Celent Roundtable: Exploring Digital in Financial Services

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12 April 2014
William Trout
If you get together a room full of bank and insurance executives and ask them to define the term ‘digital’, don’t be surprised if you get a lot of different answers. Some view digital in terms of devices, others think of delivery channels, a third group understands digital as a marketing tool. We surveyed the participants at our recent Digital Roundtable in New York and got all those definitions and more. What is incontestable is that digital, with its outsized impact on the customer experience, has become part and parcel of the front- or customer-facing end of the banking, investments and insurance businesses. Back-end processes that enable scale and automation, such as documentation and STP, are being lumped under the rather inglorious label of ‘e-business’. That raises the question: given that many customers are ahead of their financial institutions in terms of technology use and adoption, what are the requirements for a powerful customer experience? If digital is going to anchor the client-advisor relationship (or the financial institution to client relationship), what needs to be in place? One bank participant noted that digital offers must be ‘contextual’. An example of this might be mortgage offers prompted by a customer virtually touring a house for prospective purchase. Digital interactions become even more powerful when context is coupled with data. Presenter Tsukasa Makino of Tokio Fire and Nichido Marine insurance showed how his company used data to market special policies, such as one-day car insurance, to non-car owners, as well as medical insurance offers linked to the physical activity levels captured in clients' mobile devices. In the wealth management arena, evolving client characteristics are presenting new opportunities for remote servicing, including via video, chat and tablet. Time-starved and increasingly tech savvy clients, 20% of whom live more than 50 miles from their advisor, often prefer mobile delivery. In the same vein, firms need to step up efforts to develop real-time, device-neutral client reporting systems, while encouraging advisor use of social media for thought leadership and networking. Today, 98% of affluent investors choose not to use the same financial advisor as their parents, and social media is one of the first places they look for ideas and recommendations. It’s clear that the financial services industry has entered a new, more competitive era. From the mass market to the ultra-affluent, customers are increasingly collecting more data about themselves, and they are largely willing to share. Inspired by the example of non-financial firms such as Zappos, Amazon and the airlines, these customers are driving the most fundamental change in delivery that the industry has ever seen. They ask: As a flier, I can pull up real-time seat assignments on my phone; why can’t my bank let me do cool and convenient stuff, too?

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