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It almost feels like the financial industry went to bed in March 2020 and woke up in 2030. Prior to the pandemic, financial institutions had been falling behind when it came to digital transformation, only increasing resources when absolutely necessary. But now, the pandemic has forced financial institutions to make great strides with their digital transformations; changes we didn’t expect to see for the next five or ten years.
Because of this 2021 is set to be an exciting year for banks as they finalise their digital transformation projects, enhance customer service and automate the detection and prevention of financial crime. Here are some of the biggest trends we expect will take shape this year.
Digital Acceleration
The current climate has forced banks to digitise further and faster. With the previous inhibitors removed, we’ll see increased budgets and aggressive timelines in order to achieve digitalisation goals. COVID-19 was a great teacher in many aspects, not least how it highlighted the importance of innovation. There is a clear imperative for financial institutions to leverage the use of digital technology to streamline client onboarding processes; many banks were left unable to effectively onboard new customers remotely at the onset of the pandemic. By digitalising processes, automating compliance and delivering frictionless digital client onboarding journeys, financial institutions will be well-equipped to respond to sudden change and operate more efficiently while satisfying regulators. We also expect to see regulators to continue encouraging financial institutions to utilize digital technology to maintain business continuity and more effectively mitigate risk.
Enhanced Customer Experience
The prevalence of disruptors such as Revolut, Starling, and N26 in the market, and the experience that customers have with services like Amazon and Expedia, leaves financial institutions behind the times in terms of customer experience. For financial institutions, the enhanced customer experience can be delivered through automation, human-less workflows, with every participant being a digital actor on any device at any time, and really accelerating the move to true digital enablement. This is something we expect will become a focus throughout 2021.
The challenge for financial institutions is to understand how they can digitalise their processes to make their client journeys more effective. In order to streamline onboarding and create a frictionless client journey, financial institutions need to invest in the right technology. A range of recent technological advancements – such as natural language processing (NLP), machine learning (ML), optical character recognition (OCR), and Identification and Verification (ID&V) technology – enable financial institutions to automate data collection from scanned documents, which can then be cross-referenced against other data sources internally and externally.
Technology and data are key to helping financial institutions achieve the goal of creating the frictionless client journey. After all, a good client experience is no longer just ‘nice to have.’ The churn of potential customers due to a poor experience can add up to $10 billion per year in losses, when you evaluate the lifetime value of a client.
Fast Track RegTech; Improve the Bottomline
Financial institutions need to ring fence regulatory compliance and ensure that the bank is safe, while also pushing the acceleration to digital. The aim should be to reduce the cost to serve, enabling greater competition with the new disrupters in the market. This can be achieved by using automation to build a leaner operating model and at the same time, bring the customer experience to the fore.
The world we live in now is more globally connected than ever. COVID-19 has been a huge wake-up call to the financial industry. And even though the pandemic has “kick-started” the industry in terms of digitalisation, there is still more that needs to be done.
Credit: RegTech Insight
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