Digital transformation in finance

Expert analysis: How can financial services transform itself based on analyst insights?

  • bijon mehta
    Bijon Mehta
  • Jun 30, 2020

Finances are a deeply personal, powerful influence in consumers’ lives. While COVID-19 has exposed vulnerabilities for financial service providers, it has also opened the door wide for rapid and meaningful evolution to better serve customers and build stronger institutions alike, now and well into the future.

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The economic crisis caused by COVID-19 is a massive wakeup call for financial services providers that haven’t digitized their customer engagement and communications capabilities.

Customers want more guidance and communications from their banks, wealth managers, financial planners, and insurers. Business continuity for employees and customers alike is at stake.

Learn how financial services can respond, adapt, and thrive, in light of COVID-19.

Reliable, personalized omnichannel customer engagement isn’t just a nice-to-have—it’s the basis of customer experience differentiation.

Transformations born out of response to COVID-19 should be built to last beyond the current crisis. But knowing where to start, especially for a highly regulated industry like financial services, can be overwhelming.

Below, we unpack recent insights from Forrester analysts who’ve assessed how the global pandemic will forever change how financial services––whether it be banks, insurance companies, or wealth management––interact with customers.

“The current level of resilience defines what a bank can do. If a bank hasn’t designed, built, or purchased its systems to be resilient and, thus, protect their availability and it is in a country with huge COVID-19 impact, it’s too late to start now... If any issue comes up that your systems cannot automatically resolve, you will need technology staff to resolve it.”

Creating a resilient, elastic organization

Organizational resilience is a company’s capacity to respond and adapt to disruptions and risks through maintaining business operations, protecting employees, and its reputation.

A crucial piece of resiliency is the ability to scale personalized communications across customer channels.

During this crisis and for unknown risks ahead, an effective business continuity plan needs elasticity, flexibility, and scalability of your communications and customer engagement infrastructure.

The abrupt onset of COVID-19 exposed how vulnerable businesses are if they don’t have an elastic, flexible infrastructure that can scale quickly. Financial services firms who rely on on-premise systems and in-person interactions as the basis of their business are especially vulnerable to disruptions and loss of revenue.

The communication platform as a service (CPaaS) is gaining momentum as a way to fully own the development and deployment of a business’ systems enhancements and avoid the limitations of another vendor’s roadmap. In fact, according to IDC, the worldwide communications platform-as-a-service (CPaaS) market is forecast to grow from $4.3 billion in 2019 to $17.7 billion in 2024.

CPaaS leverages cloud technology, letting financial services companies develop and embed customer engagement channels without needing to purchase purpose-built applications. CPaaS connects calls, texts, and other forms of communication using geographically-distributed data centers around the world. To integrate communications capabilities into existing business applications, financial services companies can use cloud-based application program interfaces (APIs) from CPaaS vendors for faster and easier implementation, rather than build from scratch.

CPaaS relies on APIs as communication building blocks that offer the greatest amount of flexibility to adapt as business needs and customer preferences change. The flexibility to experiment is key—it lets companies iterate and keep pace with consumers as their expectations evolve.

When compared to off-the-shelf software-as-a-service (SaaS) solutions, APIs offer greater flexibility and control. They’re the easiest and fastest way for companies to target specific moments in the customer journey, adding incremental updates—and value—to the customer experience. Financial services organizations can pick which APIs best fit their use case to build the precise solution needed to suit customers and business needs.

Transforming how your business communicates with customers requires more than a customer engagement platform alone, though. Today, implementing and connecting customer engagement software is fully intertwined with the question of how to deliver an incredible customer experience.

Get the guide for how to choose the CPaaS provider that’s right for you.

“As social distancing becomes a common tool in the fight against COVID-19, banks need to reshape and accelerate their digital roadmaps to make up for the off-limit channels—branches and possibly the contact center as well—extending digital sales to more complex products, boosting digital self-service, and promoting online payments should be top priorities.”

Enabling remote support

The need to shift to remote support has revealed some technological gaps for many financial services companies.

During the COVID-19 pandemic, consumers are increasingly turning to website or in-app chat (47.34 percent) to resolve issues. However, more than 25 percent of the time consumers are ‘dissatisfied’ or ‘very dissatisfied’ based on resolution time.

This isn’t surprising, considering that, prior to the global pandemic, a reported 70 percent of customers were using self-service channels during their resolution journey, but just 9 percent are resolved start-to-finish without switching to a live agent.

To improve efficiency without compromising quality, self-service strategies should prioritize reducing time to resolution by reducing customer effort––a measure that is40 percent more accurate at predicting customer loyalty than customer satisfaction.

A customer effort score (SEC) is determined by customers answering just one question, “Did the company make it easy for you to handle your issue?”

Ninety-six percent of customers with a high-effort interaction become more disloyal, compared to just 9 percent who have a low-effort experience.

Self-service is also the biggest opportunity to reduce costs. Low-effort experiences have been found to reduce costs by decreasing up to 40 percent of repeat calls, 50 percent of escalations and 54 percent of channel switching. In comparison to live channels, such as phone, live chat, and email, which cost an average of $8.01 per contact, self-service channels cost about $0.10 per contact.Overall, a low-effort interaction costs 37 percent less than a high-effort interaction.

Financial services companies that aren’t able or ready to fully replace their on-premise systems with a cloud-based platform can augment their existing customer service with AI-powered interactive voice response (IVR), or a phone tree, that intelligently routes calls to reduce handling time or give callers the option of receiving either a callback, switch to chat, or text, rather than wait in line.

Watch the webinar all about creating self-service customer experiences with IVRs and chabots.

Amid COVID-19, more than half of consumers plan to buy or increase their use of voice-enabled digital assistants (57 percent) and self-service apps (56 percent). This represents a huge opportunity for financial services to extend its support capabilities, as virtual customer assistants can reduce call, chat and/or email volume by up to 70 percent.

Unlike chatbots, conversational AI technology uses advanced algorithms to train itself and improve at predicting questions. It can complete tasks, including paying a bill, completing orders, and providing instructions to customers without channel switching. The use of voice assistants is set to triple over the next few years with 8 billion digital voice assistants in use by 2023, up from the 2.5 billion at the end of 2018.

Low-effort service doesn’t only reduce costs, it also boosts sales.Ninety-four percent of customers with low-effort interactions intend to repurchase compared with 4 percent of those experiencing high-effort. Overall, intelligent self-service puts customers at ease by reducing uncertainty in the resolution process.

Source:  IDC Worldwide Communications Platform-as-a-Service Forecast, 2020-2024, Doc #US46287520, May 2020

Twilio for financial services

Discover how a CPaaS solution can help your financial services organization future-proof its customer engagement.

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bijon mehta

Bijon Mehta

Bijon is the Global Head of Financial Services at Twilio. His industry expertise spans his 25 years of experience in financial technology, capital markets, corporate innovation, and digital product development.

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Bijon Mehta