Financial Services Companies Are Catching Up with Digital
The financial services sector is undergoing a digital marketing transformation as companies embrace new technology to improve targeting and deliver better customer experiences, both online and off.
According to Adobe’s 2017 Digital Marketing Study, the percentage of financial services companies that view themselves as advanced in terms of digital maturity nearly tripled from 7 percent in 2016 to 19 percent this year. Digital maturity is an indicator of a company’s technical skills, use of automation, and level of data integration.
While the financial sector still lags behind the overall industry average of 24 percent, it’s gaining ground. Overall, more than half (59 percent) of financial services marketers view their companies as either advanced or focused in terms of digital maturity. The survey, which is designed to help you better understand the pace of the digital marketing transformation, included financial services companies from across Europe and North America.
Overall, marketers that categorize their companies as “digitally mature” more than doubled between 2016 and 2017, from 11 percent to 24 percent. That means a quarter of the 1,165 companies surveyed are transforming their business processes in order to better understand and use their data.
As financial services companies increase their investments in digital technology, they are becoming more mature in terms of how they use the people, tools, and processes required to deliver personalized content that is consistent across both online and traditional bricks-and-mortar channels.
Embracing digital technology.
One example of a digitally mature financial services company is Bank of America, the ninth largest bank in the world in terms of total assets. The bank is on the leading edge of an evolution, from a fragmented, bricks-and-mortar industry to a digitally savvy ecosystem that understands the importance of integrating data in order to both optimize operations and improve customer experiences.
Cathy Bessant, the bank’s chief operations and technology officer, recently told Forbes that data is the company’s greatest untapped resource. “I think of it in terms of how we take the big universe of data and make it usable in a way that changes product opportunities, changes lives, changes worlds, and makes things better,” she says. “That takes brilliant architecture, brilliant storage, brilliant transportation of data, and well-protected data.”
In fact, Bank of America is a trendsetter in an industry that is embracing digital solutions. The 2017 Digital Marketing study underscores the importance of this shift. Looking ahead, the top three priorities for financial services marketers in terms of digital marketing strategy are audience reach (68 percent), whole customer views (66 percent), and attribution modeling (65 percent).
Overcoming challenges and legacy solutions.
Some companies in the financial sector are implementing digital technology solutions faster than others, which is not surprising in a complex and highly regulated industry that has historically relied on doing business in person. While the number of companies who view themselves as advanced increased over the past year, more than 40 percent of the financial services marketers surveyed still describe their company’s level of digital maturity as either emergent (34 percent) or nonexistent (7 percent).
Although the industry is making strides in terms of digital solutions, it has to reconcile massive data silos, offline distribution channels, and a bricks-and-mortar transactional culture. “It’s very difficult for financial services companies to operationalize and unify massive amounts of data,” says Christopher Young, director of industry strategy and marketing at Adobe. “They also struggle with being able to identify individual customers across these channels, engage them in a meaningful way, understand their needs, and ultimately match them with the right products and services.”
Brand differentiation is a motivating factor.
For industry leaders, brand differentiation is one of the big benefits of using digital tools for marketing. But it’s a different story for the industry laggards — 11 percent of whom say technology is not differentiating their digital marketing efforts. This disparity, Christopher says, reflects the reality that while many financial services companies have one foot in the digital world, the other one is still firmly planted in the physical world.
For banks to be able to leverage their data and become more customer-centric requires more than just a centralized digital platform. “They still have to figure out how to really innovate and organize themselves around the customer,” says Christopher. “They need the processes and the skill sets to integrate their entire operations, not just their digital technology.”
Another reason the financial services industry is lagging behind other sectors is that it has been slower to embrace the use of technology for omni-channel and mobile marketing. “They’re playing catch-up, which explains why many North American financial services respondents didn’t feel digital maturity was a differentiator,” says Jim Goldschlager, general manager at Slalom Consulting in Hartford, Connecticut. “They’re investing just to reach the same position as other industries. In mobile, for example, they’re behind the curve. Mobile banking should have the same ease of use as buying products on Amazon or ordering drinks on Starbucks.”
Leveraging data is key to moving forward.
While data silos have been a constraint for the financial services industry, Christopher says the industry overall does a good job with data integrity and normalization. The ability to track and analyze individual customer interactions is a potentially significant advantage when it comes to target marketing across multiple customer touchpoints.
Financial services companies are taking the lead in terms of leveraging data as part of an evolving digital maturity. Christoper points to Erica, a mobile chatbot developed by Bank of America, as a harbinger of what’s ahead as financial services companies embrace digital technology. The bank’s new digital assistant leverages artificial intelligence to help power a mobile app with 22 million users.
“What Bank of America is doing that’s really interesting is introducing all sorts of innovative capabilities in their mobile app,” says Christopher. “They are trying to replicate a meaningful one-on-one personalized interaction on a mobile screen that would normally take place with a human. This is a really useful tool that is delivering a consistently good customer experience.”
Kevin Lindsay, director of product marketing at Adobe, predicts that the financial services industry could rapidly go from a laggard to a leader in terms of digital technology. “In financial services — particularly banking — we have seen some of the most aggressive options of machines learning based, automated personalization,” he says. “Financial services is an industry that wants to measure very precisely, and that should drive the adoption of analytics technology. The industry also historically has embraced a holistic customer view, and digital integration fits nicely with that perspective.”
Financial services decision-makers are poised to invest in new technology, and that should fuel more digital integration. “I think there’s a realization that the industry has to play catch-up and accept that there is a timeline by which they need to get there,” says Slalom’s Goldschlager. “I’ve seen a really positive response in the industry — there’s a lot of great momentum.”