By Graham Lloyd
When it comes to meeting customer expectations, are banks making the changes they need in order to put themselves in the best position to deliver? Technological advances dictate that banks are in a much different place today than they were fifteen years ago. As the new millennium dawned and Internet use became more widespread, many of these organizations found themselves at a crossroads. Should they invest in embracing this change and use it as a competitive differentiator, or choose to run against it? Eventually, of course, overwhelming demand for more sophisticated services made this investment inevitable, but only once the clamor for them had become deafening. As the industry finds itself on the brink of yet another technological leap forward, it’s worth asking how well placed it is to embrace change again.
Let’s put all of this into context.
Fifteen years ago, banks were still embracing telephone banking, and online payment systems were still in their infancy. At the time, the impact these systems had on bank managers was minimal. They might have had to ensure that call centers managed to sustain peak efficiency, or to ensure that the right IT infrastructure was in place to handle the slow trickle of Internet-based payments that were coming through.
Fast forward to 2016, and retail banks are increasingly finding themselves having to meet huge pressure from their customers to develop advanced technological offerings, such as fully automated self-service machines, or automated advice from human-like avatars (or bots). For marketing, IT, and business managers within these organizations, this presents a new, yet strangely familiar challenge. Do they—like the banks of yesteryear—hold the culture/budget/perceived priority line and resist investment in new technology, or do they embrace change and deliver what their customers are demanding?
On the face of it, the answer may seem obvious, but it ignores the fact that the real issue facing decision makers is that existing legacy systems are an obstacle that many are struggling to overcome. A recent global survey conducted among 500 senior executives in the financial services and insurance industries found that 94% of all respondents felt that their legacy systems constrained their organization’s ability to meet customer demand for full self-service. Of this number, 72% said that legacy systems constrained them to either a “significant” or “massive” extent.
While it is possible that there is a certain degree of learned helplessness, and that some banks believe other challenges to be more pressing, the challenge for decision makers is generally clear. How can they make a solid business case for replacing this archaic infrastructure that is no longer agile or flexible enough to deal with the demands of a new digital generation?
The answer is, quite literally, that it’s a matter of survival.
If these organizations are as slow as their predecessors at the turn of the century to embrace the new order, they could end up losing customers very quickly. In 2011, Gartner predicted that 85% of customer relationships would be managed without human intervention. And while it’s clear that we are still some way off that outcome, there’s no doubt that the appetite for these services is growing. The previously cited survey attributes this to the emergence of smartphone virtual assistants such as Siri, with 76% of respondents stating that these were making customers more willing to engage with automated assistance and advice.
The truth is that given these mounting customer expectations for automated self-service and automated advice, banks who are not able to provide these services in the coming years risk losing not only customers, but also any sort of competitive edge for all but a few segments.
Decision makers must diligently observe and interpret technological trends, customer behavior, and the solutions offered by competitors, and make recommendations based on how they help their organization to stay ahead. Crucially, however, these recommendations should not be limited only to those affecting direct customer-facing solutions. Just as important is the need to source technological solutions that can help to keep the customer happy in other ways. For example, many banks are already using computer generated recommendations to help guide their own contact center staff, thereby reducing errors and improving outcomes—a trend that will increase even further in the coming years, and which has the potential to revolutionize the relationship between banks and their customers.
The bottom line for any banking decision maker is that holding on to history is no longer an option.
Legacy systems cannot be allowed to be a barrier to progress. A willingness to adopt, integrate, and offer new technological services is a given, and rapid fulfilment of ever-changing customer expectations is going to become a key battleground for these organizations in the coming years. What’s clear is that those who are bold and decide to lead the technological charge will be those who benefit the most. Those who don’t will lose customers, lose their competitive advantage, and fall behind. The time for holding the line has passed. Now, more than ever, it’s time to push the boundaries.
Graham Lloyd is Industry Principal of Financial Services at Pegasystems, a company that develops strategic applications for marketing, sales, customer service, and operations. Email: graham.lloyd@pega.com.
