How embracing the cloud turns threats into opportunities
Expectations around customer service have changed dramatically in recent years. Driven by round-the-clock access to services, apps, and tools across work and leisure, people have come to expect real-time, personalised experiences across any channel they choose. And it’s no different when it comes to financial services, with customers expecting the same seamless, responsive service while protecting their data and privacy at the same time.
The shift to accommodate these new customer expectations provides a unique set of challenges for financial services institutions (FSIs). They typically come from an environment driven by risk management, constrained by legacy systems and structures that place systems rather than customers at the centre.
It’s an environment that makes transformation extremely difficult, with more than half of Australian banks reporting to have failed to deliver on their transformation plans.
As a result, there is a growing gap between what customers expect and what FSIs can deliver. This has created significant challenges for the industry but also significant opportunities for FSIs that are willing to embrace a culture of experimentation and adaptability. If digital transformation is managed effectively, FSIs can leverage their established brand and customer base to gain a powerful competitive advantage.
Using data to build new paths to success. The key challenges FSIs need to overcome when meeting the new rules of customer service include:
Challenge #1
Providing a seamless experience
“FSIs are facing a customer experience revolution they’ve never seen before. The need to deliver easy, fast, and efficient digital experiences across every channel.”
Simon PoultonPartner - Google Cloud
Customers today want and expect seamless connection, regardless of what channel they use to interact with your brand. In fact, 72% of customers say it’s important that companies connect their digital and in-person experiences, though only 60% believe they’re doing it well. This highlights a clear gap between what customers want and what FSIs are delivering, while opening the door for FSIs that can deliver on those expectations.
The demand for seamless service also comes at a time when challenger financial services brands are showing what’s possible by delivering service in a way never seen before. Unencumbered by legacy IT systems and traditional data management practices, cloud-native challenger brands have the agility to step up with insights and interactions that meet new customer needs. As a result, they’re seriously undermining customer loyalty to more established brands.
Additional research by Bain & Company also highlighted that roughly half of the customers that tried to buy digitally defected to a competitor, with each point of friction negatively impacting a customer’s perception of the entire experience.
It’s fast become clear that to stay competitive and survive in this environment, finding new ways to serve and engage with customers is essential.
To deliver in this new era of customer service, FSIs need to:
- Offer a seamless connection across multiple channels, including; web, mobile, voice and chat.
- Facilitate intelligent interactions where a customer’s identity is quickly and accurately recognised, so they’re not subject to repeated requests to enter information and waste their time.
- Remove the digital friction points that traditional data management approaches have created.
For most established FSIs, this will involve building new capabilities to overcome the limitations of siloed, legacy systems and allow customers to have meaningful interactions.
Creating an independent data layer within the customer experience that’s connected to, but not dependent on, legacy systems is key. This will allow customers to carry out transactions and interactions without relying on legacy architecture, opening a new world of possibilities for FSIs willing to embrace this path.
“Reducing friction points in customer channels and building the capability to enable customers to interact meaningfully is the way forward – but it can only be achieved if traditional FSIs find a way to create new layers in the digital banking experience”
Troy BebeePartner - Google Cloud
Google Cloud in action
Big 4 bank builds new customer channel
An Australian “big 4” bank recently launched a new customer-facing channel designed to help people and businesses build their overall financial wellbeing.
The project involved creating a foundational Google Cloud-based layer that interacts with both the customer and transactional systems without being dependent on legacy systems.
This new digital experience delivers a single view of accounts, seamless interactions, and customer-focused features based on customer feedback.
Challenge #2
Creating a meaningful view of risk
“Managing risk in financial services is relentless, and the costs are proving to be major obstacles to productivity and growth. Royal commissions, new digital assets, and heightened cyber security risks are some of the many factors feeding into this”
Simon PoultonPartner - Google Cloud
The risk landscape for FSIs continues to grow in size and complexity, encompassing both financial risk (market, credit, liquidity) and non-financial (fraud, cyber security, financial crime).
The volume of regulatory change alone is a challenge, with 74% of risk and regulatory professionals reporting an expected increase in regulatory activity. Add hybrid working, cyber security risks, and increasing digitisation to the mix and it’s no surprise that compliance costs have skyrocketed with as much as 70% of data investment dollars now being directed towards risk management and regulatory initiatives.
This represents a significant opportunity cost for FSIs that could be directing a portion of that investment into revenue-driving activities.
Unfortunately for established FSIs, their IT infrastructure and data management practices make it hard to adapt and adjust quickly, even when it’s critical to do so. Risk management teams rely on ad-hoc reporting and struggle to get the data they need while also having to process more in less time. This leads to a situation where teams spend more time configuring tech rather than focusing on higher-order tasks, leading to slow responses, missed insights, and increased financial and reputational risks.
To succeed in an increasingly complex risk environment, FSIs need to find a way to meet more demanding reporting requirements and understand the implications of their reporting throughout the business. To create this meaningful view of risk, FSIs must:
- Bring data together from across dozens of different assets and applications.
- Create the capability to process that data in a way that helps teams understand risk exposure.
- Optimise and automate risk calculations where possible.
FSIs that embrace digitisation, take advantage of automation and optimise risk calculations have the potential to save millions.
Adopting the cloud also allows FSIs to scale up or down as required. By only paying for what they use when they need it, risk teams can potentially turn risk management costs into operating expenses.
Risk and compliance automation benefits
Reduce operating costs
Improve speed and consistency
Focus on strategic decision-making
Challenge #3
Leveraging data for personalisation
“The modern consumer is inundated with thousands of messages every day. If you make an offer that isn't relevant or you miss something important, they’ll switch off and that means you’ve effectively lost them”
Simon PoultonPartner - Google Cloud
Personalisation has become the number one driver in customer experience. This consists of real-time interactions that ideally anticipate customer needs with offers or services tailored to them. According to Gartner, 71% of B2C and 86% of B2B customers expect companies to be well-informed about their personal information during an interaction.
However, only 30% are satisfied with their current experience of personalisation. Furthermore, over 54% of brands offer no tangible incentive to consumers in exchange for creating an account, beyond access to products and services.
The reality is that while FSIs have the data to make personalisation possible, most struggle to harness it. On-premise, legacy IT systems make it difficult to bring data together, analyse it effectively, and create targeted experiences. There’s also a perception that moving to technology that enables personalisation, such as the cloud, will increase the risk of security breaches. As a result, FSIs are missing out on a significant opportunity to differentiate themselves from competitors.
“Empowering customers with real-time interactions is one of the most valuable experiences you can provide. FSIs who can’t do that will struggle to be around in ten years”
Troy BebeePartner - Google Cloud
FSIs need to find ways to
Access useful data
Ensure its security
Maintain quality
Use it to personalise the customer experience
Moving to a distributed data ownership model can help by allowing different departments to own, curate, and manage their data, rather than waiting for long periods of time for a central department to process it.
By giving teams ownership of their data set, they can better ensure its accuracy and reliability before making it available to other parts of the business. It also provides better data governance as each data point has its own unique identity that can be tracked back to its origin.
“There is a shift required from the perspective of creating solutions with systems at the centre to creating solutions with the customer at the centre. If you don’t have that kind of thinking behind your solutions, then you might be able to create a good solution - but you won’t be able to create a great one. This means you could end up with a few good point solutions, but not a holistic tool that fully solves those problems – and this is exactly what today’s customer wants and needsears”
Simon PoultonPartner - Google Cloud
Google Cloud in action
Major FSI unlocks critical data for personalised, profitable advice
A major Australian FSI implemented a powerful Advisor Online Portal that blends and models banking data from legacy sources and enables advisors to give clients the most personalised, profitable wealth management advice.
The project began by identifying and streamlining complex workflows to provide access to raw, critical data as soon as it was created. This followed by building efficient, modern big data processing pipelines that brought processing times down from around 18 hours to under 8 minutes.
By accessing critical data within minutes of being available within the portal, this FSI now has critical business intelligence intuitively available to wealth managers, advisors, and customers.
“By bringing together critical banking big data from several disparate and legacy sources together, CIE has for the first time unlocked actionable business intelligence out of data that was otherwise hidden and unreachable.”
Chief Digital Officer
Challenge #4
Embracing AI for a differentiated customer experience
“There are so many applications for AI, from marketing to operations to sales. If your competitors are using these technologies to drive better customer interactions, and you’re not, there’s a real risk that you’ll fall behind”
Simon PoultonPartner - Google Cloud
There’s no question that artificial intelligence is critical to digital transformation. According to the latest Worldwide Artificial Intelligence Spending Guide by IDC, Australia will double its spending on AI by 2025 with the banking sector leading the way.
IDC Senior Market Analyst Anastasia Antonova states that continued investment in AI tools and platforms will be very important to support decision-making, become more digitally resilient and innovative, and get one step ahead of competitors.
A recent financial services survey by Google supports this view, with more than half of the respondents expecting AI technology to have the biggest impact on customer experience.
FSIs need to find ways to
How to capture, handle, and store personal information.
How to keep sensitive and confidential data secure.
How to work across different data silos and ensure information goes to the right place.
How to model risk and guard against error-based financial loss.
How to satisfy governance requirements in the context of autonomous decisions made by AI.
The $1 trillion opportunity. McKinsey has estimated that AI technologies could conceivably deliver up to $1 trillion of added value each year for the global banking industry.
“AI technology has reached a tipping point. It's only now that we have the sophistication to move personal data to the cloud, and have advanced enough to translate needs, classify them, and determine an appropriate response”
Simon PoultonPartner - Google Cloud
While the full potential of AI within financial services is yet to be seen, the industry is already experiencing the transformation potential. Retail customer service has embraced chatbots and assistants to help replace large volumes of manual customer interactions. Loan application processing times have significantly reduced, with some organisations offering home loan approvals in hours rather than weeks. FSIs that have started adopting AI are already a step ahead of their competitors and winning customer share.
To embrace AI and its benefits at scale, FSIs need to address the foundation of AI – that is, data. This starts with addressing the current limitations of legacy systems that make data difficult to access, analyse, and interpret.
Preparing for AI will require a dedicated AI strategy, a shift in data culture, and creating new capabilities with an end goal of creating personalised, intelligent interactions across all channels.
Google Cloud in action
Regional bank drives data-led customer engagement
Regional bank drives data-led customer engagement
A large regional bank created a powerful customer intelligence capability to support data-led customer service and marketing activity.
Data sets across different divisions and systems were securely connected within the cloud with the capacity to scale and build automations as needs change.
This bank is now using AI-driven insights to predict churn, create targeted marketing campaigns with increased ROI, and improve frontline customer service.
GCP Benefits
Capturing opportunities with the Google Cloud Platform
“In five years’ time, every financial services company will be a data company”
Troy BebeePartner - Google Cloud
Australian financial institutions are at an important crossroads in their history. Established banks, superannuation funds, insurance companies, and wealth managers face significant challenges driven by the changing demands of digitally savvy customers and competition from digital-native brands.
To solve these challenges, FSIs need to determine how to best dial up their operations in a way that balances time to market, efficiency, risk, and customer experience.
Addressing and balancing these key challenges requires choosing the right technology and implementation partner based on your specific business requirements.
Cloud technology offers the speed, responsiveness, and scalability that FSIs seek to help overcome the limitations of existing legacy IT architecture and transform the customer experience. Specifically, it allows FSIs to mine data more effectively and gain a competitive advantage by bringing valuable, tailored solutions to the market.
By choosing Google Cloud, FSIs can tap into the unique advantages of partnering with a global cloud leader.
Simplicity at its core
Work with Google Cloud to get access to undeniable experience in engineering technology solutions at scale along with the same simple, user-centric philosophy that drives the entire business.
Recognised leadership in the industry
Google is an industry leader recognised by Gartner® Magic Quadrant™ in data and analytics, security, machine learning, and AI. Google Cloud has invested heavily in providing both local zones for its services, and tailoring their services for the Australian Financial Services market. Together, both Google Cloud and Mantel Group have significant experience bringing cloud technology to Australian Financial Services companies.
Pioneer in cloud-native applications
Google is the birthplace of container-centric management software Kubernetes, the widely accepted standard for cloud-native application development.
Commitment to open source
The open-source development model used by Google gives organisations the flexibility to build an application once and run it on any platform.
Partnering with Mantel Group, the trusted experts in Google Cloud
As a Premier Partner, our single objective is to harness its power to help our clients move towards a more successful, cloud-enabled future. Talk to our team to learn more about how Australian financial services institutions leverage Google Cloud Services to put their data to work, reimagine the customer experience, and build their competitive advantage.
