The New Playbook
Fortunately, there are some proven tips that can help you build and deliver a digital financial-services masterpiece:
1. Start with strategy and resist the temptation to jump ahead
Before you do anything else, you'll need an overarching strategy. That means everything from corporate and brand strategy to employee and customer-experience strategy to technology and operations strategy.
First, consider whom you will serve, what you will offer, how you will differentiate yourself, and perhaps most importantly, what you won't do. Next, determine what experience you want your customers to have. Then, decide how you are going to set up your employees to deliver that experience. This will establish your culture.
Firms that deliver digital financial services will need to balance a workforce comprised of banking subject-matter experts as well as digital natives combined with extensive automation to create the operating rhythm necessary to power a new generation of digital-banking experiences that scale. Finally, how does your brand complement and deliver on your strategies?
You'll need to create a complete service blueprint of the offering or offerings you want to create and map it to the strategies. And, you'll need to define your target operating model around the strategies and blueprint.
2. Deliver personalized, contextual, proactive solutions in real time
All customers start their financial journeys at different points. In the same way that GPS systems – such as Google Maps and Waze – help travelers by anticipating roadblocks and providing turn-by-turn navigation information, customers of financial solutions now also want guidance on the path to financial betterment. This is a concept that Genpact's recent report, Banking in the Age of Instinct, refers to as 'optimized reality' and calls out for additional investment.
Digital financial-services providers will need to use data and analytics to derive insights throughout the customer experience. For example, by optimizing the onboarding process as the customer enters information or by using predictive insights to help customers identify the right product mix for their needs.
This requires more than a great digital interface. It takes a lot of back-office construction or reconstruction. If you don't automate the back office, you can digitize the front-end experience as much as you want, but the customer will still encounter long lead times. Data storage and hygiene are particularly important to get right early on because they enable fast and efficient scaling.
Meanwhile, technology stacks that limit access to data could prove detrimental to your ability to deliver personalized, contextual, proactive solutions in real time. Don't continue to build on bad data. The truth is that seamlessly connecting people, processes, and technology across an entire organization enables exceptional financial experiences.
3. Develop a challenger mindset
Competitors are introducing new solutions to assist consumers and small businesses in meeting their financial goals at breakneck speed. In fact, although the term may sound like an oxymoron, we are already seeing what one might refer to as 'legacy fintechs.' Case in point? PayPal. The payments giant is now concerned about buy now, pay later companies that didn't even exist a year ago.
We see it across industries: incumbents asleep at the wheel until new entrants shake and wake the inattentive giant. Look at retail, for example. After a decades long ascent, Amazon recently dethroned Walmart as the largest retailer outside of China.
When it comes to digital financial services, don't let perfect be the enemy of good. It's better to make a good decision quickly and iterate afterward than to overanalyze in search of a 'perfect' answer. Future competition may come from anywhere and everywhere. So don't wait for a crisis. It's important to keep the fire and never become complacent.
4. Engage at the right time to drive loyalty
Loyalty is being redefined. In the past, institutions used share of wallet as a primary measure of loyalty based on how many financial accounts a customer or business maintained with their firm. Today, loyalty is less about accounts and more about interactions, activities, and engagement.
The more engagement you have with consumers, the more likely they are to use your solution. Again, take PayPal as an example. The design of much of what the payment giant is doing – from bringing on crypto to incorporating messaging into its new 'super app' – aims to drive engagement with its platform. PayPal representatives have said that consumers who buy, hold, and sell cryptocurrency on the platform in the United States log on at twice their previous rate. With increased user engagement, the company expects to see a bump in average revenue per active account.
One cannot overstate the role of technology in driving loyalty. After all, a significant portion of today's interactions take place in digital channels. In addition, the ability to anticipate needs so you can engage with the customer to deliver against those needs at the right time – not too early and not too late – is critical. And 360-degree customer data and real-time analytics are what will enable you to do this.
5. Partner for success
When it comes to creating a digital financial-services masterpiece, you can't get there by yourself. You can't build it by yourself. You can't rebuild it by yourself. Instead, it requires a connected ecosystem of partners.
Firms that deliver these services will need to break down internal silos and embrace external partnerships, potentially even with competitors. They'll need to partner with many specialists to ensure optimization of services, uptime, access, and more, via an open-banking platform infrastructure that allows them to plug in new partners as needed. And they'll need to share data, intellectual property, skills, and more for a seamless user experience that benefits their customers.
Customer behaviors have forever changed and will continue to move away from traditional banking business models. Other industries have shown that customers are now breaking their experiences into smaller 'best value or experience' components, rather than always choosing traditional large brands that operate in traditional ways.
In banking, as in other industries, whoever fills that void will win. And whoever ignores the void will fall into it. The time to start is now.