Here’s what banks, insurers and advisory firms need to know about optimizing IT — and operations — today.
The bank branch remains central, but its role is changing. Financial services legacy IT may finally be reaching end of life. Omnichannel customer connections are becoming table stakes. Here are six key trends shaping the financial services landscape.
Trend 1: Modernizing the Bank Branch
The number of branches is predicted to shrink by one-third by 2025.1 Yet less than one-fifth of banks say they will close branches, and nearly half expect their branch count to grow.2 But to keep the branch relevant, banks will need new strategies and technologies:
- Cardless and e-ATMs — Some banks are deploying cardless ATMs that customers can access with smartphones. Others are offering e-ATMs with services formerly provided by a teller.
- Digital signage — Digital signs and video walls market products and let customers open accounts, access online accounts, view transfers, pay bills, calculate loans and more.
- Video — Two-way video conferencing allows customers to interact with bank staff at kiosks and drive-through windows. Staff can be located onsite or remotely.
- Internet of Things (IoT) — IoT beacons recognize customer smartphones to track how customers consume services, and to deliver personalized messages and experiences.
- Mobile tools — Equipped with tablets, bank staff can assist customers and cross-sell products while remaining connected with core bank systems and customer relationship management tools.
Learn more about the branch of the future.
Trend 2: The Race to Legacy IT Migration
In a survey of banks and fintechs — the emerging technology-based rivals to traditional financial services providers — 75 percent agreed that legacy IT is a bank weakness.3 The problems are manifold:
- Increasing complexity of highly modified legacy systems.
- Loss of technical expertise as older staff retire.
- Inability to support new technology such as blockchain and cognitive computing.
- Increasing shortcomings in cybersecurity and compliance. (See infographic, “Financial Services and Cybersecurity.”)
Financial services companies must either integrate legacy systems with new digital platforms or migrate core systems to the cloud. Those that move to the cloud face key questions:
- Should we take a big-bang or modular approach?
- Should we move legacy applications to the cloud without replacing them?
- Should we start with easy wins, or with the most mission-critical systems?
- How will migration affect security, regulatory compliance and customer experience?
Further explore legacy IT migration.
Trend 3: Consumerization of Financial Services Technology
Consumers depend on their personal IT. They expect the same ease of technology use and access from their financial services company. (See infographic, “The Future of Fintech.”) In particular, they’re looking for value-added services, from in-context financial advice to real-time help finding discounted merchandise:
- Mobile technology — Savvy banks are meeting customer needs with apps that monitor spending, improve budgeting, promote saving, protect against overdrafts, track credit scores, compare credit-card features, help with mortgage research, enable loan applications and more.
- Chatbots and robo-advisers — Chatbots automate live chat to provide contextual responses to questions, recognize when a customer is having trouble and seamlessly hand off the conversation to a customer service representative. Robo-advisers offer personalized financial guidance on portfolio planning, asset allocation, risk assessment and more.
- Wearables — Wearables extend smartphone functionality to a more persistent and convenient device. They allow users to make payments, receive personalized promotions, view account balances, locate nearby ATMs and branches, and get real-time alerts.
- Actionable analytics and cognitive computing — Financial services companies will need to combine everything they know about customers with cognitive computing to automate the analysis of thousands of data points in near real time. So instead of simply offering a service, they can deliver the right service in the right place at the right time.
Find out more about the consumerization of financial services technology.
Trend 4: Embracing the Digital Workplace
Millennials now make up 34 percent of the U.S. workforce.4 And they’re leading the ranks of employees who expect consumer-grade ease of access, use and support in enterprise IT. In response, smart financial services companies are delivering a digital workplace through four key technologies:
- Mobile — Mobile devices let end users access the data and functionality they need, when and where they need it. An effective mobile strategy balances employee preferences for bring-your-own-device (BYOD) solutions with the need for effective security and support.
- Communication and collaboration — Collaboration and social media software allow employees to find internal expertise, create and share content, quickly assemble virtual project teams and contribute to an agile organization.
- Personal productivity — Personal productivity software increasingly resides in the cloud in the form of Google® G Suite® or Microsoft® Office 365TM. Combined with cloud-based data storage, this allows people to access and share content wherever they need it.
- Digital workplace hubs — Workers have more data and functionality in more places, with little direct integration or shared intelligence. Digital workplace hubs bring these tools together in a single wrapper.
Discover more about the digital workplace.
Trend 5: Institutionalizing Big Data
Traditional data sources offer a limited view of the market. Savvy financial services companies are combining this information with new streams, including:
- IoT — Internet-connected household items that trigger automatic purchases can create cardholder buying profiles for better fraud detection. Location services can enable real-time financing for shoppers of big-ticket items. In the branch, IoT beacons can help banks understand how customers consume services and give them a personalized experience.
- Social media — Financial services companies can apply sentiment analysis to social media interactions to understand customer perceptions. Banks can identify customers in the market for cars and present relevant offers. Insurers can factor in social media data in customer risk profiles.
- Employee data — Service desk data can provide invaluable insights into how successfully employees are using IT to get their jobs done. End-user data can help companies improve employee productivity and satisfaction while optimizing the use of IT.
Dive deeper into big data.
Trend 6: Leveraging Omnichannel Engagement
Nearly two-thirds of customers use four or more bank channels.5 Yet less than 10 percent of banks say they’re executing on an omnichannel strategy.6 (See infographic, “Omnichannel Banking: Many Paths, One Goal.”) Omnichannel banking starts with understanding and optimizing each channel:
- Branch — As customers use other channels for transactions, they’ll rely on the branch for complex processes. Branch technology can help. Mobile devices allow staff to serve customers flexibly. IoT solutions enable self-service kiosks that offer a personalized experience.
- ATM — ATMs can enable cash and check deposits, mini statements, bill payments, credit-card and express-loan applications, and personalized ads. But ATMs must be integrated into the omnichannel experience.
- Call center — Smart banks are leveraging the call center to improve digital self-service. Using video and screen sharing, reps can teach customers how to use internet or mobile touch points for future transactions — and cost savings.
- Internet — As consumers shift to mobile devices, banks must follow. That means optimizing your internet presence for mobile access and moving more information and services to mobile apps.
- Mobile — Savvy banks are expanding mobile offerings. One lets customers get ATM cash more quickly with a phone-generated code. Another offers a mobile chatbot with artificial intelligence (AI) and predictive analytics to help users manage transactions and make financial decisions.
Learn more about omnichannel banking.
1 “Say Goodbye to Your Neighborhood Bank Branch,” The Washington Post, April 2016
2 “The Need for Speed: 2016 Banking Industry Outlook Survey,” KPMG, 2016
3 “The Disruption of Banking,” The Economist Intelligence Unit, December 2015
4 “The Future of Banking: Growth of Innovative Banking Fintech Services,” Business Insider, December 2016
5 “Most Bank Customers Would Trade Personal Banking for Digital Banking,” Gallup, April 2015
6 “A Survey of Retail Banking Channel Systems in North America: Omnichannel Emerges,” Celent, February 2017
Business Insider® is a registered trademark of Business Insider, Inc. Celent® is a registered trademark of Oliver Wyman, Inc. The Economist Intelligence Unit® is a registered trademark of the Economist Newspaper Ltd. Gallup® is a registered trademark of Gallup, Inc. Google® and G Suite® are registered trademarks of Google, Inc. KPMG® is a registered trademark of KPMG Int’l. Microsoft® is a registered trademark and Office 365TM is a trademark of Microsoft Corporation. The Washington Post® is a registered trademark of WP Co. LLC.
All data cited in this article is used by permission.