July 16, 2019 ON24
The finance industry, one of the main contributors to the global economy, has seen more disruption from digital innovators and startups in the last few years than ever before. Incumbents face significant challenges as new players enter the market, unique operating models emerge and technology redefines product and service delivery.
Sentiment among financial services firms continues to deteriorate in the face of a challenging economic and political climate. Building a successful brand in an era of fierce and unprecedented competition is an onerous undertaking and requires extensive investment and commitment. In Europe alone, nearly a fifth (17%) of players that entered the banking market over the last 13 years have captured one third of revenue growth.
Digital Expectations for Financial Services
Organizations are also racing to meet expectations that haven’t even been shaped by their close competitors, but by best-in-class companies operating in other sectors. The appetite for instant, always-on experiences transcends sector boundaries and is set to significantly impact the finance industry. Adding value while maintaining utility and security – all while complying with a complex regulatory burden – is a balancing act that organizations will need to excel at in the coming years.
An inherent level of trust in financial services has traditionally contributed to above-average levels of loyalty in the industry but gaining trust is no longer an easy win. Unsurprisingly, trust in financial institutions is yet to recover following the economic crisis. At 57% among the general population, the industry remains least trusted in comparison to others. Additionally, over two-fifths (45%) of millennials don’t trust banks to be fair and honest. The ability to engender trust is a critical deliverable when it comes to customer experience design, so it’s something that finance organizations will need to work towards if they are to meet the challenges of the future.
Before diving into ON24’s benchmark data, let’s explore some of the challenges the finance sector faces today and how organizations can turn them to their advantage.
Digital Marketing for Financial Services Need an Engagement Upgrade
Historically, financial institutions haven’t offered much in the way of differentiation. This is set to change as digital continues to disrupt their relationship with clients. Both wholesale and retail financial users are now experience-centered, have high expectations and low loyalty, and demand instant, easy access to financial services.
As fintech players are changing the rules of the game by focusing on cutting-edge services powered by data and technology, providing a differentiated customer experience has moved to the top of the incumbents’ priority list. Balancing transparency and security without impairing the customer experience continues to be a major theme in the industry, but regulatory constraints limit the speed of innovation. For many organizations, selling products through multiple intermediaries, such as financial advisors, brokers or insurance agents, further compounds the issue.
While average retention rates in the banking, financial services and insurance sectors are relatively high, ranging from 75% to 83%, it doesn’t mean that continued investment in engagement strategies and tactics is less important. Developing innovative services that tap into the latest technologies (explored in more detail in the next section), forming strategic partnerships and connecting with customers on an aspirational rather than rational level are just some of the ways organizations can build trust and deliver positive experiences.
Finance Gets Digital, but Doesn’t Act On Digital
The vast majority (87%) of banking executives claim that the combination of customization and real-time delivery will underpin future competitive advantage, only slightly behind insurance executives at 90%. However, the gap behind perception and execution is large: only 38% of organizations in the banking sector are prioritizing a customized approach to delivering products and services and a mere 9% are prioritizing on-demand delivery.
With fintech and insurtech disruption at the core of this journey to customer centricity, the spotlight has gradually shifted from fierce competition to mutually beneficial partnerships and collaborative innovation. As customer demands continue to grow and catering to all their needs is increasingly difficult, new entrants and established players have come to see the value of working together. Opening API platforms to third parties unlocks value from data, enables organizations to enhance their value proposition with exclusive or premium features, and accelerate speed to market.
In order to respond to the ever-changing client needs and create points of differentiation, finance organizations need to think outside the box, import best practices from other industries and form strategic partnerships that enable them to add value while retaining utility.
Discover how professionals in the financial services industry can provide a better digital experience with ON24’s Webinar Benchmarks Report: Financial Services Trends.