Despite the unquestionable need for businesses in most sectors to undergo some level of digital transformations, it seems the financial services industry is one that’s ill-prepared.
According to a November 2016 study by Deloitte, while 90% of financial services firms strongly agreed that digital technologies disrupt their industry to a great or moderate extent, only 46% are adequately preparing for that disruption.
This finding is supported by a March 2017 report by eConsultancy, which revealed that while digital permeated the marketing activities of financial services firms last year, only 9% professed to being a digital-first organization.
So what digital transformation and digital marketing trends can we expect to see in the financial services industry as 2018 unfolds?
Here are our predictions:
1. More Mobile-First Initiatives
Study after study reveals how consumers today are primarily turning to their smartphones when they want to go about their business online. Whether it’s conducting an Internet search, checking their social profiles or even making some sort of purchase, mobile-first has definitely established itself as the new norm.
For banks and financial institutions, this presents a series of opportunities, perhaps the biggest of which is the development of intuitive mobile applications that enable customers to carry out a multitude of transactions.
While many banks already have functional mobile applications, the key in 2018 will be to implement even more value-add services and functionality, without increasing the login burden for end users. Financial institutions that can successfully introduce biometric login capabilities, without risking the security of their clients, will emerge as customer favorites in their industry.
2. The Importance Of Generation Z
When it comes to digital marketing, there’s always a lot of buzz about Millennials (Generation Y), and the financial services sector is no exception. However, smart financial marketers are keeping a very close eye on Centennials (Generation Z), who are now finishing college and entering the workforce.
These individuals will soon be looking to move out of the family home and setup on their own. Many will be looking to open new checking accounts, while others will be in search of financial assistance in the form of loans and credit cards.
This presents a significant opportunity for banks and financial institutions to provide these people with laser-targeted offerings and value-add services.
What’s really crucial for banks to remember, is Generation Z has never known a world without the Internet, without social media, without omni-channel experiences. Leveraging all of these will be pivotal if banks are going to make Generation Z their customers of tomorrow – which, let’s face it, they absolutely have to.
3. Increased Block Chain Utilization
So-called crypto currencies, like Bitcoin, are getting huge amounts of attention right now because of their decentralized nature and slightly mysterious background (we still don’t know who created Bitcoin).
Whether these highly-secure, decentralized payment options will disrupt the financial services industry to the point where banks have to change there strategic positioning, remains to be seen – but let’s face it, it is very unlikely.
However, the block chain technology that underpins many of them cannot be ignored forever by the traditional halls of finance.
It was no surprise, then, when Ripple – a Bitcoin rival – announced a partnership with Dallas-based money transfer giant MoneyGram. The collaboration will, according to the two companies, enable lower cost money transfers between friends and families.
Globally, an increasing number of banks are experimenting with block chain technology, realizing reduced operational costs and improved efficiency. It seems they have realized that crypto currencies aren’t just a fad, and a ‘if you can’t beat them, join them’ attitude could be a more fruitful approach to adopt.
4. Even More Focus On Security
One of the reasons why consumers (especially Generation Z) are so enamored with block chain technologies is the perceived sense of security they afford. And it’s a perception that isn’t without merit.
While there have been several high-profile cases of crypto currency exchanges being hacked, the actual underlying block chain technology that most crypto currencies are supported by is virtually unhackable.
The knock-on effect of this reality is that consumers now have a new benchmark when it comes to security and data breaches. The anonymous nature of crypto currencies massively reduces the chances of someone being the victim of identity theft, which is why these solutions are so attractive to consumers.
If traditional financial institutions want to remain relevant as this and subsequent years unfold, they will need to prove that their security measures are as good as, if not better, than the new, disruptive alternatives that are gaining traction in the marketplace.
5. A Rethink On Social Media
While businesses in other industries have been leveraging social media for years and engaging with their customers on the platforms they are most familiar with, financial institutions have been much slower in their adoption.
There’s always been a feeling that social media could harm the reputation of banks and that the value it brings is lacking compared to other mediums.
The truth, however, is that banks can no longer ignore these online behemoths. In a time when a single complaint can go viral in less than 24 hours, the importance of social media can no longer be ignored.
According to a February 2017 research study by the American Bankers Association (ABA), only a quarter of banks have been using social media for five years or more. Furthermore, around a quarter of banks have no plans to use social media for managing complaints, customer service, or recruiting – despite these being areas where other similar institutions are reporting notable success.
The bottom line is that while many banks and other financial institutions have been reluctant to open the social media floodgates for fear of reading negative posts about them, it’s much better to be part of the conversation and shape it to your advantage than simply ignoring it.
6. Artificial Intelligence & Machine Learning
Nearly every trend report you read that discusses the future of the financial services industry mentions Artificial Intelligence (AI). But don’t think AI isn’t already being used by some of the world’s largest financial institutions; quite the opposite.
For example, Swiss Bank UBS is now using robots on its trading floor to help boost the performance of its traders. The AI scans emails and executes transfers accordingly. A task that would normally take a person around 45 minutes to complete can be done in just two minutes by the AI, freeing the investment bankers up to call clients and add value in more tactile ways.
Other banks are using machine learning to analyze vast amounts of trade data and market conditions to develop trading strategies.
A recent TCS study found that 86% of business leaders in the banking and financial services sector are already using AI technology, and the remaining 14% will be doing so by 2020 at the latest.
7. Data-Driven Personalization
Amazon and Netflix have redefined how people shop online and consume video content. The personalized experiences they give their customers are second to none, offering recommendations at such a personal level, and this is one of the reasons why both companies have become so insanely successful.
In fact, consumers are actually crying out for more personalized financial experiences, similar to the ones they get with companies like Apple, Google, and Facebook. However, the banking industry often falls short of the mark when it comes to meeting personalization expectations.
Using data-driven insights, banks can offer more personalized experiences for their customers. In 2018, this will be essential; a reality highlighted by the fact that two-thirds of brands expect their personalization efforts to drive at least a 6% annual revenue lift, with those in the financial services industry anticipating increases of 10% or more.
Access to data, the ability to successfully mine it and secure it, will be central to everything that happens in the financial services industry going forward.
Conclusions
Despite being one of the oldest, most reserved industries, the financial services sector can no longer ignore the significant disruption that’s occurring in its space. Due to technologies advancement – and consumers comfort with it – the need to evolve and adopt a digital-first approach is alarmingly obvious.
The institutions that embrace this change and take advantage of new, innovative technologies and solutions will be the ones that thrive in the mobile-first ‘age of the customer’ we are living in.
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I’m a full-time freelance writer and Managing Editor at Creative Mindscape who is lucky enough to call the tropical paradise that is the Philippines my adopted home. In my spare time, I love to dabble in cryptocurrencies and play with my three young children. One’s a stressful, non-stop rollercoaster ride; the other is cryptocurrencies.