scale a customer-insight driven experience:
- The future of finance lies in digital-first experience.
- Financial institutions that can successfully shift their passion for meaningful customer experience in brick and mortar to digital have vast opportunities to serve their customers better than ever before.
- Dynamic tools such as these will enable institutions to transition their offline value proposition to the digital channel like never before – allowing service-minded institutions to compete at scale.
For more of our thoughts, you can read a full discussion on this topic here.
Earlier in the year, we saw a growing consolidation trend in fintech. We expected that trend to pause, but not this week. We were surprised by the news of PFM provider Strands being acquired by the Italian bank technology firm CRIF, as they are making a push into Open Banking.
Clearly, this trend will continue even during the current situation. We don’t expect, however, that the fintech firms acquired will be in the lending space. Who do you think will be next?
United States of Neobanks
Speaking of trends that we thought would pause but continue, it was a case of another week another neobank enters the US market. Last week, One launched a neobank aimed at middle-class banking customers. This week, HMBradley “a startup backed by PayPal Co-Founder Max Levchin” officially launched their banking offering.
Staying with the topic of neobanks and digital-only banks, J.D. Power released their U.S. Direct Banking Satisfaction Study for 2020 this week. The report indicates that “direct banks continue to significantly outperform traditional retail banks in overall customer satisfaction—but challenges persist when it comes to call center interactions.” The key findings noted are:
- Direct banks outperform traditional retail banks
- Direct banks gain market share from retail banks
- Call center challenges persist
- Direct bank customers skew younger and are also less loyal
- Direct banks that offer checking outperform direct savings banks
Small to midsize financial institutions can continue to combat digital-only and neobanks through excellent customer service, particularly at the call center. However, time is running out. As we note in our discussion of the Episerver webinar, leveraging personalization will be key in better serving existing customers and finding the right new ones. Further, institutions need to own their digital experiences and not rely on vendors that offer undifferentiated experiences.