With the next generation of customers, Gen Z, reaching adulthood and becoming both more financially savvy and economically influential, the pressure on financial services firms to accelerate their digital transformation programmes will only intensify. Ross Kittlety, Head of CCM at Paragon Customer Communications (PCC), delves deeper and explores the dangers of overambition.
Target Group spoke to 1,000 consumers from across the UK, and from different generations, about what is most important to them when looking for financial products and providers. The research shows that like Millennials before them, Gen Z consumers are looking for an omnichannel, digital-first experience that lets them pick and choose how and when they access and manage their accounts and products, and which empowers them to take charge of their money.
While the temptation for many firms has been to embark on complex digital transformation programmes to better cater to new generations of customers, this must be balanced with delivering value to these customers today and not just focussing on tomorrow.
Many financial services firms have been pursuing digital transformation for some time, however, Forrester research suggests that many others are failing to keep up with changing consumer requirements.
In its recent report, ‘The State of Digital Banking, 2021’, it found that while a handful of leading banks are effectively pushing ahead with their digital transformation, others are still struggling to create and execute a coherent transformation strategy. Even those that are succeeding with a digital-first strategy are finding that the delivery of a seamless experience between channels and contact points remains elusive.
What are the barriers to successful digital transformation?
While many financial services firms are coming up short in digital transformation efforts, this generally isn’t through lack of effort.
When asked to describe their digital transformation status, 40% of the firms in Forrester’s survey said they were currently undergoing a technology overhaul, while 26% said they were always in a state of transformation, with only 19% admitting they’ve yet to turn plans into action.
So, what’s amiss? A lack of clear scope and pre-existing systems, research suggests. The top challenge among those firms executing digital transformation, cited by 24% of respondents, was ‘technology strategy’, followed by security (24%) and legacy systems (20%).
The scale of the transformation required at many organisations poses a challenge in itself. Northern Trust, for example, is investing approximately $2.5 billion in technology over rolling three-year periods. As it embarks on the process, the firm’s Global Head of Product & Client Solutions has reported finding a “huge amount of fairly inefficient [processes], especially when you compare it to our personal lives where we are logging into apps and moving money instantaneously – we get about 20,000 faxes a month on trade instructions.”
This is a challenge seen across the industry, where digital transformation programmes threaten to become so complicated and unwieldy that they turn into vastly expensive multi-year projects that deliver little in terms of customer benefits, and risk merely delivering the next legacy headache. In many cases, the industry has seen digital transformation programmes being abandoned after turning into money pits that delivered little.
In this worst-case scenario, an overambitious digital transformation plan may result in damaging customer communications by promising a lot, delivering little, and diverting resources away from areas that bring real customer value.
But what’s the solution, and how can digital transformation be designed to deliver benefits in the short term, while ensuring the long-term digital restructuring required to future-proof an organisation?
Pragmatic delivery of transformation
Standing still is clearly not an option. Done correctly, digital transformation can offer the single customer view that’s essential for driving efficiencies while delivering an improved customer experience.
The power of digital transformation naturally extends to communications, where the combined power of integrating technology and communication expertise can enable everything, from the removal of friction points and simplification of the customer journey to enabling and responding to real-time customer behaviour.
The ability to test and refine customer communications and segment audiences accordingly is key. Crucially, it is also possible to deliver these capabilities without embarking on an all-consuming digital transformation drive.
OnePlatform is a complete, fully integrated suite of communication solutions that can immediately and seamlessly deliver many of the benefits of a wider digital transformation.
Quick to implement, and able to fully integrate with legacy systems, OnePlatform can offer a pragmatic delivery of transformation, operating as a tactical solution to deliver immediate customer communication improvements while a wider digital transformation is undertaken in the background.