Published: Apr 14, 2022

five financial services trends that will lead in 2022

Since the COVID-19 pandemic started, the Financial Services industry has been pushed to accelerate even more their digital transformation. To survive and thrive in the future, Finance institutions need to embrace emerging technology and adapt to changing business models while keeping customers at the core of every strategy they put in place. With this in mind, we have identified five trends for the year ahead.

COVID has pushed most if not all, people to use a mobile device and embrace technology, like QR codes that have evolved from a mostly unused technology to an everyday tool for anything from contact tracing to restaurant table ordering, payments, ticketing, and many more.

They have adapted to the concept of mobile applications and now go to a company’s app for knowledge, engagement and support, ahead of going to their website or contact centre as the first point of contact. Customers now know what a good mobile app experience is like, and it is seamless, engaging and value-adding. According to the Australian Banking Association, more than 80% of Australians prefer to transfer money, pay bills or check account balances online, and more than one in three Australians with smartphones use a digital wallet.

FI's will need to continue evolving their mobile app offerings to allow customers to engage in their sales and service requirements seamlessly. This is the domain that digital-only FI's are leading in, and they will continue to push mainstream FI's to innovate and evolve their app offering. In Australia, Financial institutions have been well ahead of the game; however, are they keeping up? The road ahead is still log. It is an area that continues to grow and develop constantly. It will always require rethinking and relaunching new ideas focused on improving the customer experience and developing new business models.

Following the level of distrust created off the back of the Royal Commission, FI's throughout the COVID pandemic has started to earn back customers trust through actions like mortgage repayment holidays and business loan relief packages.

Coming out of the lockdown challenges we have all faced, FI's need to continue listening to and being there for their customers. The FI's that can continue to do this and resist the urge to go into full sales mode will continue to earn customer trust and retain customers, while those who push too hard will turn customers away.

It is still ok to push offers to customers; however, they need to be relevant, contextual and with a sense of understanding, rather than a hard sell. Personalisation, individualisation of client messages, and the realisation that not all consumers are the same are more critical than ever. Financial institutions must attempt to shift their focus from segments to people.

Since the launch of Open Banking in Australia last July 2020, banking customers have had more control of their data. It has forced banks to change their business practices, from increasing savings and reducing debt to providing a better, more personalised customer experience. There is still a great deal of work to be done. However, everything appears to be heading in the right direction, with the most successful banks in the future investing in creating genuine human ties with their customers.

For too long now, organisations have been creating data lakes and funnelling all their data into these lakes (or are they now swamps) with little additional business value/outcomes being created. Many executives are still looking at the same reports/analysis yet have spent millions of dollars on the underlying technology.

The time is now to put a business lens on the situation and create new insights to help engage with customers, make critical business decisions, and influence product design.

FI's who master this will be able to derive real-time insights, proactively respond to customer needs/actions and ultimately create greater engagement not only with customers but also internally across teams who learn to collaborate around data insights to solve real-world problems.

Entities need to invest in capabilities that enable them to truly leverage the power of data they own and achieve the level of empathy with customers that will become a critical asset for any Finance institution.

Automation of processes, straight-through processing and zero back offices have been talked about for a long time, yet the hype has not been delivered, and why is this?

Not every decision or action can be automated, and at the end of the day, there still remains a human element to some decisions and a customer at the other end.

Many companies who have automated processes have achieved initial successes yet not maintained in the long term because they automated what they had today rather than taking the opportunity to reimagine/re-engineer the process before embarking upon the automation journey.

Automation can deliver fantastic organisational and people benefits, yet it needs to be done in the right way. Don't automate what you have today. Instead, rethink/re-engineer and automate the future.

COVID created many stressors for FI's processes due to high volumes and people availability, which exposed weaknesses in the highly manual processes used by FI's. In order to react to the times, many process automation activities kicked off, yet the reimagining/re-engineering of processes fell to the wayside in the flurry of needing to catch up with a backlog.

Now is the time to create long-lasting benefits through automation by taking the time to think strategically around automation and the opportunity it can create.

To rebuild profitability, FI's who invest in process re-engineering powered by automation will create long-lasting shareholder value in addition to dramatically improving customer experience.

Where is the next wave of revenue growth going to come from for FI's? The hunt will be on, and it is not for lack of trying; instead, it comes down to organisational priorities and risk appetite.

Some banks, for example, are embracing banking as a service to create a new set of partnerships and, therefore, revenue sources. Partnerships with fintech are also being used to create mutual benefit. For example, we witnessed last year how NAB completed a fintech acquisition of 86 400 neobank through its UBank arm as part of its growth plan.

The past twelve months have proven that the public is eager to consume more modern financial products, and though at this point much of what we currently observe is experimental and highly risky, it certainly indicates that FSI's need to explore new and more modern products and play a more dynamic role. This represents an exciting opportunity for the industry to embrace change and stay close to customers' needs and demands.