SPONSORED CONTENT BY COMCAST BUSINESS
The digitization of financial services has banks focused on enhancing the customer experience through technology.
Prior to the pandemic, many banks had a five-year plan for upgrading their telecommunications infrastructure and ushering in the digitalization of financial services. But as soon as COVID-19 forced banks to close their physical doors to customers, that long-term vision became an overnight cram session.
In recent years, the financial services sector has viewed digital transformation as a way to provide an enhanced customer journey and appeal to younger consumers, who generally prefer mobile and online banking services over visiting brick-and-mortar branch locations. Then, all at once, the pandemic led consumers of all ages to migrate online, where they could conduct financial transactions without visiting a retail branch.
For banks and other financial institutions, the digital transformation has resulted in a kind of customer-service foot race. Those banks providing the best customer experience across their digital platforms and product portfolios will be better positioned to succeed in the highly competitive financial services marketplace.
The financial services industry clearly is taking this challenge seriously. A 2020 study by McKinsey found that 88% of finance and insurance executives had increased their implementation of automation and artificial intelligence during the pandemic, with the end goal of enriching the customer experience. To pull off this digital transformation, financial institutions need the latest telecommunications infrastructure and increased bandwidth to support the growing need for digital experiences throughout the customer journey.
“The pandemic definitely has accelerated the digital transformation,” says Thomas Sweeney, executive director of the Strategic Client Group for Comcast Business. “Before COVID-19, it was probably among the top five initiatives of the retail banking space, but once the pandemic hit, a lot of the initiatives that were planned had to be implemented a lot sooner.”
Sweeney says that throughout the pandemic, Comcast Business has seen a large uptick in inquiries from banks wanting to upgrade their networks. Rather than handling this extensive project in-house, financial institutions are turning to managed network service providers like Comcast Business to provide technical expertise and take some burden off internal IT teams.
“From our perspective as a supplier, it’s exciting to be able to help transform the industry,” he says. “In the past, banks have been reticent to use managed network service providers because they wanted control over their networks, but banks now see a need to manage costs and to rely on a provider to manage certain areas of their business.
Managed service providers can also help banks improve network security through the use of software-defined wide-area networking, or SD-WAN. That technology is being increasingly adopted for its ability to integrate a variety of advanced security solutions (such as next-gen firewalls, secure web gateways and zero-trust network access) with capabilities for improved network security monitoring and policy setting.
SD-WAN can help extend an organization’s network, enabling branch offices to connect through the internet. Data can be encrypted and transported via secure virtual private network tunneling to help protect it in transit.
With SD-WAN, network administrators can segment and route traffic across the network. Data from different applications traverse the network via micro-segmentation, which can help prevent a cyberattack from impacting all of the data traffic running on the network.
In financial services, the digital transformation can focus on five key areas: staffing, operations, revenue streams, security and customer communications. Each is critical in creating a customer experience that is simple, secure and seamless between devices. Each also relies on an agile network that can scale as the business transforms and has enough bandwidth supporting it.
Early in the pandemic, an initial challenge for the financial services industry was providing the same level of customer service while allowing employees to work from home. Financial services representatives needed secure access to corporate systems and data to effectively interact with customers. Serving customers had to be just as effective over the phone or through video chat as it had been in person, and that required financial institutions to increase their employees’ connectivity and access to enterprise systems.
Now and into the future, that investment in telecommunications infrastructure will continue to pay off for banks and financial institutions. With customers having become accustomed to virtual meetings, banks experiencing heavy foot traffic can direct some customers to kiosks where remote employees can assist them with transactions or other services.
Sweeney says a number of financial institutions are developing interactive ATMs that serve all of the self-service functions of traditional cash machines but also allow customers to connect with bank employees by video to complete complex transactions. That can reduce wait times for customers who prefer an in-person interaction with a teller, and it gives banks more flexibility as they look to pair their staffing levels with customer demand.
“Those types of solutions drive the need for more robust bandwidth and secure, reliable networks,” Sweeney says. “Part of the digital transformation is enabling brick-and-mortar branches to have that robust connectivity and the bandwidth needed to support all sorts of new ways to interact with customers.”
Similarly, enhanced connectivity can allow banks to remain relevant to customers who no longer visit branches to cash paychecks or deposit checks. Last year, U.S. banks and thrifts closed 3,324 branches nationwide and opened 1,040, according to S&P Global Market Intelligence data, which may indicate that some banks are failing to adapt to changing customer expectations.
In response, some banks are turning their branches into cafés and equipping employees with tablets and other mobile devices, bringing them out from behind the counter so they can interact with customers and answer questions about financial products in a relaxed setting.
For their employees to do that, banks must increase their bandwidth and ensure that it’s both reliable and that they have cyber tools to help protect from security threats, which are a big concern for banks today, Sweeney says.
“We’ve heard from banks that there is no plan to abandon brick-and-mortar branches,” he says. “But there is an effort to make banks not only a place where people can go for their complex banking needs, but a place that feels like part of their community.
“There will continue to be branches, but they’re going to be more in tune with their community’s demographics and makeup. I think banks have to get much smarter about how they control the cost of that asset to ensure that they are able to shore up their profit margins.”
As customers increasingly embrace online and mobile banking, the pressure is on banks to expand their digital product and service offerings. It’s no longer sufficient for a bank’s smartphone app to allow customers to check their balances, review transactions and deposit checks. Banks now need to make exchange rates, loan interest rates and other key data readily available to customers who expect to conduct all of their banking online.
For financial institutions, that means creating what’s known as an active/active system—a network of independent processing nodes that each have access to a common database, so that all nodes can participate in a common application. The application network is made up of multiple processing nodes connected to a redundant communications network.
“Banks need to have all these different network nodes—the different branches and offices—able to access all these extremely large databases of information at the same time,” Sweeney says.
To serve tech-savvy customers, banks need reliable network connectivity that allows customers to bank online 24/7.
“Certainly, it’s important to banks to create at least the perception of 100% availability,” Sweeney says. “The modern banking customer doesn’t bank according to the old 9-to-5 banking hours. They bank 24 hours a day, so having network connectivity that’s robust and reliable is critical in today’s marketplace.”
Along with banking apps, the ubiquity of smartphones has led to an explosion of niche financial services applications, including brokerage, loan and remote payment apps. With the internet having removed many barriers to entry for startups, some of these apps have attracted solid backing by venture capitalists to establish and market their products.
These apps may allow banks to expand their product offerings, improve their customer service and gain relevance with younger consumers, but they also require telecommunications infrastructure to support them, according to Sweeney.
“Banks are trying to achieve a delicate balance in dealing with the demographic that is their future customer,” he says.” Their new customers bank in a very different way than their parents did, so banks have to find ways to leverage technology to appeal to that younger age group.”
To learn how financial services firms are deepening customer relationships, driving revenue, and outpacing the competition with the help of Comcast Business technologies and solutions, go to: https://business.comcast.com/financial-services.