Upping the ante.

PwC Digital ServicesConnected banking

For years, many customers have viewed their financial lives from afar. Digital technology has accentuated this, with visions of call centers and automated processing. It’s a problem, particularly for an industry that sells trust and relationships as core values.

What if digital enabled something more human? What if it helped us make better decisions, big and small? And not just periodically when we sit down with an advisor, but in real time?

From a customer’s perspective, buying a home involves much more than taking out a mortgage. Whether we’re going to school, starting a family, selecting a vacation locale or just deciding whether to purchase a new phone, we want information on our terms, without boundaries. But whom do we turn to for help?

At the same time, digital technology can strengthen relationships and let businesses see what their customers value most. And by working with others, firms can use this information to make things easier for customers, no matter what they’re buying, from research to payment and beyond.

Meet BenWe recently brought together a team to discuss the future of everyday advice and how it will affect the financial services industry. We looked at trends in technology and customer expectations. Then, we prepared a brief video to illustrate a new vision for the customer. Imagine: an always-on advisor that speaks your language, equipped with the right information to guide through life’s many financial decisions.

Some of the scenarios are already appearing in the market. Others are theoretical, but clearly realistic. Together they represent threats and opportunities for financial institutions (FIs) and their business partners.

Our perspectivesBanks are retooling to win in the digital era. Here’s how.Retail Banking 2020

Applying sharing economy concepts to existing business models.The sharing economy

Technology plays a key part in building customer experience.2015 US CEO Survey

Building trust and being relevant in a digital age.

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Let’s see how it all could work...

Analytics-driven lead generationPredictive analytics will give customers help they really need when they’re most receptive to hearing it

Many firms already group customers by demographics and activity level. But these groupings don’t always give enough information about what customers will want to buy, or when. New data and analytics techniques will help spot needs sooner. So instead of just focusing on standard life-stage events, like offering 529 plans to families with newborn children, they’ll be able to address the less obvious needs of each client.

Personal financial planning for everyonePlanning tools will make it possible for firms to provide advisory services that reach a new audience.

For years, customized service design has been limited to high-end customers. But technology now puts individualized offerings for a mass-market audience within reach. This goes beyond simplistic algorithms, budget tracking, and alerts. Customers will look for content and support tools to guide the decisions that are most important to them.

She’s finally paid off her student loans, and is ready to think about buying a house.

She wonders how much she’ll need for a down-payment.

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Multi-channel servicingCustomers will expect to be “known” seamlessly, across channels, in real-time.

Many of us switch across social, mobile, online, and physical channels daily. And customers are beginning to expect their financial institutions to keep pace. They want to prep a transaction in one location and finish it elsewhere. They have little patience for “I can’t see what you’re looking at.” Systems integration, analytics, training and other initiatives that have been on the wish list for years are now becoming must-haves.

Alternative paymentsNon-traditional competitors are becoming more common, and they’re extending their reach to new areas.

As customers experience new ways to pay, they may view financial institutions as less relevant to their lives, regardless of the technology used or how funds actually flow. Technology companies entering the fray may land some of the most profitable business and relationships. This isn’t just a matter of operational efficiency; many will earn revenue from data capture rather than fees and net interest margin. Businesses need to decide how they’ll position themselves to win in this new competitive environment.

Real-time budgeting and scenario analysisFinding value by sharing insights from analytical systems.

The same analytical techniques that help financial services firms understand their customers’ attitudes and preferences can be used to help customers directly. A growing number of customers use independent planning tools to help them save, analyze their spending, and make different choices. Some financial institutions already offer aggregation and financial tracking capabilities. But giving the consumer more analytical power, like the ability to analyze their spending in a broader context, will make the data much more useful.

She’ll transfer funds between accounts as part of a broader savings strategy.

As she makes different purchase decisions, she’ll also rethink the way she makes payments.

…and this will turn budgeting into a continuous process, rather than a once-a-year exception.

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Partner managementFinancial firms will extend their reach by turning more often to partners, from inside the industry and beyond.

Technology is making it possible to share and integrate data faster than ever. So the lines between financial firms and their partners, affiliates, and even competitors may blur even further. Successful firms will find ways to add value across an entire process – helping a customer buy a home, say, rather than simply providing a mortgage. This will require new thinking about risk management and branding, but it will also result in stickier, more meaningful customer relationships.

Distribution model evolutionDigital and physical teams will need to integrate their marketing and service capabilities more effectively.

Like many other service providers, financial firms have been gradually shifting away from large brick-and-mortar branches, experimenting with smaller storefronts, ATMs, mobile apps, and more. This affects more than operational decisions; it also raises questions about marketing strategy in a post-physical environment. In the future, successful financial institutions will need to engage with customers in meaningful ways, even if those customers never walk into a branch.

Remote data capture and enhanced mobile capabilitiesCustomers will expect to “bring their own devices” – and they’ll expect their financial providers to adapt.

Mobile check deposit was just the start. From smartphones to wearables, we now carry with us the ability to scan, videoconference, transcribe, and more. This offers new opportunities for financial institutions and others to integrate closely into their customers’ daily lives. Behind the scenes, many firms have some catching up to do – validating new, inbound information feeds, making them available across the service team, and integrating them with legacy systems designed with very different applications in mind. Consumers won’t care; they’ll just say “Figure it out. I just want it to work.”

She may think differently about the kinds of services that financial services firms provide, directly or through partners.

She won’t have to go to the branch to get financial advice; her living room will work too.

In fact, she’ll have her own mobile devices that will make it easier to complete transactions anywhere.

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GamificationHuman psychology will play a greater role in product and service design.

Not a video-gamer? Then you may not know that the global gaming market is now estimated at more than $100 billion, far bigger than Hollywood. And there’s a growing body of research that shows how game-design techniques can make a range of non-game activities more fun and engaging. Some companies are now using these cues when educating customers about products or designing incentives to change behaviors. Firms have also been experimenting with game techniques to grow brand awareness, boost account activation, and enhance retention.

Information Technology and Agile developmentMonthly release schedules and complicated approval processes will look as dated as “bankers’ hours.”

Batch processing. Waterfall development. These go hand-in-hand with large-scale, legacy systems that were developed decades ago and are often still limping along. In today’s dynamic market, Agile development is critical. Even companies that can’t shoulder large upgrades will need to chip away at the problem, phasing in changes without rewriting entire back-end systems. They’ll also look to data management and project governance to help them manage systems that are more complex than ever. Many are already introducing Agile methodologies beyond IT across the entire development process, including product design, process re-engineering, regulatory/compliance review, and more.

Firms may use a variety of techniques and incentives to get and keep her attention.

She won’t have to go to the branch to get financial advice; her living room will work too.

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Virtual to personal interactionsReflecting broad societal shifts, in-person meetings will be much less frequent, even in relationship-driven businesses.

Personal service once meant face-to-face meetings with an advisor at a branch office. But just as the role of branches is changing, the definition of “personal” may shift as well. For some, this will mean virtualization, simulating in-person interactions. This could allow smaller offices to offer capabilities of larger facilities, such as ATMs that allow video links to service representatives or sales consultants. It may extend to partners, using video kiosks in retail locations. Over time, it could even include using virtual avatars to handle routine transactional requests, freeing up employees to handle more personal, higher-value interactions.

Workforce managementAs customers change the way they interact with companies, customer-facing roles will be redefined. Required skills and compensation models may need to be changed, too.

Digital systems are able to handle more and more functions with ease. Some researchers even believe that as many as half of today’s jobs will be obsolete by 2035. Companies will need to think differently about their workforce: what job categories they need, the skills and experience they’ll want in new recruits, and the management skills to lead tomorrow’s staff. And they’ll need to rethink the way they hire and train these teams – because front-line workers at all levels will need to take a more holistic view of customers and their needs.

She may still meet with her advisor in person – but the way she thinks about ‘in-person’ will change.

And she may think differently about the kinds of help she wants from her advisor, too.

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Virtual authentication and cyber security More digital interactions will increase fraud exposure, which could lead to significant financial and reputational risks.

Trust is more complicated in a digital environment. And security in a mobile environment with partners and alliances is more difficult, too, as hackers get better at finding and exploiting weaknesses. These risks will increase with the “Internet of Things,” as networks expand. Some providers will pursue a strategy that turns security (i.e., trust) into a competitive advantage.

From cross-selling to needs matchingTomorrow’s financial services firms will be far less product-centric; the transition could be dramatic for their partners and their customers.

People like to buy, but they don’t like to be sold to. However, the financial industry has grown up with product-centric organization structures, pushing products to meet aggressive cross-selling goals. Technology will reshape how financial institutions interact with their customers. Successful firms will place customers at the center of their processes and even their organization structures. They’ll have to move beyond traditional selling practices to unlock the latent demand for financial services that always exists. Customers will want to feel as if their loyalty has been earned, and they’ll reward these institutions accordingly.

At the end of the process, she’ll complete the “paperwork,” and move on to the next project.

…and when her next financial need arises, she’ll have no reason to look elsewhere.

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From coffee to cars, user experiences impact our buying decisions. We can help you discover the ideal customer experience by determining what success looks like, innovating your business, and creating new value. Go beyond what you already know... before someone else does.

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