It's time to embrace the instant financial convenience trend

By Jerry Young
Jerry Young, CEO of ieDigital, argues that financial services providers must begin embracing the trend for instant financial convenience

In today’s age of financial convenience, it is no longer enough to meet consumers’ demands quickly. It is now essential to meet them instantly. 

Indeed, high-profile, and hugely influential consumer champions, such as money-saving guru Martin Lewis, are urging people to “ditch and switch” savings or current accounts in favour of more rewarding ones, often pointing them towards those accounts which favour the latest technology. This technology often enables customers to benefit from instant financial gratification. For example, most of the present highest-interest savings accounts (at the time of writing) can be opened in a matter of minutes using just an app or going online at the provider’s website. 

Welcome to the age of convenience. Financial services providers need to meet customers’ needs on their terms, and these forward-thinking companies are realising the necessity of artificial intelligence solutions, web self-service, mobile phone apps and online communities to make that happen.

Gone is the need to take hard-copy documents to a high-street branch and stand in a queue to get your identity verified before opening your account. Today, it is all done electronically and instantly. 

However, there are still some financial services providers who need to improve their digital customer service channels. Here we outline what they should do, or what they need to bear in mind, so that they too can benefit from this age of financial convenience. 

Digital maturity equates to business success

Some 18 months ago, ieDigital carried out its own analysis of statistics contained in the latest Building Society Association (BSA) handbook. Without singling out specific names, these numbers reveal it is those with a low digital maturity that are seeing a low increase in assets. Some even reported an overall decrease. 

Of course, we need to caveat this analysis. Various factors could be at play. We certainly do not know all the reasons behind fluctuating balance sheets, and there could be a whole host of reasons behind the scenes. However, on the face of it, the figures do show a direct pattern linking those with a good digital offering to much more robust financial figures.

The BSA itself recognises the importance of digital channels, stating on its website that there is a common agreement that modernisation of technology is mandatory to enable cost effectiveness and to ensure customer satisfaction.

Embracing a digital culture

Organisations are two-and-a-half times more likely to succeed with digital transformation if they focus on transforming their culture and building capabilities during the process, according to research by McKinsey

Indeed, a willingness to not only accept digital transformation, but to have digital transformation embedded in the very DNA, right at the heart of a firm, is arguably one of the biggest ways a firm will adopt cutting-edge digital customer-service channels. 

However, the available resources of small to mid-sized financial services organisations probably aren’t on the same scale as the firms McKinsey identified as digital transformation leaders. Whereas these huge corporate monoliths might be staffed by Chief Innovation Officers or Chief Digital Officers, when it comes to smaller players on the high street, or smaller-scale digital players, the crucial responsibility for digital innovation often falls on the CEO or COO themself, often battling for attention alongside the “day job” of simultaneously running the firm.

However, this should not stop a digital culture from permeating across the business. It is not too late for such businesses to incorporate a digital mindset. 

Developing a risk appetite

In such scenarios, leaders should learn to re-evaluate their approach to risk. 

Embracing a digital mindset requires leaders to encourage experimentation. A test and learn approach is essential for innovation to flourish. That requires a tolerance of failure as part of the learning process. Otherwise, employees who believe that they are monitored and rewarded for output will find it hard to engage in experiments, preferring the apparent safety of operating their current ‘machine’.

Over and beyond encouraging employee engagement, business leaders will naturally want to minimise the likelihood of failure. The temptation may be to revert to bloated requirements definitions and exhaustive process analysis. Such waterfall methodologies – although still common for slow-changing technologies such as core banking and ERP systems – are a poor fit for fast-changing customer experiences such as digital banking.

Developing an appetite for risk means developing fluency with agile development. Fast-paced, iterative development with weekly or biweekly demonstrations to all stakeholders minimises the risk of rework. But adapting to the need for continuous engagement, timely feedback, and fast decisions can be a cultural shock for those unaccustomed to agile development.

Just like a team sport, developing fluency with agile development requires match practice. No wonder, therefore, that organisations that invest in transforming their culture to embrace agile methods tend to be more successful at digital transformation.

It is these companies that will benefit the most from the age of convenience in financial services that is encroaching across all areas of financial services. 

Switch – but don't ditch

The age of convenience has never been so important when it comes to switching, particularly when it comes to end-of-life products, such as fixed-term mortgages – especially in today’s rocky economic climate. 

If a mortgage provider can provide a seamless experience when it comes to renewal time, they will arguably stand a much higher chance of retaining customers who appreciate a high level of customer service. Indeed, paying expensive commission to keep a conveyor-belt of short-term, brand-new fixed customers coming in is costing mortgage providers dearly – it is a huge overhead. As we all know, it is generally much more efficient and cost-effective to retain existing customers. 

The age of convenience is evident across the whole financial services sector, including motor finance. One of our own motor finance clients invested in its web functionality and launched a mobile app to introduce a much more sophisticated level of customer service. They reported that this equated to a huge upturn in customer satisfaction by 71%. By supplementing the motor dealership’s retail buying experience, the motor-finance provider was able to deliver a slick customer digital experience that meets the ever-growing demand for speed and convenience. 

And again, we return to our own research from the BSA handbook which indicate those societies with a low digital maturity are seeing a low increase in assets.

It is worth emphasising once again that the uber-convenience provided by mature digital customer service channels cannot be over-estimated. Indeed, research shows that some 45% of loans will be taken out in a non-financial context within five years, as consumers embrace the convenience of accessing the funding they need when, and where they need it. 

Conclusion

If lenders – be they banks, building societies, car finance providers or specialist lenders – do not provide a level of instant fulfilment, they risk being left far behind the competition. 

The fact is that this instant convenience is now intrinsically linked with the level of digital maturity that a firm can show. And, if the level of “digital culture” permeating through a financial institution is low, it is likely that the corresponding digital maturity will also be low. 

Whether a bank, building society, mortgage provider or car finance lender needs to merely tweak their digital channels, or perhaps they need to be introduced from a standing start, the digital culture of an organisation is paramount to digital success. 

Instant financial fulfilment is here to stay – and all financial institutions need to ensure they are in the best possible place to benefit from this mindset.

About the author

Jerry Young is CEO of ieDigital, which provides financial service organisations with the ability to transform their digital customer experience. He has held this role for five years, before which he had other senior roles at Fiserv, Oracle and Adeptra.

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