Financial service executives believe digital is key to winning and retaining customers as well as growing revenue. They understand that reaching more profitable customers and greater market share will require better customer experiences (across products, services, and channels), smarter pricing (i.e., dynamic), and straight-through processing.
As a result, leaders from all financial sectors are investing in customer-facing mobile apps, big data, machine learning, and artificial intelligence. But most do so only tentatively, according to a recent Cognizant-sponsored Forbes Insights study of 100-plus North American financial executives.
The Survey Says …
Financial executives are decidedly on board with digital. Three out of four believe that digital innovations such as artificial intelligence, big data, and machine learning will lead to stronger growth and a competitive edge, respondents noted. Similarly, the study found that executives expect 25% of future revenues to originate from customer experience improvements.
In the past, it’s worth noting that many financial services suffered from the silo effect of running stand-alone applications. But leaders seem to believe that prior experience along with advanced tools and processes — for example, the embrace of lean technology practices — will help their organizations overcome such pitfalls. Consequently, they anticipate significantly higher percentage growth over the next three years.
What’s more, executives are significantly more likely to consider a wide range of transformative tools now, including everything from predictive customer recommendations to dynamic pricing as customer needs arise. To achieve these objectives, leaders also appear to have increased confidence in today’s tools and transformation technologies.
Overall, a solid majority of respondents agree that investment in transformative technologies will pay off. But many have so far been slow to invest. For example, four out of five executives believe advanced mobile applications can deliver differentiating results, and yet only 35% say they’ve deployed applications. The same is true of big data, where 79% see the differentiating potential, but only 24% are fully deployed.
The Reticence & the Rub
Our survey revealed a number of potential roadblocks. For example, 43% of respondents say their companies prefer to be fast-followers due to the perceived high costs of being a first-mover. Others blame talent shortages and/or the inability to acquire the necessary funding for development. And while not expressly tested by the survey, dissatisfaction with legacy investments may also be a factor.
Regardless of the degree of any given implementation or the challenges incurred, most firms believe that transformative results will materialize quickly. For example, 60% of respondents believe that big data programs deliver results within a single year; 55% believe the same regarding mobile.
For other technologies, however, the belief is that transformative results will require time. Only 31% believe machine learning will pay off within a single year (over half believe it will require up to two years). Augmented reality and robo-advisory, too, are expected to require more than one year to reach fruition.
While respondents are confident of eventual returns, many are wary about the speed of the return, hence the lack of urgency.
The “Wait And See” Mistake
Whether they are leaders in technology investment or not, respondents recognize the competitive value of technology as well as the disruptive forces at play. They also recognize the potential of a wide range of customer-focused strategies that can improve business results. But this group is also hesitant to fully commit.
We believe financial service executives must delve into the risk/reward profiles inherent in today’s customer-focused technologies and move faster (not slower) in their pace of deployment. After all, first-mover advantage is real. And the payoffs will be as rapid as they are significant.
To learn more about the latest customer experience strategies, please read “Digitizing Financial Services” or visit our Banking and Financial Services section of our website. Contact Diana Buxton, Cognizant Banking & Financial Services’ Chief Marketing Officer, at Diana.Buxton@cognizant.com.