The Weekly Extract from Extractable is a condensed roundup of digital experience news for financial services institutions, and our take from San Francisco.
This week, we look at how to get started on digital transformation. We also examine FI’s efforts in digital account opening. Finally, we give a brief introduction to a video interview with our Chief Strategy Officer.
5 Questions to Answer Before Digital Transformation
While we are by no means out of the woods in this pandemic, many executives have finally turned to how they may operate in a post-COVID world. We’re still astounded by the number of Financial Services executives who remain unsure about when to begin their digital transformation. Luckily, that attitude is starting to fade.
If FI executives are still on the fence or just don’t know where to start, Lauri Giesen offers five questions they must ponder before starting a digital transformation in an article in BAI’s Banking Strategies.
Giesen quotes Gartner’s Peter Redshaw: “Every single bank we talk to has a digital strategy or a transformation initiative or a disruption program. But when you dig a little deeper, 90% of those strategies are not strategic at all.” We can attest that this is a very true statement.
The questions Giesen suggests are:
- What is your future business model?
- How will we protect the customers’ and banks’ financial health from data breaches and identity fraud?
- Are our data and analytics ready to deliver personalized experiences?
- How will we improve the financial lives of our clients?
- What roles do we play in people’s lives?
In reference to the last question, Forrester’s Peter Wannemacher says that “without answering this question first, the bank’s digital business model, brand strategy, product road map and resource allocation will be misaligned.” Peter gets an Amen from us there, as well.
Let’s assume that FI executives are ready to move forward. Should they be careful and innovate at the margins?
Helena Rubinstein, Head of Behavioral Science at Innovia Technology, says “innovation will need to be radical, not marginal, and play a central, not subservient, role in determining strategic plans” in an article in Marketing Week.
Rubinstein notes that:
“there are three key components that enable acceptance of transformational innovation: a breakthrough mindset and motivation, a defined set of simple-to-understand innovation tools, and a shared innovation language and process map.”
Rubinstein continues, “in the post-COVID world, you will need to focus on all three of these components to explore digital solutions for improving customer insights and engagement. It will be crucial to be agile and flexible in order to take advantage of early signals indicating market change and capitalize on new behaviors and expectations”.
Will entrenched bankers bet their future on regulators to keep them safe from digital disrupters? Will community-based organizations give up and let innovative large banks take all new business?
The Problem with Online Account Opening
“Organizations that did not have an end-to-end digital engagement capability (without branch support) were caught off-guard, forced to take initiatives that may have been further down the priority list and move them to the top. The almost instantaneous shift to digital and remote engagement had most organizations dealing with unforeseen challenges as digital use and call volumes skyrocketed. In many instances, customer experiences suffered.”
We were particularly interested in Marous’ discussion of digital account opening. Marous notes:
“Consumers can order their groceries, select entertainment and buy a new car digitally from home and can have a video call with dozens of people internationally. They expect their bank or credit union to be able to help them open a new account without leaving their house.”
We often hear bankers point to their surveys where customers say that they prefer to open accounts at the branch.
Historically, we ask the following probing questions: why do they say that? Is it because they truly prefer it or because banks haven’t built digital experiences that are engaging? As a matter of note, we regularly open accounts at banks and Credit Unions. The process is rarely engaging.
We also receive the push back that building engaging digital is hard and expensive. While this may be true, Marous makes the point that digitization of processes isn’t enough.
“Consumers and small businesses are feeling more pressure than many have ever felt in the past. They are craving understanding, empathy and connection from their financial institution.”
He points to a Bain & Company Study that says “building a digital experience that includes a human, when done right, can be less expensive than missing the mark with a human-only experience.”
In an article in BAI’s Banking Strategies, Evan Barale, Senior Product Manager at Access Softek, brings up another quandary that many bankers bring to account opening: Should we have an omni-channel solution rather than a digital only and a branch only solution?
While that may be a great question, some bankers use it as an excuse to merely replicate the branch process in the digital realm.
“Banks use the word omnichannel to describe their account-opening tools, but in practice ‘omnichannel’ turns into ‘mobile or online options for the perfect applicant only’ and too many people get left out when using digital account opening solutions.”
He continues, “even with a powerful digital channel, banks should not always assume a new customer will pick one channel and stay there. In a true omnichannel solution, each channel needs to work independently while playing to the strengths of every channel.”
Barale gives an example that illustrates the point that Marous made in his article about humanizing the digital process.
“If someone is opening an account online, but needs to get personalized support over the phone, can support staff easily connect the phone call to that person’s application and co-browse to directly see and fix problems?” Barale describes it succinctly:
“Switching between channels should never be a requirement, but a true omnichannel experience needs to find what is great about each channel and use those advantages to create the best process for everyone.”
As we noted in an article in Bank Director back in December, “In a prospective relationship, nothing is more important than the initial experience. A growing number of potential customers are engaging with a financial service company for the first time through a digital application process. This makes the initial experience a microcosm of the failings of legacy financial service companies during their digital transformation.”
Don’t lose your prospects or returning customers because you haven’t designed an engaging digital account opening experience.
Transforming the Call Center
Jimenez notes that many organizations miss the point of digital transformation.
“When we talk about digital transformation, the vast majority (of bankers) will focus on the very first word of that phrase, digital. The technology, the technology drives it. And actually that is not true. You really should be looking at the word transformation. That is what is actually active. And so we are transforming the organization to use technology. We are not using technology to transform the organization.”
To truly drive transformation Jimenez notes that organizations must start with strategy. “if you look at smaller organizations, generally, they don’t think about strategy as a way to drive the organization and they sort of default into a strategy. So you have to figure out what it is that you are, who you are and where you want to be. That should be your strategy, and that should be driving where you’re going.”
For call centers, Jimenez notes that the promise of CRM has yet to become reality. He notes that the most exciting digital technology in contact centers right now is the application of AI to augment the work done by human agents.
“I’m thinking about the augmented agent and the ability to have AI help the agent through a complicated problem.”
If you are interested learning more about how we think about and approach digital strategy, certainly give the interview a listen.