Financial services companies are fighting for customers’ hearts and minds on a very uneven playing field. Because the rules of the customer experience game are DIGITAL—and there’s a gulf between the haves and have-nots of digital talent. How can mid-sized financial services keep up with big banks, big tech, and a slew of digital-first FinTechs?
On average, each of the world’s top 100 banks spends 26 times more on IT than the individual 900 banks that follow them.
If you’re a mid-sized financial services player, you need to pick your fights carefully. Otherwise, given the inequality illustrated above, you’ll get a bloody nose. So, before embarking on your next CX improvement program, it pays to understand the obstacles in your way. Here are five barriers you need to anticipate. And beneath, we’ll explain how to overcome them.
Barrier #1: The IT Backlog
An IT backlog is a necessary evil for any business. Without it, firms cannot prioritise business requirements according to risk and business value.
A potentially long list of priorities in financial services can push customer experience improvement off the top of IT’s agenda. These include operational risk, cybersecurity risk, and regulatory and conduct risk.
Such burning issues can leave customer experience improvement projects stuck in a lengthening IT queue. Cruelly, the regulatory burden for mid-tier financial services firms is much the same as for larger institutions. Consequently, many mid-tier incumbents have lengthier IT backlogs than digital leaders.
If your digital banking requirements languish for six months or longer, you fall further behind more agile competitors.
Barrier #2: Legacy Systems
“Over 90% of UK financial services firms rely on legacy technology in some form to deliver their services.“Financial Conduct Authority, 2021
Legacy tech consumes a disproportionate amount of IT’s resources. Even minor changes can take an age. And given a choice whether to prop up creaking systems or work in a dynamic team using the latest cloud tech, it’s obvious where the best IT talent will gravitate.
Simply put, if your firm is burdened with old systems, you’ve got fewer resources available for innovation, and digital projects will take longer.
Barrier #3: The Digital Talent Crunch
“The UK is heading towards a catastrophic digital skills shortage, says The Learning & Work Institute.”BBC News, March 2021
The global shortage of IT talent is getting worse. According to The Computing Technology Industry Association (CompTIA), the UK’s net tech employment has grown between one and two percent p.a. in recent years. That’s woefully short of demand. In evidence:
- Forty-seven percent of IT decision-makers say they have accelerated digital transformation plans because of the pandemic.
- Unfilled cybersecurity jobs have grown 350 percent in the eight years to 2021.
In these market dynamics, it’s becoming increasingly difficult for mid-tier financial services firms to attract and retain the digital talent they require.
Barrier #4: Lack of Agile/Digital Fluency
“Over fifty percent of UK financial services firms surveyed used a waterfall project management methodology. But firms that use agile delivery were less likely to experience a change incident.”Financial Conduct Authority, 2021
Like any team sport, agile product development requires match practice to build confidence and fluency. Unlike digital leaders, laggards lack the necessary experience to develop such fluency.
And with a quarter of project managers likely to change jobs in 2021, mid-tier financial services firms are particularly vulnerable when head-hunters come calling to fill posts at bigger banks and fast-growing FinTechs.
Consequently, even if mid-tier firms succeed in recruiting the latest digital development skills, they risk wasting such talent on projects that run into difficulty. According to the Financial Conduct Authority, 24 percent of high severity incidents result from IT change failures.
Barrier #5: A History of Making Do
“If you want something done well, ask a busy person to do it.”
The heroic efforts of operations teams can make building the business case for digital customer experience improvement more challenging. They mask the inefficiency of disjointed systems with human integration—the manual steps, rekeying, and workarounds they’ve used for years.
Customer onboarding is a great example:
- Digital leaders integrate web forms with back-office systems and third-party AI-powered web services for KYC and AML checks, credit risk checks, and more. They automate every step of the onboarding process—making the customer experience lightning quick and the straight-through execution cost minimal.
- Digital Laggards lack integration and automation. They often use paper-based application forms. When using web forms, they result in little more than an email to a shared inbox. Applicants wait while staff perform slow, repetitive, and error-prone tasks. Decisions can take days. Applicants often need to visit a branch to prove their identity. The execution cost is sky-high, especially considering the high abandonment rate.
Such busy and knowledgeable people will be immensely more valuable if automation can release them to serve customers.
How to Overcome These Obstacles?
Assuming you want to improve the customer experience your financial services firm provides, then …
Hello, we’re ieDigital.
We are a team of experts in financial services technology and customer experience. At the very core of our company is a passion and belief in the power and potential of technology, and we’ve been applying technology, such as mortgage software, to solve business problems since 1986.
We provide ieDigital Interact, a web, and mobile-ready platform to transform your entire customer experience. It provides a suite of pre-built, pre-integrated, easy-to-configure services that work alongside your core banking systems.
ieDigital Interact includes:
- Customer onboarding
- Digital Banking
- Self-service switching
- Digital debt recovery.
And as we explain in this eBook, it provides unique flexibility, as it’s built using low-code technology. That makes it lightning-quick to configure, and whenever you need to make changes or extensions, that’s faster still.
Industry analyst Forrester calls this approach “Buy then Build,” as it offers the advantage of fast time to value, plus the flexibility to keep ahead with fast-paced innovation.
Learn more about “Buy then Build” in our eBook — Three Strategies for Modernising Digital Banking – A Guide for COOs.