As the world moves into an age of technology like the Internet of Things, cloud computing and digitalisation, almost all of our daily movements leave some sort of data trail.
Whether it’s buying groceries online, communicating with energy providers or creating new social media accounts, nearly every individual has a personal data repository associated with every service they engage with.
This includes engagement with the financial services industry.
Known for leading all other industries in digital innovation, the financial services industry has excelled in offering customers new, digital services for engagement and interaction with banks.
It is this progressive service that has helped evolve today’s customer – someone who is trusting of their banks and open to new propositions if it can benefit them in some way.
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This was highlighted by recent research from Fujitsu which found that a colossal 97% of European consumers are happy for personal data to be used to inform, make recommendations or add value to financial services.
This means today’s consumers are no longer cautious and conservative when it comes to their personal data. With high-profile data breaches seemingly making news headlines daily, it was thought that customer trust has never been so hard to come by.
One would be forgiven for assuming that customers are becoming even more wary. Yet the research clearly finds that for rewards and convenience, customers are more than happy for their personal data to be used.
Within this trust lies huge opportunity for the banking sector to diversify its offering and futureproof its business model. However, harnessing the almost infinite business potential of customer data brings equally large risks.
Evolving customer, evolving business
As digital continues to reshape almost every aspect of the business world, key industry players are offering services that once might have seemed bizarre, but are now considered “smart”.
For example, Uber now offers its customers takeaway delivery in its Uber Eats service and Amazon offers fresh groceries through AmazonFresh.
The Financial Services sector is no different. Today, there’s an enormous, untapped desire for radical new capabilities and services from the financial sector – offering firms the chance to innovate, diversify and even transform traditional business models to create entirely new revenue streams.
According to Fujitsu’s research, in the UK alone 36% of consumers would buy energy for their home from their bank or insurer, 32% personal data storage, 34% broadband, 32% mobile phone contract and 34% home telephone – all higher than the EU average.
This offers a wealth of opportunity to the financial services industry. The perception of customers as guarded and conventional customer is transforming to one of thinking outside the box, and open to new ideas and services from their tried and trusted providers.
Great responsibility
The challenge now lies in how to grow income from such an opportunity. While the benefits of consumers offering such data might seem endless, investing in data analysis doesn’t come cheap. So how do banks determine whether the costs of investment in this growing pool of consumer data is worth the benefits it suggests?
Additionally, harnessing the power of customer data also creates a dilemma as safeguarding more information brings added risks like cyber threats.
With cyber attacks now making the headlines weekly, if not daily, and 90% of major organisations suffering a breach last year, consumers are growing ever warier.
While 97% of consumers might be happy to share their data with banks if it is used to inform, make recommendations or add value to their financial services, almost two-thirds (59%) of consumers would switch bank or insurer if their provider suffered a security breach. So how can this threat be combatted whilst ensuring financial services continues to evolve?
As an industry, CXOs in banking and financial services have a huge challenge on their hands – securing multi-channel environments while mitigating security risks or reputational damage.
It is paramount that the industry does not overlook, or get complacent, about security – or place it in the “too big to fix” category – and instead takes a proactive approach.
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As part of this, financial services need to be able to spot, react and defend against a breach quickly, by having a threat monitoring/detection system in place.
By doing so, banks can be confident in harnessing customer data in a proactively secure way. Then, by communicating this strategy to their customers, banks can begin to broaden their portfolio of service offerings and bring added value to the customer journey.
New pace of change
Consumers might not know precisely what the future of finance is but their perception has shifted dramatically.
Today, customers are no longer cautious and conservative – they’re thinking radically.
There’s a willingness to embrace innovative capabilities and engage with the financial sector in new ways to ‘get more’, simply and more efficiently.
To cater to this, banks need to embrace this desire for innovation and utilise the data that comes with it to gather further insights. Only then will financial organisations be able to deliver the fresh, compelling services that their customers seek.
Sourced from Mike Foster, MD, financial services, Fujitsu UK & Ireland
