In the fast-paced financial services market, you can either change or get left behind. Winds of change in member expectations, rising regulatory costs, and the roadblock stemming from legacy systems are the key challenges being faced by credit unions. Keeping pace with the changing member preferences and dynamic technology can be overwhelming. And far… Continue reading Building a future-proof credit union to pivot in a changing market
Month: September 2022
Customer experience is critical to any business. Many companies across the globe, often aren’t putting customers at the center of their ventures. Instead, they are using new technologies to create operational efficiencies and in turn, reduce costs.
But, when we think about how to approach customer experience and how to change it, first and foremost we need to have a clear view of what matters to the customers and what doesn’t. The recent economic downturn due to the severe health and financial shocks inflicted by the pandemic and the massive economic disruptions is forcing businesses to rethink the core competencies of customer experience.
The picture is not very different when it comes to the lending industry. Now, low rates are not enough for lending firms/ banks to attract clients or, more importantly, retain them. So, they must personalize their customer journey at all stages, and that includes every step from initial interaction to onboarding to loan origination and more.
How can businesses successfully transform their customer experience to get results?
Today’s tech-savvy customers expect to provide access to funds anytime, anywhere. Customers have no patience for hours of time-consuming and lengthy processes. Many lending firms are still supported by legacy back-end systems built several decades ago. These systems have resulted in inefficient manual and paper-based processes, significantly affecting the consumer experience.
Businesses can improve customer loyalty and fuel growth by offering services beyond traditional coverage and focusing on digitization. Digitization fulfills the customers’ need for convenience, at the same time offering lending firms many new opportunities for growth, both top line, and bottom line.
Research shows that 35% of business executives claim that digital transformation helps them to better meet customer expectations and improve operational efficiency (40%), and38% of executives plan to invest more in technology to make it their competitive advantage.
Here are 4 steps in which digital transformation needs to happen to impact the customer journey in a positive way.
Define digital strategy: The business world is face-paced due to rapidly changing technologies and innovations. Even established companies are being disrupted every year by evolving and advancing technologies. Companies need a plan that not only outlines which technologies need to be adopted but also protection from digital disruption. That’s why understanding your core systems and processes to identify opportunities is critical before harnessing the potential of digital transformation.
Re-imagine customer journey: With customers gaining control over the way companies deliver experiences, it’s time to build new experiences that meet their demands. Businesses looking to improve customer experience during the first interaction should consider collecting data and documents in digital format (digital onboarding)
Omnichannel strategy: Customer expectations are changing rapidly, and they expect to be able to transact digitally on any device and the experience to be connected across all channels. Implementing an effective omnichannel strategy is a powerful weapon for businesses to win customers who demand convenience and simplicity irrespective of the kind of electronic devices or physical channels they use. Firms need to introduce a single platform that manages most (if not all) of the channels
Personalization: Today’s customers actively look for relevant inputs that might either improve their financial health or help them make smarter decisions, causing wellness programs for finance and financial management tools to increase in popularity. This has led to the integration of data sources to reduce documentation, personalize pricing, and make the overall process experience more effective.
In fact, lenders are now using digital tools to unlock varied forms of customer interactions and services previously not accessible to borrowers. Customer data, combined with machine learning, helps personalize the offerings and delivers effective customer-centric communication at the right time.
Top benefits of adopting digital mode
a. Improve operational efficiency
b. Meet changing customer expectations
c. Improve product quality
d. Increase design reuse
e. Reduce product development cost
f. Introduce new revenue streams
Digitization isn’t just doing the same thing in a better way, but rather creating something new. It implies an end-to-end process of developing and delivering data-driven financial products that are applied for, disbursed, and managed through the digital channel.
The new, digitally conscious customer
Truly understanding customer needs may help firms improve not only the buying experience but also their bottom line. In an environment that becomes increasingly globally competitive, service quality is an important measure of customer satisfaction, which ultimately leads to customer loyalty. Today’s customer has zillions of alternatives, and bad customer experiences will certainly make him switch to better avenues to serve his needs.
Hence, retaining your loyal customers and attracting new customers can only be possible by providing seamless and personalized experiences, and making them a top priority every time. The need for an intuitive, frictionless digital borrower experience is increasingly becoming the key to lenders’ success.
Through digitization, you can potentially expand your business, likely increase the number of customers who will stay with you, and help ensure your business is profitable long-term.
Have you started digital transformation yet?
Find out how Insight Consultants can help you in your digital transformation journey by Contacting Us
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The world is staring at an economic downturn due to the severe health and financial shocks inflicted by the pandemic and the massive economic disruptions triggering the Russia-Ukraine war. The current economic scenario has the potential to send some FinTech firms into hypergrowth and others into ruin. Global inflation is continuing to rise, but what does this mean for FinTechs?
Traversing through an inflation
Several countries are now going through what the experts call – stagflation, which is a mix of low growth and high inflation. It can be a mixed bag for fintech companies as they are involved in different activities like lending money, buying equipment, and more. The reality is no one exactly knows how to navigate a modern inflationary environment.
Inflation effect on fintech
Decreased confidence from investors: Fintech companies are ever reliant on investors to grow and expand their businesses. Unfortunately, the risk of inflation will call for bigger demands on investment returns and lower company profit.
Increased borrowing from fintech: With rising costs due to inflation, fintech companies remain essential in providing loan services to small businesses and individuals
Increased spending on equipment: Fintech has been essential in storing and moving money through the technologies and/or infrastructures they develop. Due to current events, however, profits from these services have been affected.
By focusing on fundamentals and drawing the right balance between being conservative and bold, fintech players can cushion the impacts of inflation.
Strategic preparedness to face the storm
Inflation in 2022 has the potential to send a few fintech’s into hypergrowth and others into ruin. Interest rate hikes and the end of quantitative easing are inevitable, as the Federal Reserve has signaled, to combat a 40-year high in inflation. Firms need to Implement a strategy that works to address different economic landscapes. Inflation could lay waste to many fintech’s in 2022 unless they act now.
Moves Fintech firms need to make to prepare for the possible coming storm
Do more than just provide a service: Help your customers achieve positive financial outcomes that outweigh better interest rates. Leveraging personalization, automation, and predictive analytics to help customers be more financially successful will give your firm a competitive advantage than other competing banks and fintech’s. Shortcutting the laborious processes of opening accounts or applying for loans is also a huge selling point.
To be cautious and invest in long-term fraud control measures: An economic downturn invariably leads to an increase in NPAs. With a jump in the number of defaulters, fraudulent transactions and suspicious activities become prevalent. Investment in long-term fraud control measures is a must during an inflation.
Improve pricing practices: Companies must adopt more dynamic pricing practices. Using AI understand the pricing opportunities. Use Artificial Intelligence to predict their customers’ willingness to pay and understand the gap to current prices.
Tap the un-banked sector: During an economic depression, large banks lend only to customers with high credit scores. Fintechs can aim at the underbanked community and get the lion’s market share.
Exploit the possibility of new acquisitions: Firms which are not adequately capitalized come under significant cash pressures and become available for a takeover. Exploiting the opportunity and acquiring those businesses can provide an inorganic boost to the top line and access to new proprietary data.
Communicate effectively to customers: Like any other change, price adjustments need a strong change management process enabled in order to achieve maximum effectiveness. A clear rationale for the price increase needs to be developed and the sales team needs to be appropriately enabled to ensure this rationale is communicated effectively.
Companies that have the right tools and systems in place to make informed decisions on time will outperform their competitors. Organizations that use AI have greater visibility into customer and product profitability, allowing them to analyze data more frequently and implement more targeted price increases. This enables them to device change more quickly, increasing their chances of successfully navigating inflationary periods.
There is both an ocean of opportunity for the industry and some challenges ahead. With the current crisis, the future and sustainability of fintech are reliant on its response, especially for smaller fintech firms that would have to push for continued innovation amid rising costs. While a recession is always perceived as unfortunate for the larger market, by addressing the challenges at hand and exploring newer possibilities, fintech players can do well for themselves and the economy.