Since the banking crisis in 2008 there have been calls for a shake-up in the financial services sector. There was a widespread feeling that the odds were stacked against customers and those involved in creating the crisis had got away largely unscathed, with just a few high-profile casualties like Lehman Brothers. Wind forward almost 10 years and there is still a large amount of distrust and dislike of banks and, by association, the whole financial services sector.
While legislation to change the sector has been slow coming, developments in technology are happening thick and fast, which could act as the catalyst that could change the sector completely over the next five years.
Fintech has been a buzz word for the last few years, with dozens of new start-ups bringing out new platforms, ideas and ways of looking at the financial sector to challenge the old order. Multinationals, not wanting to be left behind, have also ploughed millions into these start-ups, recognising their potential. Firms like Schroders and Commerzbank have invested heavily, realising that there are huge benefits to be had from harnessing this new technology, providing customers with a quicker, more efficient service.
Insurtech – technology that is revolutionising the insurance sector – is the latest area to take off. In the US almost $4.5 billion has been invested in it in over the past two years. Companies like Lemonade and Guevara, which offer peer-to-peer insurance products are beginning to get noticed. Developments in other areas that speed up the processes like underwriting or claims are beginning to appear, with companies like RightIndem and Cuvva looking to challenge the way things have been done in the past and provide better solutions that are more customer-friendly.
At the moment, many of these innovations are aimed at consumers, but that is beginning to change. In the world of employee benefits for example, disruptors like Zenefits and Gusto are making their presence felt in the US and over in the UK, new propositions like Untangl or Pure Benefits are beginning to get noticed. These platforms offer simpler products, that are easy to understand and straightforward to purchase. This can all be done without the aid of a broker, threatening the traditional model and opening up the market to smaller employers, who are looking for cost-effective solutions.
So, what does this mean for the financial services sector and what lessons can other sectors learn from these experiences?
Move from passive to active service
Many of the solutions on offer allow customers to find the answers to their questions much quicker and easier. Rather than entering the hell of an automated phone service, where it can take seemingly forever to speak to an actual person, customers often find connecting to a company via social media resolves an issue in much less time and with much less pain. Sending a tweet or posting a comment brings it in to the public domain for all the world to see. Companies should embrace this opportunity to connect with their customers. It gives them a chance to catch a problem early, demonstrate they are listening and change perceptions – turning a negative into a positive. Demonstrating great customer service publicly in this way can have a significant effect on how other customers and potential customers view the company.
Innovations like Spixii, which provides intelligent online assistance to customers, asking questions to find out what their needs are in a chat format are on the horizon and will be available shortly. This will make buying insurance a much more friendly and interactive process. Similar chatbots are appearing in other industries like retail, and companies are seeing the value of using artificial intelligence in this way. They could change how companies set up their customer services functions in the future, reducing the number of employees they need on the phones. Looking at this technology now is vital for companies as their service offering could be very different in the next five years.
Tailoring becomes more effective
Through embracing analytics on all online platforms and taking the time and focus needed to understand them properly, companies can now find out so much more about their customers. From discovering what they are interested in to how they use the website and social media, it is now possible to build up a much more accurate picture of customer and prospective customer behaviour. With this information, it is possible to build up a much more effective customer relationship management programme based on actual behaviour, which means customers get more of the information they want and less irrelevant messages, enhancing their experience. Companies in all sectors should be looking at how they can use their data in this way, to better serve the customers they do have and to find new prospects more effectively.
From missing to meaningful
A long-standing issue in the financial services sector has been how to continue an ongoing dialogue with their customers who don’t interact with them on a regular basis. This is particularly true in the insurance sector. If a customer doesn’t have to claim, they may only get a yearly renewal reminder and in some cases, not even that. Embracing digital provides a solution to this. Creating online blogs that can be regularly updated with news, videos, infographic, research reports and a whole host of other things, enables companies to touch base with customers on a regular basis in a much more interactive and user-friendly way than a traditional newsletter. Customers can be alerted when new material is available and have the choice and flexibility to interact with the material at a time that suits them.
Technology is having a huge effect on all sectors, not just financial services. Digital is the way forward, but many leaders lack the confidence and knowledge to take advantage of it in their organisations. This is completely understandable as many started their working lives before the invention of email. What they need to realise is that they don’t need to have all the answers, but they need to know someone who does. Those that will thrive in the future will take the time to learn and invest in technology, building it into their businesses, with a view to continually evolving.