The financial services industry has been and continues to be going through a radical shift as it heads towards true digital transformation.
As we survey the industry, it’s clear to see that there are several reasons and factors influencing this rapid wave of change: new entrants, disruptive innovation and technologies, changing business models, increasing regulation and compliance, as well as a change in your own customers’ expectations.
What we witnessed at the beginning of 2020 up until now as a result of the global impact of COVID-19 was like nothing else we’ve ever seen before. Once the pandemic hit and face-to-face interaction became nearly impossible for institutions, service professionals, and clients everywhere, the reliance on digital technologies became even more paramount. Needless to say, the pandemic was the catalyst for a very much-needed push and acceleration towards digitization and digital transformation for all stakeholders in the industry.
While the above is seemingly all too good, it does come with the cost of posing several critical challenges for organizations and advisors. Keeping the above factors in mind, here are five major challenges financial firms will need to face and overcome in order to win the minds, hearts, and wallets of new and existing clients everywhere.
1. Keeping up with technology & innovation
Implementing the latest and greatest technology is arguably one of the most important keys to meeting long-term business goals such as providing a seamless customer experience and staying competitive. In a PwC Global FinTech Survey, 70% of the leaders said the speed of change in technology was a concern. When the systems and tools in place, as well as the client-facing technology lag behind the curve, it can complicate the customer experience.
Sustainable success in business requires insight, agility, and continuous innovation. To stay cost-competitive, and to have the flexibility that innovation requires, financial institutions will need to update their infrastructure to make it more agile and responsive. A successful business transformation requires buy-in across an organization from well-before technology is implemented to well-after technology is distributed across the organization. When it comes to adoption, you’re only as strong as your weakest link. We’ve seen this time and time again from organizations where departments and key stakeholders are not quite fully bought-in, slowing the overall movement of the organization.
Solution: To have the flexibility that innovation requires, financial institutions must consider consolidating platforms and investing in automation, AI, and cloud-based technologies to deliver on ever-more demanding customer expectations, manage data and information, as well as improve their ability to manage compliance requirements.
2. Limited workforce training
Most financial firms understand the need to be flexible and responsive in this highly competitive and constantly changing landscape. Team members, particularly in client-facing roles, must be properly trained on handling client interactions smoothly and efficiently. Acquiring and retaining talent is critical for the implementation of strategic initiatives, however, according to PwC’s 20th CEO Survey, 72% of CEOs in financial services say that the limited availability of skills is a threat to growth. Along with cyber threats, financial services CEOs’ concerns over technology and skills top their list of business threats.
Solution: Focus on building a successful upskilling strategy, with attention paid to implementing digital tools and new ways of working to build long-term talent for the organization.
3. Increased regulatory obligations
It seems like almost every other week we hear about regulators like the SEC penalizing and cracking down on companies with heavy fines for sensitive corporate and client data being exposed over email. With data breaches becoming more prevalent, both consumer and corporate concerns for data privacy and integrity has skyrocketed, resulting in ever-changing, more restrictive, compliance requirements and policies that soon form.
As regulations in the financial services industry continue to escalate, organizations are required to spend a large part of their budgets on meeting strict compliance standards. Building systems and processes that keep up with regulations and industry standards require resources on every level. Overcoming regulatory compliance challenges requires financial firms to foster a culture of compliance within the organization. Companies need to constantly evaluate and improve their operations to keep up with fast-changing consumer expectations, technology, and industry regulations.
Solution: Investing in the latest digital technology is a critical component in creating a culture of compliance. Technology can help standardize processes, ensure procedures are followed correctly, and enables firms to keep up with new policy changes, among several other benefits.
Note: If you’re still sending critical corporate and client documents back and forth over email, FutureVault’s digital vault and document management solutions can help by providing a much better, more secure alternative to email.
4. Legacy systems & processes
Most of the existing challenges are struggles financial services organizations are faced with are a result of legacy systems and processes, directly impeding their ability to focus on clients and scale. Such systems have been used for so long that they are usually ingrained into a business’ processes making it difficult to move away from, however, absolutely necessary to do so.
According to Business Systems, maintaining legacy systems can be extremely costly with more than 80% of the IT budget often being consumed by it.
Similarly, paper-driven processes for things such as account transfers, new client onboarding, and just about everything else not only costs a considerable amount of money but also constitute a resource drain from a time perspective. This results in companies dedicating FTE capacities to handle the burden of manual, paper-driven administrative tasks, taking away from their ability to spend time on client engagement and interaction.
Solution: Financial service organizations that leverage the latest business technology like online document management and collaboration will have the key advantage of innovating faster in the digital transformation race.
5. Optimizing customer experience
Your customers crave relationships and being understood. Ensuring that your customers feel valued and are receiving great customer service is essential to developing long-term customer relationships. In the Accenture Global Financial Services Consumer Study of nearly 33,000 banking customers spanning 18 markets, 49% of respondents indicated that customer service drives loyalty.
As such, client experience initiatives need to be prioritized and vocalized across all levels of the organization. If departments are misaligned, the client experience will suffer and as a result, so will your business.
To top it off, we continue to observe the constantly ever-evolving customer expectations as consumers gravitate towards firms and financial services professionals that are able to provide them with 24/7 personalized service. According to a study by Accenture, 79% of consumers viewed their relationships with financial service institutions as largely transactional., institutions and advisors simply need to do better.
Solution: To effectively deal with this requires a new covenant between front-office and people leadership, connecting the worlds of customer, HR, and general management to provide a seamless customer experience across the face of the organization.
Solutions & opportunities to automate, improve, transform
The financial sector is constantly evolving, and today’s challenges are guaranteed to evolve with them. The more steps organizations take now to stay up-to-speed, the better off they’ll be when it comes to inevitable changes in the future. It’s mission-critical for firms and their advisors to secure a controlled strategy to innovate and help refine the consumer engagement model in a digitally native world.
The first step involves keeping up with the newest trends in FinTech and seeing which ones could directly impact and improve client experience. Financial firms must also consider consolidating different platforms and providing a more consistent, customer-friendly experience across internet, mobile and physical locations.
Another important factor is the need of having an agile and diverse workforce, as greater diversity allows financial service organizations to better reflect, understand, and engage with the increasingly diverse set of clients they serve.
Organizations leveraging the latest business technology, particularly around cloud applications, have a key advantage in the race to digital transformation. Without system hardware limiting flexibility, the agility and scalability of cloud technology enable systems to evolve along with your business. Lastly, for any major business decision you make, be sure to surface plans with department heads and especially with client-facing teams. That includes sharing client feedback widely, whether it’s through shared tools or in all-hands meetings.
Winning the minds, hearts, and wallets of consumers
For organizations to remain competitive in the financial services landscape, they require new ideas and innovative methods of accomplishing tasks on a greater scale with faster speeds. More significantly, the customer will always be at the forefront of the future. Today’s modern consumers expect more personalized experiences, demands faster access, and expects better results from all of their providers, financial institutions included. And it seems that firms that are unable to compete with these higher expectations will likely struggle to maintain viability in the long run.
What we’ve seen and learned is that an investment in technology is no longer a “nice” to have, it’s an absolute must. To say the least, technology is fundamental to success. And that’s where FutureVault comes in. As an industry-leading Digital Vault Platform, FutureVault works closely with financial service organizations to help them successfully overcome all these challenges through a digital transformation that focuses on people, processes, and technology.
By helping organizations transform the way they’re managing and securely storing documents, onboarding advisors and new clients, and improving compliance and audit readiness, we’re able to help them significantly improve operational efficiencies, save time and money, and focus more on what matters most, their clients.