A number of financial services challenges are overwhelming financial and retail industries in 2022.
After the COVID-19 pandemic forced the world to limit face-to-face contact, businesses were urged to escalate their digital transformation efforts. This came with a myriad of hurdles such as a rise in data breaches and privacy concerns, coupled with progressive regulatory and compliance requirements. As if that weren’t enough, customer demands continue to evolve as consumers seek more convenient and personalized services1. The dominoes just seem to keep falling for these financial services challenges.
With the threat of recession looming, organizations are forced to rethink their strategies and investments. As daunting as everything may sound, the problems of the financial services sector aren’t unsolvable; far from it, as it turns out.
There are notable industry financial services challenges to highlight, along with some opportunities and solutions that, if implemented, could radically change an organization’s direction.
Focusing on these financial services challenges today is not only key to maintaining an edge in an industry where competition is getting fiercer, but also serves as an opportunity to build up a thriving and resilient business model.
Evolving customer expectations will always be part of the challenges faced by the financial services sector, but it’s important to note that ever-changing customer demographics is the key driver to these heightened expectations. With each new generation of customers comes a more innate understanding of technology, and, as a result, an increased expectation of digitized experiences.
Research shows that millennials lead the way in adoption of mobile banking (47%), however, they are also the fastest to jump ship due to frustrating user experience. One of those experiences most likely to create that added friction is in the KYC realm. Processes and outdated procedures for verifying identification, and a handful of necessary reporting fields used to take days to complete; for the user base of today’s “instant” generation, that’s no longer palatable.
Based on this trend, financial companies need to anticipate future generations to be even more attuned to technology and therefore more expectant of omnichannel services.
The majority of an organization’s revenue typically comes from repeat business. But as customer demands increase, customer retention rates become even more of a challenge. According to a report from Gartner, 69% of senior leaders view the role of customer service to drive retention and loyalty is more important now than it was years ago.
A single transaction has the potential to create a lasting impression on how the customer identifies with the brand or retailer. A study on the impact of customer service on customer lifetime value shows that 97% of respondents stopped buying from a company after experiencing poor interaction with customer support.
Since the majority of a business’ revenue comes from repeat buyers, companies should definitely consider maintaining customer loyalty as one of the key financial services challenges to focus on.
Competition isn’t something new in the list of financial services industry challenges. What concerns many financial institutions today is the rapid growth of FinTech startups.
In a PwC Global FinTech Survey, respondents were concerned that a quarter of their business, or more, could be at risk of losing to FinTech companies within five years. The threat FinTech startups pose is forcing financial institutions to seek partnerships and/or acquisition opportunities as a stop-gap measure.
Meanwhile, organizations will want to learn from FinTechs that owe their success to providing simplified and intuitive customer experiences. Finding ways to exceed customer expectations and stand out from the competition are one of the key financial services industry challenges to focus on.
One of the major problems of financial services sector concerns data privacy and cybersecurity. According to an annual survey by Allianz Risk Barometer, cybersecurity incidents maintains its position as the top risk for financial services companies.
Financial services deal with sensitive and personal data, making them a prime target for cybercriminals. As employees continue to shift to remote work, millions of finance workers are handling confidential financial documents in less secure home environments, increasing their vulnerability to cyberattackers.
Technology is key to solving the many challenges faced by financial services sector so it might be surprising to hear that it’s also posing some valid concerns among industry leaders. In another PwC survey, 70% of the surveyed CEOs said the speed of change in technology was concerning.
From artificial intelligence (AI)-powered wearables that monitor a person’s vital stats to self-driving cars, technology has become fully ingrained in our culture. Soon enough, there won’t be any room left for manual processes or systems and those who do not embrace digital transformation will be ultimately left behind.
Regulatory compliance is more important than ever in 2022. Ever since organizations emerged from the global pandemic, regulatory enforcement has become even stricter across industries.
Organizations must anticipate regulatory compliance requirements and policies to continue to heighten in the future. This is why maintaining regulatory compliance remains as one of the major problems of financial services sector today.
Compliance can significantly strain resources as it is often dependent on the organization’s ability to correlate data from disparate sources. The cost and complexities associated with compliance management are some of the more significant financial services challenges financial organizations face, urging them to be more structured and agile in order to become prepared for the unexpected.
The financial services challenges presented here can be addressed with innovative and holistic approaches. Taking advantage of these solutions could drastically improve business operations and outcomes.
Meeting customer demands can be made easier with AI training data services and risk management services. Implementing chatbots, virtual agents, and other augmented technologies have been proven a helpful way to increase customer engagement. According to studies, majority of consumers prefer virtual assistance when it comes to resolving issues in a timely manner.
Bots also have the ability to gather information from dialogue and understand its context through the recognition of emotional cues. This information can be utilized to quickly evaluate, escalate, and route complex issues to humans for resolution.
Customer service is a key competitive differentiator these days, which means that prioritizing robust customer experience management is a must.
Streamlining operations can lead to an increase in sales and CSAT scores. Even minor changes such as fine-tuning real-time support can drive great customer experience. It all comes down to understanding the customers’ sentiments with the brand and identifying the key areas customer service can improve on.
Organizations should know by now that having robust customer understanding is a vital approach to addressing the challenges faced by financial services sector.
Battling fraud, data breaches, and other cybersecurity threats feels more daunting as each year goes by. Leading organizations will want to take this as an opportunity to continuously improve on risk management and compliance solutions.
Technology is a critical component in creating a robust culture of compliance and risk measures. Standard fintech solutions such as streamlined identity verification workflows and automated due diligence are some of the most straightforward ways to address these financial services challenges.
From creating convenient and user-friendly customer experiences, to providing agile customer support, to creating safer financial spaces—no challenges faced by financial services sector are left unanswered with Us.
Here are some services that directly address the challenges faced by financial services sector.
Our job is to be a step ahead, always—ahead of cyberattackers, and ahead of ever-changing compliance requirements so you can continue with your operations smoothly. We have a number of proprietary solutions for both risk management and compliance that have enabled our partners to focus on growth and scale.