Business Transformation

Transformation of Financial Services: Shifting from Transactions to Creating Value.‍

Antti Nivala
Business Transformation

Transformation of Financial Services: Shifting from Transactions to Creating Value.‍

Antti Nivala
September 6, 2023

The financial sector is undergoing a profound transformation. The era of transactional banking has given way to a new pattern where the focus is on customer-centric digital sales through trusted relationships with customers who have high expectations for the services they engage with. In this blog, we will explore how financial institutions can utilize the best practices from ecommerce and create digital services that bring value for both customers and companies by prioritizing great usability and personalized user experience while offering reliability, simplicity, and security.

The Evolution of Financial Services

Financial services have come a long way since the days of traditional banking. As digitalization has changed the service industry and especially sales of the services, customers' expectations have shifted dramatically. Customers expect that services are available through digital channels without the need to visit bank branches. Some of the banks and financial services have taken digitalization a step further and offer services only through self-service channels. Customers also demand more than just transactions; they seek personalized services through digital channels that are easy to use, secure, and offer personalized services. The financial industry can benefit from the new expectations that are set for digital service experience by developing well-functioning services that will bring value for both users and companies. 

The Regulatory Tightrope Walk

In an era where phishing attempts and financial fraud have become increasingly sophisticated, financial industry regulations have responded with heightened vigilance. The imperative to safeguard customers from potential harm is unequivocal. A response is where strong customer authentication (SCA) enters the stage, by mandating multi-factor authentication for online transactions. However, while SCA is undeniably pivotal for fortifying data security, it introduces a layer of complexity that can pose challenges in delivering user-friendly digital services. When new services are developed they should be designed to have a minimal amount of friction without forgetting the security 

Usability: Putting the Customer First

Usability is the foundation upon which digital financial services are built. It's about making sure that customers can easily navigate through apps and websites to access the services they need. A user-friendly interface is not just a nice-to-have; it's a necessity. This is what customers are expecting from up-to-date digital services.

Well-functioning digital journey truly creates value for the customer and can serve a whole new group of users whereas dead-ends, confusing workflows, broken links, and inaccessible features will bring frustrated users to the doorsteps of your customer service.

For traditional players, this often means changes in the internal processes that were created in the era of manual workflows and therefore might not support frictionless digital services without changes.

Seamlessness: Connecting the Dots

Seamlessness is the glue that holds modern financial services together. Customers want to move seamlessly between different aspects of their financial lives, whether it's checking their balance, applying for credit, making payments, or investing. For financial institutions, this means providing a unified experience across various channels and devices throughout the services. 

Seamless user experience can be achieved by planning and building services that are not overlapping and using shared processes and components to ensure a unified look and feel throughout all digital services. 

Security and Reliability: The Bedrock of Trust

Customers place their faith in financial institutions to ensure that their financial transactions are executed flawlessly and that their sensitive data remains shielded from harm.

Reliability serves as the bedrock of this trust. Customers need to be confident that their financial dealings will unfold without a hitch. Downtime, errors, or system failures can swiftly erode this trust, making it imperative for financial institutions to commit to robust infrastructure, rigorous testing, and effective disaster recovery plans. Reliability isn't just a mere checkbox; it's a steadfast commitment to delivering peace of mind to the customer.

Equally important is security. In an industry where customers entrust financial institutions with their most sensitive information and assets, any breach of this trust can have catastrophic repercussions. To uphold security, financial institutions must deploy state-of-the-art encryption, multi-factor authentication, and formidable cybersecurity measures. Additionally, there's a shared responsibility to educate customers about best practices for safeguarding their accounts. Security transcends being merely a requirement; it's a collaborative commitment to protect what matters most in the world of finance: customer trust and financial well-being.

Simplicity: The currency of the future

Traditional banking services have often shielded customers from the complexities of their operations, relying on manual processes that aren't easily automated. To meet the demands of the digital age and ensure all essential services are readily available online, financial institutions must rethink their approach to process design and automation. The challenge lies in crafting processes for frequently used services that operate seamlessly without causing interruptions or necessitating in-person visits to a branch.

This endeavor isn't without its complexities, particularly when certain use cases still mandate authorization or signatures from multiple parties, such as co-signing a loan or opening accounts for minors. However, the successful execution of streamlined and efficient processes will make all the difference in the quest to provide customers with the simplicity they desire in their financial interactions.

Building Lasting Relationships

The transition from transactional to relationship-driven services requires a shift in mindset. It's not just about completing a single service through a certain digital channel, it's about having the most used services available digitally when and where the customer needs them. This involves understanding customers' needs, offering personalized solutions, and being able to bring value to the customers at every stage of their financial journey. Financial institutions can achieve this by leveraging data analytics, customer feedback, and proactive communication. The goal is to become a trusted financial partner, not just one of many service providers.

The Road Ahead: Staying Ahead of the Curve

In conclusion, the financial sector is evolving rapidly, and success hinges on the ability to create digital services that prioritize great usability, seamlessness between different digital channels, reliability, simplicity, and security. Those institutions that embrace this shift and put the customer at the center of their strategy will thrive in this new landscape. It's a journey that requires continuous innovation, adaptation, and a deep commitment to building and maintaining trust. The future of financial services is about more than just transactions; it's about building trusted relationships that stand the test of time.

Ready to transform your financial services and build lasting customer relationships? Contact us today to learn how our experience and can help you navigate the evolving world of financial services.