Imagine a financial world that feels like it revolves around you, where services are tailored to your needs, and your financial goals are the priority.

This is not some far-fetched dream, but the emerging reality of customer-centricity in the financial sector. It’s a significant shift from the traditional service-led approach, and it’s proving to be a profitable one. Studies have shown that customer-centric companies are 60% more profitable than those that aren’t. It’s no surprise that the financial services sector is welcoming this change at a rapid rate.

Understanding customer-centricity in financial services

Customer-centricity is not just the latest corporate jargon. It’s akin to a business philosophy, one that sets the customer firmly at the core of all decisions and actions. In the financial world, this means shunning the old model of pushing products and services. Instead, it asks for an empathetic ear to your customer’s needs, tailoring every interaction to their unique financial journey. Ignoring this personal touch can lead to an unfortunate mismatch between the offerings and the customers’ actual needs, resulting in a less than satisfactory customer experience (CX).

The role of data in customer-centricity

There are no two ways about it – data is the lifeblood of customer-centricity in the modern financial world. It provides the insights needed to understand and predict customer needs, enabling financial institutions to offer relevant products and services proactively.

While traditional data sources such as account activity, loan requests, and investments have always been crucial, the advent of big data has opened up a wealth of unstructured data sources, including social media streams, audio, video, location data, and clickstream data. In fact, roughly 80% of the data that financial institutions hold is unstructured.

Examples of banks utilising data for improved CX outcomes

Rabobank, a multinational banking and financial services company, leveraged data to help its customers become more self-sufficient and improve debt settlement. They implemented technologies that could process large quantities of streaming data, enabling them to rapidly analyse historical and real-time data together. This new system allows Rabobank to detect early warning signs of clients potentially defaulting so they can pre-emptively advise customers to avoid such issues

Similarly, DBS, one of Asia’s leading banks, recognised the need to become more data-driven to deliver a superior customer experience. They built a central data team and an enterprise data hub that enabled them to continually experiment and innovate, leading to a more comprehensive understanding of the customer experience.

Challenges in adopting a customer-centric approach

Transitioning to a customer-centric approach is not without its challenges. Financial institutions often face structural and cultural hurdles. Most financial institutions lack a strong customer focus due to two interrelated factors – structural and cultural.

Structural challenges refer to the organisational barriers, such as departmental silos and outdated legacy systems, that can impede the seamless integration of customer-centric practices. These institutions often need to overhaul their existing structures to foster better communication and collaboration, and to effectively leverage data for personalised services.

Cultural challenges, on the other hand, involve shifting the institution’s mindset from a product-focused approach to one that prioritises customer satisfaction. This requires fostering a culture that values understanding and meeting customer needs over simply selling products. It also involves promoting open communication, collaboration, and continuous learning to adapt to evolving customer expectations. Employee engagement is crucial in this transformation process.

The future of customer-centric financial services

There’s no denying it: the future of financial services is all about the customer. This evolutionary leap is propelled by innovative distribution models and the dynamic rise of fintechs, which are stirring up the traditional landscape. They’re nudging, if not outright pushing, established financial institutions to rethink their customer service approach.

Let’s spotlight Banking-as-a-Service (BaaS), one of the brightest stars in this fresh financial firmament. BaaS enables banks to embed their digital services directly within third-party platforms—think retail marketplaces, ride-sharing apps, or online accounting software. The result? A fluid customer experience where users can tap into financial services without stepping out of their favourite apps.

And how about those bold, technology-driven startups we call fintechs? They’re not just playing a pivotal role; they’re practically driving the customer-centricity bandwagon in financial services. Known for their laser focus on customers, fintechs are offering innovative, convenient, and user-friendly alternatives to traditional banking. The sheer success of these startups is mounting significant pressure of established financial institutions to up their game and put a spotlight on customer-centricity.

Furthermore, the surge in artificial intelligence and machine learning applications in financial services is paving the way for highly personalised offerings. These technologies are sifting through mountains of data, unveiling deep insights into customer behaviours and enabling institutions to craft services as unique as every individual customer.

When technology and company culture are combined in such a manner, a customer-centric approach provides a win-win situation. Customers get a service that feels like it’s been tailored just for them, while financial institutions can look forward to increased customer loyalty, heightened satisfaction, and ultimately, greater profitability.

Get in touch

Are you considering pivoting to a robust customer experience strategy within your organisation? We’re here to lend a hand. Armed with extensive experience in transforming financial institutions, we can navigate you through the intricacies of this transition and help craft a strategy that puts your customers at the very heart of your business.

Read our brochure to find out more.

Michael Anderson

Vice President – Client Solutions

michael.anderson@davies-group.com

linkedin.com/in/michaeljohnanderson

Lee Russell

Client Solutions Director

lee.russell@davies-group.com

linkedin.com/in/leerussellljr