Building smarter banking with digital customer experience management

Building smarter banking with digital customer experience management

Digital CEM adoption in the Nordics: a progress report Introduction The impact of digitalisation has been profound in the financial services sector. In a short space of time, first web became one of the key points of contact between banks and their customers, and now the digital engagement is deepening through an even faster pace of delivering services via mobile. For consumers and businesses alike, the process of managing one s finances has been fundamentally transformed. Compared to firms in other industries, many traditional banks particularly in the Nordic countries have been fast to adopt digital channels and to make them an integral part of their business model. The space they ve moved into is a competitive one, however, having also paved the way for new, non-traditional financial services providers. Digitalisation is an opportunity for banks to strengthen their relationships with customers at every touch point, building a banking experience that s smarter, more efficient and delivers a better service for the end user and their everyday situations. And in those consumer situations, a bank is part of larger ecosystem with retailers and insurance companies alike to provide a customer experience and a service for the need. Enter digital customer experience management (CEM). Here at Tieto, we wanted to find out more about the maturity of digital CEM among banks and other financial services providers in the Nordic countries today. Working with Marketvisio, we conducted interviews with 98 decisionmakers in Finland, Sweden and Norway to gain insights into their digital projects, development priorities and pain-points. We found that while most respondents agreed on digital CEM s potential to improve customer loyalty and operational efficiency, there are still plenty of opportunities to make it part of day-to-day work. About the study Purpose of the study was to investigate Customer Experience Management (CEM) in Finance Industry in the Nordic region, focusing on the generic CEM maturity and development actions on digital CEM. 98 decision makers in Finance were interviewed in this quantative study within Finland, Sweden and Norway. Primare Role (Nordic) Executive management team member Business unit director or corresponding Team manager or corresponding Specialist Other % respondents, n = 98 Primare Function (Nordic) Corporate management or finance Development Marketing and Communications ICT, including ICT development Customer segments Front Office Back Office Risk Management Other

Digital channels are a must if we want to keep our customers happy. Key findings Almost all of the respondents in our survey recognised digital CEM to be an important development priority for their business. Asked why, 84 per cent cited the potential to improve customer loyalty, with no significant difference between countries. In Sweden and Finland respectively, 72 and 71 per cent of financial services providers also felt that digital CEM was the key to better operational efficiency. Norway was somewhat cooler towards this target, with only 53 per cent of respondents considering it important. Conversely, 59 per cent of Norwegian decision-makers expected digital CEM to help them win more customers, whereas the number was below half in the other two countries. Online as channel or touch point for sales and new growth is increasing, though the focus still seems to be on services targeting for loyalty and efficiency. One thing that was true of all of the countries, and that we also found in a concurrent survey on digital CEM in retail, was that there are opportunities for more systematic development of holistic digital CEM approach. The results indicate that the views on the roles of channels differ somewhat between top management and channels area directors. Nonetheless, many were supremely confident in their abilities: a quarter (25 per cent) of Swedish financial services providers, for instance, ranked themselves as innovators, while 44 per cent felt their firms were forerunners. Just 25 per cent used the term followers and six per cent laggards. However, when our survey results were mapped to a Gartner maturity model, Marketvisio gave the respondents a score of 3.3 out of five. As such, there are lot of opportunities before firms are fully empowered by digital CEM. Looking at the rest of our research, we established the following key differences between the three markets: Finnish respondents were focused on developing mobile services, as well as on tackling threats from new financial services providers. 43 per cent felt that digital CEM was a competitive must. In Sweden, respondents were planning to further personalise their services using analytics and better information-sharing between channels. The Norwegian market is focusing on growth, with respondents seeing digital CEM as an opportunity to build revenue from both existing and new customers. Mobile services, internet banking, social media and improved back-office automation all figured into their current projects or plans for the future.

Four key focus areas Smart banking industry concept The potential for digital CEM to revolutionise the financial services sector is huge and all-encompassing. Banks, insurers and pensions providers all have the scope to change the way they talk to and create wealth for their customers. Based on both the insights we gained from this survey and our proven track record in digital transformation for the financial services sector, Tieto believes that the industry s digital CEM challenges can be divided into four key focus areas. While many financial services providers have worked hard to make their services available via digital channels, only 16 per cent of respondents were active on social media. Proactive Mobile banking Digital branch 60% are developing new online services and mobile apps, but only 35% are aligning their branches with this digital ecosystem. 22% are planning to improve information sharing between different channels. Only 22 % of the responents were improving informationsharing internally and with partner and supplier networks. Finance App-Collection Intellent Banking Only 24 % were analysing behavioural patterns to predict customer needs, and just 12% were personalising their offerings based on data from multiple sources. An omnichannel model of banking In an age of online banking and mobile payments, the traditional brick-andmortar branch can seem like a lower priority for digital transformation. According to our survey results almost 60 per cent of respondents overall were working on new online services and mobile apps, 35 per cent were attempting to align their branches with this digital ecosystem. And 22 per cent planned to improve information-sharing between channels. This demonstrates the need for holistic CEM approach. As online and mobile channels cannibalise the traditional role of the branch, there is need to think how those premises can be transformed from cost centres into revenue machines, working smoothly together and complementing the online services. As much as digital service delivery helps banks to improve efficiency and customer satisfaction, face-to-face meetings are still a key source of sales revenue and an important centre of value creation. Digitalisation presents an opportunity for banks to change the role of the branch as a location-specific physical channel and orchestrate human assisted advisory with collaboration of technology via digital touch points. It also enables banks to centralise competences compared to having them distributed widely in each local branch, supporting the virtualisation of customer services organisations. Because financial services are so important to the general public, yet also often complex in nature, the number of a bank s customers who are willing to attend advisory sessions is typically far higher than in other industries. Smarter branches will allow more of these customers to be served, improving both sales and retention Digital CEM is a tool for our own development and evolution.

Better customer understanding Many industries today are applying the data they have collected to their sales and marketing efforts. The more personal information they have at their fingertips, the more they can find out about their customers and the more they can improve hit rates, i.e. customer engagement. And who has more data than the financial services sector? Some of the respondents in our survey were looking to collect and utilise customer insights to improve their services. Roughly a quarter (24 per cent) were analysing behavioural patterns to predict customer needs, while just 12 per cent were personalising their offerings based on data from multiple sources. This result combined with our experiences indicates that many banks are in the early stages of utilising the customer data they already have for better customer services and sales. Customers want simple and fast access to our services, and personalisation is how we can achieve this. The biggest hurdle here, beyond organisational barriers, is potentially the regulatory angle. A bank can t use personal information to deliver a targeted service without the customer s consent, which might be tough to obtain. If, however, that data is exchanged for a service that creates value for the customer, as well as a better hit rate for the bank, the proposition becomes a more attractive one. Think of how insurers are talking about using smartwatch data heart rate, blood pressure, calorie intake to determine premiums. This business model is a win-win, because healthy customers share their data and receive better premiums, while insurers reduce their exposure to risk. This could equally apply to other areas of financial services. If customers feel they re getting a better service in terms of advisory, for example - which helps them make the most of their money, they re more likely to share their personal information with a bank or other entity.

Delivering customer value is the most important way for us to differentiate ourselves from the competition. Co-creation of new applications It s not advisory alone that allows digitally empowered banks to play a more significant role in their customers finances than in the past. In time, digital channels might also be adapted to offer more sophisticated services that apply to nontransactional elements of the financial management process. Think of the difficulties currently encountered by banks small and medium-sized enterprise (SME) customers, whose transactional information might be required for dozens of different day-to-day tasks - everything from processing expenses forms to making long-term cash flow forecasts. There s a lot of work involved in getting this data together in the right place, at the right time. Banks have this information at their fingertips right now, so why not use digital channels to deliver apps created with a partner network that fulfil all of an SME customers financial management requirements? This area offers high untapped opportunity in the Nordic countries at present 22 per cent of the respondents in our survey said they were improving information-sharing internally and with partner and supplier networks, while the same figure were seeking new partners to extend their current services. Reaching customers everywhere Finally, while many financial services providers have worked hard to make their services available via digital channels, this remains an area where to focus more. Our survey, for instance, found that only 16 per cent of respondents were active on social media, even though consumers decisions are increasingly made based on information in uncontrolled channels. The experience we have gained with several Nordic banks indicates that, for example, mobility can be used more to engage the customer or to bring new services for the mobile situation the customer encounters. Today, mobile is mainly a new channel to introduce basic online banking services. Another example is the pensions area, where connecting customers in digital channels requires more attention. In the long run, financial services providers are generally under pressure to be more transparent, while an ageing population will, in time, become more inclined to scrutinise their financial arrangements for retirement. Here, the services from a bank or a pensions provider needs to build linkage to savings, for example, in banks or life insurances to get the full picture. Critically, we don t yet know what the future holds for financial services, but digitalisation has changed them forever. Firms now have at hand a huge opportunity to position themselves at the forefront of digital transformation and truly differentiate from the competition, to the benefit of their customers. Our customers perception of us is created in digital channels.

Discover more about digital CEM The statistics presented in this whitepaper were captured as part of a survey of 320 decision-makers in the Nordic retail and financial services sectors, carried out by Tieto and Marketvisio in June 2014. A full summary of the study can be found in another whitepaper, Digital Customer Experience Management in the Nordics. Here at Tieto, we believe that the future belongs to companies who put their customers at the centre of everything we do. We have a proven track record in the CEM sphere and are responsible for more than one world-first, including the first ever internet bank. Active in the Nordic countries since 1968, our industry, technological and local expertise is unmatched. However, we also believe that CEM is about business value, not only technology. With us as your digital CEM partner, you ll be able to take advantage of our in-depth knowledge, innovation ecosystem and experience in seamless integration with back-end systems. But we ll also work from vision to value, empowering you to step into the hearts and minds of your customers and transform your business accordingly. For examples of our work and further insights from our experts, visit our CEM website and Customer Experience Management group on LinkedIn. tieto.com /cem Sami Uski sami.uski@tieto.com