New technologies aren’t only transforming the banking industry, they’re also transforming regulation, customer expectations, and competition from non-financial entities – and this in turn is transforming the role of the financial services CMO. Technologies like artificial Intelligence (AI), big data, machine learning (ML), and open APIs are creating new areas of innovation – as well as requiring ever-greater budget spends – so CMOs are increasingly highlighting the benefits of technology investments to the board. And with better customer insights, CMOs also advise on the importance of ensuring that customers’ needs are central to shaping the transformation roadmap.
In my opinion, four major interlinked technology trends that should be on any bank CMO’s radar when formulating long-term strategy are:
1. Focus on the customer lifecycle
As banking services become more commoditized, customer experience and customer convenience are key differentiators for banks. Generating business from existing clients is more cost-effective than acquiring new ones. Retaining them and creating a consistently positive experience takes system-wide thinking and an integrated service-delivery approach. Excellent customer journeys can increase revenues up to 15 percent and cut costs by up to 20 percent, according to McKinsey.
Finastra has developed the Customer Health Index (CHI), a KPI-based system to assess customer health across the customer lifecycle. This gives the business a much fuller picture than measuring customer satisfaction based on the post-sales experience, such as Net Promotor Score (NPS).
2. Using AI and predictive analytics for increased personalization
Applying AI and ML for data analytics and in customer services creates exponentially faster and more personalized customer experiences through significantly better insights – plus more automated back-end workflows. According to Accenture, businesses successfully applying AI could increase profitability by an average of 31% by 2035in the financial services industry.
For example, banks are now using an AI- and Natural Language Processing (NLP)-enabled applications to help consumers manage transactions, answer FAQs and apply for loans or other products. Chatbots are increasingly deployed in retail banking and robo advisors in investment advisory; speech and voice recognition and humanoids such as Hanson Robotics’ Sophia could replace ATMs in future.
Finastra is deeply engaged in advancing the use of AI in financial services. In capital markets, our ML-based Detect solution identifies trading errors, accelerates trade validation and meets regulatory requirements by understanding user patterns and behaviors. In retail banking and payments, Finastra is developing proofs of concept for the use of chatbots as AI gathers pace towards augmenting the human workforce in the banking industry, so customers receive 24×7 assistance, instant gratification and convenience – in a faster and more intuitive way.
3. Digital transformation and continuous innovation
In E&Y’s Global Banking Outlook 2018, 85% of banks cited Digital Transformation as a business priority this year. New digital technologies are being adopted across the entire banking value chain, with continuous innovation and investment in the ways these technologies are implemented and consumed internally to respond to insights from big data analytics. Our other digital innovations span mobile banking, chatbots, gamification, and personal finance management, creating a frictionless open banking experience that will delight banks’ customers and grow their businesses.
The bank of the future is platform-based with front-to-back digitalization – putting digital lipstick on customer-facing interfaces will not work.
4. Open banking, platform and data
Open banking, the move to platform and the path to digital maturity will enable greater cooperation, shared development costs, and richer stores of data. 90% of innovation will now come from outside the bank and the banking ecosystem will be more powerful than ever. An increasing focus on data protection and regulation, such as the EU’s General Data Protection Directive coming into force on 25 May, is an opportunity for firms to build stronger relationships with customers based on trust and transparency. By providing tailored content that meets their customers’ needs, they can demonstrate that customers’ personal information is used for their own benefit.
Organizations evolve in response to changing environments – and within them, the roles of their leaders must evolve too. As digital technologies enable new insights and innovative services to address customers’ increasingly-sophisticated desires and needs, the person with the skills to marry technical know-how with customer intelligence – and direct the organization’s response – is increasingly the CMO: the new superhero of the boardroom.
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