The Dawn of a New Financial Services Industry

Know your customers
The first step, not surprisingly, is to understand your customers. How can you better serve your customers if you do not know what their needs, preferences and perceptions of current experiences are? Successful companies have aligned their business processes around the customer experience by developing a comprehensive "voice of the customer" capability. This capability requires tools that integrate multiple sources of information about customers and provides timely and actionable insight.

Enhance service through effective customer intelligence.
Better use of customer information at the right touch points can dramatically enhance customer service. A diversified financial services company with a large presence in online banking is upgrading their customer call center experience by using search technology. The current process when a customer phones the call center to question a transaction is both time-consuming and inefficient. In the new system, the payee information will be matched against a master directory while the customer is still on the phone, thus increasing the likelihood of immediate problem resolution while simultaneously eliminating a number of labor-intensive intermediate steps. This raises customer satisfaction and reduces the bank’s cost to serve.

Innovate to provide value for your customers.
As your customers’ sophistication with technology grows, so do their expectations that their bank be able to apply technology in innovative ways to enhance their experience. While technology has increased the number of options available to customers and empowered them to loosen their ties to their financial services providers, it can also be an effective tool to strengthen relationships.

Institutional companies are developing more advanced client trading platforms which provide features such as risk modeling, scenario analysis and performance management reporting. Companies are also developing enhanced platforms to serve their customers by delivering essential information quickly and effectively. One such company is Reuters, whose fast-moving environment demands speed, performance and scalability. Reuters developed its 3000 Xtra trading platform to deliver these features within a highly resilient architecture. This system holds detailed information on five million derivatives and financial instruments and supports more than 300,000 updates per day. Even though Reuters subscribers and their systems frequently ask complex queries, some containing more than 200 search terms, Reuters has never found a single query that takes over one second to run. As Ray Tomkins, search architect at Reuters summarizes, "At Reuters, we are driving scalable retrieval of structured information to provide advanced search and navigation facilities for users of our premium desktop products. The core advantages of our solution are that it is reliable, versatile, and guarantees subsecond responses for all queries, regardless of complexity."

Increase your relevancy to your customers.
Consumers are increasingly strapped for time. "One size fits many" campaigns, such as mass mailings of credit card offers that are not well-targeted, have notoriously low up-take rates. Why? Because consumers are looking for those products and services that have meaning for them. These must align with their values and meet their needs and lifestyle. Consumers are looking for financial service providers who know who they are and provide true "service" to them by providing value. Show your customers that you understand them by providing relevant products at the right time.

To understand your customers, you rely on data on their profile, needs, preferences and transaction history. This information must be accurate and up-to-date in order to provide a faithful picture of your customer. However, poor data quality affects nearly all companies. In fact, in a recent TDWI survey, 83% of respondents listed data quality as their single largest issue. One industry study has even estimated the total cost to the US economy of data quality problems to be over $600 billion annually.

Recognizing this problem, a large bank is developing a strategy to enhance the quality of its data on customer transactions. It currently spends many millions of dollars annually to understand customer propensity to buy its products and services. With increased levels of data accuracy, it can better target its customers with the products and services that are most relevant to them. This increases both conversion rate and profitability, while simultaneously increasing customer satisfaction and building customer loyalty.

Provide personalized products and services.
Customers are seeking products and services that are highly relevant to them and match their needs and values. One key way relevance is achieved is through personalization. To succeed, banks need to provide personalized service across multiple touch points.

Reuters, in providing alerts to more than 300,000 subscribers, has allowed these customers to make these alerts highly relevant to them, as they track the stocks and other financial instruments that are of personal interest. In doing so, Reuters has both increased the stickiness of the service it provides and enhanced the relevancy of its service with personalization.

A New Dawn
Market challenges such as increasing competition, declining customer loyalty and growing customer expectations are changing the nature of the financial services industry. A defensive approach is no longer sufficient. Rising to the occasion by appealing to customers’ heightened expectations can turn challenge into opportunity for competitive advantage by raising the bar. But it will require a pervasive commitment to understanding your customers and to addressing their needs at the right time and in the right place, delivering superior value.

How will you address the disruptions in the market today and capitalize on the opportunities they present?