The BFSI Tech Dilemma: Shifting the Focus from Flashy Tech to Customer Needs

A portion of the article is included in the link below, in the form of an opinion column feature in the online business and economic news publication LBO.

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In 2018, Nicky Morgan MP, the head of the powerful Treasury Committee (in the UK), demanded answers from the chief executives of Royal Bank of Scotland and Barclays, as millions of banking customers were locked out of their accounts, unable to access their own money or pay bills on time.

She remarked, “High Street banks justify the closure of their branch networks on the basis that they are providing a seamless online and mobile phone banking service. These justifications carry little weight if their banking apps and websites cannot be relied upon”.

While banks and financial services companies emphasize the importance of providing customers with seamless and reliable online and mobile banking services, many face criticism for focusing heavily on tech rather than meeting customer needs.

Other examples include Goldman Sachs’ digital-first retail banking effort, Marcus, which had to be stalled as it proved unprofitable, where issues included the complexity of the bank’s technology platforms. Meanwhile, Robinhood’s fast-paced, commission-free gamified trading platform for millennials faced severe backlash when a young trader, Alexander E. Kearns, committed suicide after seeing an erroneous $730,000 negative balance on the app.

Repeated failures and issues of this nature can put a company’s reputation, customer trust, and even financial stability at risk. This highlights the need for banks and financial services to go back to the basics when serving through digital channels, prioritizing customer needs over high-tech solutions.

Based on our extensive experience working with the BFSI industry, there are instances when financial services’ tech leaders commission the purchase of cutting-edge tech solutions based on directives from above, because a certain technology is flashy or new, or because they feel it’s better than what their counterparts have. None of these reasons, however, justify the investment and they often do not bring in results.

They can also lead to the types of disasters described earlier, endangering customers, losing money, and risking your organization’s reputation. It serves as a reminder to companies in the financial industry of the mistake of being preoccupied with the technical solution, and the need to focus on customer needs.

In the following sections of this article, we explore how banks’ tech projects fail when losing sight of customer needs; the need for alignment between business objectives and tech; plus five practical steps financial services companies can follow to ensure tech projects address genuine customer requirements and deliver superior experience.

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Where Many Banks’ Tech Projects Falter

Banks and other financial organizations are often eager to launch a new data stack or a state-of-the-art app for their customers, but they overlook crucial aspects such as how the customers will use the solution in their day-to-day lives. Deborah O’Neill, Partner and UK Head of Digital at Oliver Wyman, lists 5 reasons that kill banks’ technology projects:

1. Rushing into implementing new data stacks and a fancy app without considering essential aspects such as data migration, scalability, or backend integration
   
   
2. Committing to large platforms that become obsolete instead of developing modular systems with the best available components (this requires a new approach where every component and link need to be efficiently tested).
   
   
3. Neglecting to consider the long-term effects of the project, including decommissioning old systems, freeing up staff for more valuable activities, and incorporating user feedback for continuous improvement.
   
   
4. Prioritizing short-term revenue gains over customer safety
   
   
5. Lack of senior leaders with business acumen and technical know-how whose influence goes beyond the technology team.

Many of these pitfalls, except for the last, involve neglecting the requirements and preferences of the customers.

Which brings us to the point we are trying to make with this article – that customer needs should be prioritized in all technology projects to ensure their success and ultimately, customer satisfaction.

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Alignment: Business Strategy Can Clear the Tech-Path

While prioritizing customer needs may seem like a simple task, many companies struggle to achieve this. The biggest cause, most often, is a lack of alignment with business objectives and tech projects.

Beta Launch’s experience in the industry shows that where there is a CIO with a strong balance of business and technical knowledge at the board level of an organization, who sees technology projects as strategic decisions rather than just tactical, there is better alignment of tech investments that prioritize customer needs.

This alignment of tech investments with customer needs will lead to the implementation of an end-to-end process when considering, implementing and growing tech solutions. Ideally, as articulated in a Forbes article, which we will go into detail in the following section the process should include:

• Identifying the right customer groups
• Building a relationship with them to gather their experience
• Mobilizing resources to be responsive to their requirements
• Gathering and measuring feedback and
• Continuously improving customer experience

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A Process for Banks to Deliver on Customer Needs Through Tech

The Forbes article mentioned, titled “Five Ways to Prioritize Customer Experience”, focuses on how we can identify, address, and remain close to customer needs throughout to build a level of customer experience to win, retain and grow a business. Although the article does not necessarily focus on tech projects, we believe that these five steps should be incorporated into every new tech project in a financial organization. Therefore, we have interpreted them in the context of tech projects:

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1. Know Your Customer

To provide a great customer experience, it is essential to understand the challenges, wants, and expectations of the customers. Conducting customer research, such as surveys or focus groups and social listening are some ways that can help businesses gather insights about their customers’ needs and preferences. Businesses should ask themselves if their tech solution meets customer expectations. Understanding the needs of the customers helps in providing a better experience.

We at Beta Launch even encourage our clients to take a step back and start by analyzing the market potential, zone in on a lucrative segment and then understand its requirements well.

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2. Be There for Them

After the initial identification of needs, it is important to create a connection with the target audience and continue to engage with them throughout the development and implementation process of the tech project. This involves building a trusting relationship with them and demonstrating a commitment to being there every step of the way. Collecting feedback from customers is also essential in order to understand their challenges, expectations, and what they appreciate about the solution. This feedback can help the team responsible progressively establish product-market fit and ensure that the final product meets or exceeds customer expectations. Essentially this relationship will support steps 4 and 5.

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3. Prioritize Being Responsive Throughout

Although it’s unrealistic to expect a tech solution to work seamlessly during the trial period, customers expect timely and effective solutions to any problems that may arise. A process and team, fronted by a customer service team put in place to promptly address issues and keep customers informed of ongoing solutions can guarantee project success. Acknowledging and working on issues, even if they can’t be immediately resolved, can significantly improve a customer’s perception of the quality of service provided.

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4. Consider Customer Sentiments and Feedback

According to the Forbes article, Bain & Company discovered that while 80% of firms believe they deliver superior customer experience, only 8% of customers agree. This may happen for reasons such as companies resorting to tactics such as increasing transaction fees, to boost per customer revenue, which may ultimately result in distancing its loyal customer base. Moreover, pursuing new customers can further worsen the situation since it diverts the management’s focus from catering to the crucial existing customers. Organizations need to be aware of this possible pitfall when implementing new tech solutions.

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5. Show Continuous Effort and Improvement

This involves actively listening to customer feedback and collaborating with them to identify opportunities for enhancement. Companies should be open to changing their approach as customer needs evolve, even if they have found a successful solution in the past.

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When tech leaders invest in cutting-edge technology solutions, their intentions are usually good. They want to stay competitive, stand out, or believe these solutions are necessary for business growth. In some cases, it may be due to directives from above or they may want to create a lasting legacy. Unfortunately, these projects often fail to deliver the desired results. Customers do not always respond positively, which can lead to frustration and ultimately harm the business instead of helping it grow.

On the other hand, customer needs have been a key focus in the most successful tech projects we have experienced, leading to exponential business growth. To achieve this, it is crucial to identify, address, and stay connected with customer needs throughout the process of developing tech solutions. By following the 5-step process we laid out in this article to achieve this connectedness, technical and business leaders can perfectly tailor tech solutions that deliver great customer experiences enabling business growth and retention.

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References:

Why Hasn’t Apple Pay Replicated Alipay’s Success?
https://hbr.org/2020/09/why-hasnt-apple-pay-replicated-alipays-success

Robinhood to pay as much as $10.2 million for technical failures
https://www.livemint.com/market/stock-market-news/robinhood-to-pay-as-much-as-10-2-million-for-technical-failures-11680801702231.html

The Top 5 Killers of Banks’ Technology Projects
https://www.brinknews.com/the-top-5-killers-of-technology-projects/

Five Ways To Prioritize Customer Experience https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2021/04/13/five-ways-to-prioritize-customer-experience/?sh=78dfb92d386b