It’s been an eventful couple of years in Australian financial services. The influx of fintechs, discussions around open data, a low interest rate environment, regulatory change and cultural challenges have all dominated the landscape.
But for me, one overarching influence will carry right way through 2017 and beyond – and that’s digitalisation.
At ING DIRECT we’ve never had branches, and digital has always been a core component of our operations and delivery. But over the past 12 months the popularity of digital banking has grown. Customer interactions via digital channels are up by 14 per cent, and mobile (making up 69 per cent of all digital interactions this year) is clearly emerging as our customers’ channel of choice.
For our customers, digital is an enabler. It gives them the freedom to do their banking whenever and wherever they want, and so it makes it easier for them to take control of spending.
At the same time, digital also makes it easier for financial services to innovate faster than before. It’s not too difficult to replicate products but it’s getting harder to stand out from the crowd and maintain a point of difference through product features.
As products become more commoditised, they become less of a differentiator for customers who are increasingly prioritising the overall experience they have with a brand.
This focus on digital experience is in line with what has been happening in other industries for some time already. Customers want a personalised seamless experience in financial services – just like when they book a ride through Uber. Financial services needs to adapt swiftly to keep meeting customer expectations.
So how can banks, and financial services as a whole, focus their efforts to deliver this enhanced digital experience in 2017?
A personalised approach
Leveraging internal and external data informs future decision making, and allows us to provide relevant customer solutions.
If we can collate valuable insights through the data we have available, then we need to use them for the benefit of the customers. For example, at ING DIRECT the redesign of our digital platform last year was the foundation of what is a more personalised approach to customer delivery – taking things a step further than segmentation and communicating with customers at an individual level.
We can use sophisticated analytics and propensity modelling to target the right customers, at the right time, in the right way. Customers now only receive communications which are tailored to their personal circumstances. It’s less about informing, and more about adding value.
Collaboration – open platforms
Delivering a great customer experience involves being where our customers are, and increasingly that’s on open platforms.
We need to be able to engage with customers in the environment they choose, and this may be away from owned channels. Instead it may make sense for financial services providers to develop more of a presence on e-commerce sites, comparison sites, or payment platforms for example.
Digitalisation is erasing borders – so if customers are using other channels, including social media, then financial services needs to consider these as viable places of doing business.
Fintech partnerships
Traditional players and fintechs are often portrayed as being up against each other in the battle for market share, but I think there’s room for both – particularly in partnership with each other.
ING Group now partners with more than 65 fintechs globally, leveraging their innovation expertise to enhance our customer delivery. At the same time, fintechs can benefit from the brand recognition and marketing reach that established players can provide.
Ultimately, it’s a good thing to have more competition in the marketplace as it sparks innovation and encourages a customer centric approach to delivery.
Agile execution
Historically, the financial services industry hasn’t been that agile – but we need to learn to move faster, deliver faster, and learn faster.
The pace of change is so rapid that innovations in other industries seem to materialise almost overnight. Customers are getting used to immediacy in delivery so we need to deliver the same experience in financial services.
Having an agile operating model will reduce time to market, making it easier to adapt to changing customer needs and behaviours.
The future is digital
As financial services starts to look outside of product features to appeal to customers, it’s becoming increasingly clear that customer experience is taking precedence, and is increasingly played out on digital platforms.
All indications are that the overall experience customers have with a brand will be a key driver of their loyalty, and ultimately their advocacy for years to come. This is something for all financial services providers to consider as they build their digital value proposition going forward.
Mark Woolnough is the head of third party distribution at ING DIRECT.
