The Financial Services industry was already undergoing significant digital transformation before 2020. However, the Covid-19 pandemic highlighted and accelerated the need to implement much-needed improvements in customer experience, support the digital-first customer, improve identity and authentication processes, and create new ways to serve customers better. As we head into 2021, these themes will continue to dominate the financial services landscape.
A focus on customer experience, one of the top trends in 2020, will continue to occupy the attention of financial services, particularly when it comes to digital experiences. Specifically, “removing friction from the customer journey,” the leading 2020 trend for the retail banking industry according to The Financial Brand, should continue to be the highest priority in 2021 for both banks and other financial services enterprises.
More consumers are shifting to transacting digitally than ever before. At the same time, consumer expectations have increased. For example, consumers expect to perform all manner of services via their preferred digital channels. They want to complete these services quickly, with the fewest steps, clicks, and keystrokes. In any industry served digitally, organizations need to meet consumer expectations, or the consumer will abandon the activity or transaction.
According to Adobe’s 2020 Digital Transformations report, “those organizations winning the CX battle are the most likely to be successful. The evidence is becoming overwhelming. Almost one in four (23%) C-suite respondents rank CX optimization as the foremost opportunity for 2020.”
While digital experiences have been used most often by specific demographics, such as Millennials, in the past, the preference for digital-first increasingly applies to all consumers. Companies now need to enhance experiences even further to ensure consumers are comfortable performing tasks online and feel secure. Digital onboarding, payments, and other transactions need to evolve their security practices to use more passive authentication techniques. Such techniques include:
Servicing customers successfully involves a wide range of activities, each potentially with its own sets of challenges. The inability to service customers efficiently, whether via online, mobile, or call center channels, creates a negative customer experience, customer complaints, reputational damage, and increased operating costs. With more customers unable to visit branches and all activities performed remotely, customer service challenges will continue in 2021.
Call centers will continue to struggle in many areas with staggering costs and a negative impact on customers. One place that enterprises typically have difficulty with is IVR (interactive voice response) containment, where customers successfully perform self-service activities without leaving the IVR. Another opportunity is “Average handle time,” often referred to as AHT, which is the average duration of a call starting from initiation to call completion, which is often prolonged by manual authentication processes performed by an agent. Also, call centers will continue to be the channel that is most prone to the risk of fraud. The solution for the financial services industry lies in embracing more innovative identity and security methods.
Digital account servicing will also continue to be a challenge. Lack of information about a consumer, such as alternate email and phone numbers, creates challenges authenticating and servicing customers. For example, the inability to receive one-time passcodes due to outdated or incomplete contact information can “dead end” a customer, causing them to dial the call center or abandon a transaction. This overwhelming volume of call center activity can be costly for larger organizations due to massive operational overhead.
Losing a potential customer during the application process is one of the greatest threats to revenue. According to SalesCycle’s Remarketing Report, financial application abandonment rates averaged 75.7% across all channels. Specific to digital applications, a study by Signicat showed that nearly two-thirds of European consumers abandoned digital banking applications in 2020.
Consumers demonstrate their demand for frictionless application processes that operate seamlessly and in real-time by abandoning experiences involving cumbersome and lengthy application times.
Companies are looking to improve the velocity and efficiency of their consumer onboarding experiences while simultaneously preventing identity fraud at the front door. One way to accomplish this is by pre-filling consumer information on application forms securely.
Pre-fill techniques remove the customer burden of application data entry by populating applications with verified data and delivering authenticated digital identities to supercharge application velocity. Pre-filling customer information also mitigates identity fraud and reduces costly manual reviews. Pre-filled identities can be sourced and verified using phone identity information and other sources that create “bank-grade” data that meets regulatory requirements.
Pre-filling, by decreasing consumer abandonment, increases revenue. By boosting their pass rates for immediate approval of digital card or deposit applications, financial institutions can increase revenue by hundreds of millions of dollars. Also, verified data fetched from trusted sources reduces fraudulent onboarding, thereby reducing fraud management costs dramatically.
Consumers, out of necessity, have been trained to rely more on mobile apps for services. According to Payments Cards & Mobile in financial services in the U.S., for example, corresponding with the early days of the COVID-19 pandemic, the average weekly usage of finance apps grew 20%.
And consumers are indicating that they will continue to embrace digital channels even if the COVID crisis ends in 2021. J.D. Power’s recent survey asked consumers how they envisioned interacting with their banks or financial services providers after the COVID pandemic ends. 32% of consumers responded that they planned to use mobile banking more than they did pre-COVID, and another 5% said they planned to switch to a bank with better mobile capabilities.
Mobile channels will also naturally become the medium of choice as mobile connectivity itself continues to grow exponentially. In 2021, consumers and business users worldwide will continue to create new demands and mobile service expectations. As such, financial services need to prepare for a mobile-first customer. According to Cisco’s 2020 Annual Internet Report, by 2023, more than 70 percent of the global population (5.7 billion people) will have mobile connectivity (2G, 3G, 4G, or 5G). The prepaid customer segment, e.g., TracFone, also continues to grow and will be a segment that financial services companies need to include in their plans and find ways to serve them in all experiences.
Fortunately, for security purposes, mobile devices offer the ability to mitigate risk without creating friction. Phone-centric identity™ and phone intelligence technologies synthesize and analyze a robust set of phone, mobile, and other authoritative signals to deliver unparalleled identity insight for identity verification, identity authentication, and fraud prevention. The ability to create a trust score on a mobile device allows more good customers to transact while focusing on a rich set of data attributes to detect bad actors.
According to Forrester, 14% of U.S. online adults banked online for the first time due to the Covid-19 pandemic. Satisfaction with their experiences was high, which indicates that they will continue to embrace online usage. J.D. Power Financial Services Covid-19 Pulse Survey showed that 26% of consumers plan to use online banking more than they did pre-crisis.
Online investment platforms have also seen increased usage as new investors flood the stock market during the pandemic. As trading platforms such as Robinhood have made it simple and free to trade, stocks are trading at record numbers. This trend will likely continue in 2021 now that consumers have embraced these new platforms.
Banks and other financial services enterprises have responded to the increased digital consumer base by implementing plans to maintain resilience. According to the Deloitte Center for Financial Services Outlook Survey, one key area of focus is accelerating business services’ digital transformation as an operational priority. 48% of banks are already implementing these plans, with another 44% planning to implement such changes over the next 6-12 months.
Covid-19 has acted as a catalyst for digitization. Companies that have responded by investing in technology and rapidly improving customer experience are becoming industry leaders. Others are likely to see a decline in market share unless they similarly invest in new technologies and innovative identity verification & authentication processes to support the new digital consumer.
To learn more about how you can use modern identity authentication and verification technology to support the new digital consumer and enhance your customer experience, contact us.
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