The start of the year is a great time for businesses to put fresh eyes on their business strategy. As the financial market continues to be as competitive as ever, they should be prepared for the unexpected. Thus, it is vital they stay aware of the trends and predictions that will shape the industry in 2016.
Unifying and improving the customer experience
In the technology world, data is the new oil. Therefore, harnessing the power of data and information is key for revolutionising customer experience. To do so, businesses need to start investing more in technology such as mobile banking applications and user interface software.
To achieve a sustainable and positive return on investment (ROI) when investing into a new technology infrastructure, corporate culture also needs to be aligned with extra technology practices. There needs to be continued focus on customer relationship management (CRM) software as well, the foundation of any data driven customer experience strategy.
As more businesses look to invest significant funds in these new capabilities to target consumers with specific financial products, the CRM analytics market alone is set to be worth $7.65 billion by 2019.
Although CRM software spending has grown by over 13% compared to last year, there is 0% improvement on customer experience from 2014, according to a KPMG-Nunwood report, and this is one more reason for businesses to focus on unifying the technical and non-technical aspects of their services led by data driven strategies this year. Banks have made massive strides in this area by incorporating self-service machines into bank branches, improving efficiency and the customer’s experience through technology.
Giving access to greater customer experience will require a highly skilled workforce, capable of implementing the best strategies that can meet rising customer expectations. To cope with this demand, businesses need once more to upgrade their technology infrastructure. Many of them will have to bring in external contractors to install and maintain new technology, but choosing between them should be more than just about price. Technology projects are notorious for overrunning and experiencing teething issues, which is why they need someone reliable. A trusted partner will give businesses the confidence their systems will run efficiently and not suffer downtime in peak periods. Unavailability, which was recently experienced by HSBC, could anger customers and damage customer relations, a risk not worth taking in a competitive marketplace.
Customer experience will come out of stall and go into turbo in 2016, so businesses will need to invest into new technology accompanied with a coherent business strategy to implement these tools effectively.
Adopting nearshoring to plug the skills gap
The technology skills shortage is a widespread problem, especially across the financial sector. Many businesses face an issue when a key member of the team leaves, and struggle to find someone locally with equivalent expertise. This is commonplace in financial businesses that require staff with high levels of technical and financial knowledge. With the majority of them finding it too expensive and difficult to recruit and retain top-level in-house IT talents, they decide to outsource. Yet businesses still want confidence the technical skills outsourced are of the same calibre found in the UK. Polish cities such as Warsaw and Gdansk are now leading the way in technology skills as the local business community invests into technological skills and the outsourcing business sector thrives due to cost effective business rates. Poland is a big attraction for banks and other large institutions such as IBM, Credit Suisse and UBS who need highly trained back office staff in Europe. This shows no sign of stopping as Hewlett-Packard alone employs more than 4,000 people in Poland, and expects to increase this number over the next couple of years.
As more European countries pursue growing home talent, this will lead to an increase in businesses adopting nearshoring practices. Nearshoring derives from outsourcing but focuses on bringing economic benefits by contracting work to an offshore location. This includes closer cultural, linguistic and geographical ties with the user organisation.
The UK specifically faces a skill shortage in key technology finance areas. According to recent research by recruitment agency Robert Half, three-quarters of companies are predicting a skills shortage. UK financial businesses will then look to nearshore their operations more in 2016. Saving both time and money on recruitment efforts and retaining key staff, they will gain flexibility to adapt to changing customer demand and technological change.
Complying with data regulation and furthering cloud innovation
As a result of the recent Safe Harbour ruling, a new regulatory framework will have to be built from the bottom up, directly impacting how EU and US businesses store and transfer data. This also follows the proposals regarding the General Data Protection Regulation (GDPR) and Data Protection Directive, which brings up issues of privacy and data protection if organisations choose to house data outside the EU. With all major UK banks and lenders reporting data breaches to the Information Commissioner's Office (ICO) over the last year, protecting valuable data and complying with regulation should be at the forefront of every executive’s mind in the next few months.
Due to the security issues financial institutions are encountering, new technology such as cloud data storage will be under scrutiny. This is because much of the data is stored thousands of miles away from the actual user’s location. However, big players in the cloud market like Amazon, Salesforce and Microsoft have already obtained approval from the Commission to operate as they have been, due to their compliance with certain EU data laws. New regulations shouldn’t dampen the global cloud computing services expansion though, with the market expected to reach 127 billion dollar valuation by 2017. Especially with more businesses choosing to open their data centres in Europe, such as Salesforce recently in Germany, the capabilities of cloud will be able to grow in an environment that is safe for both businesses and consumers.
Keeping updated with new data protection policies, businesses can avoid the mistakes witnessed by Talk Talk and Ashley Madison in 2015. Doing so will allow them to take advantage of the maturity of the cloud, with exciting developments like the Salesforce Financial Service Cloud coming into fruition in 2016.
Staying ahead of the curve
These trends will be leading the financial sector into a new year of digital innovation. Having a flexible strategy to accommodate the changing nature of these movements will therefore give businesses the best chance in coping with the unexpected, impact their market and stay ahead of the curve.
By Nicholas Mobbs, Managing Director at Outbox Group.