In many Asian markets, financial services companies used to grow alongside the macro economy and compete heavily on products. But things are changing. Product innovation within established incumbents is becoming more difficult under a slowing economy and tighter regulations. Fintech companies are disrupting legacy brands – with offers across saving, credit, insurance and more. The new generation of consumers is increasingly looking for more than short-term returns. These macro shifts indicate that in the future of financial services, reimagining the customer experience and offering benefits beyond transactions will be critical in driving sustainable, ownable growth.  

Study¹ shows that nearly 70% of Asian financial services companies understand the importance of “customer-centricity,” and are investing heavily to improve digitally enabled customer experiences (CX). Yet surprisingly, only 20% of customers consider FS companies providers of truly “customer-centric” experiences². This gap is not a favorable truth but indicates a great opportunity for a company to take action and lead the future. We have identified nine key levers across three development stages that will enable financial institutions to transform their retail experiences for the future.

Fix the Basics: Become a Financial Services Company that Meets Customer Needs 

1. From “Experience” to “Branded Experience” 

Speed and convenience have become critical for customers in the modern digital world. But focusing efforts solely on “ease” also tends to create very similar sets of experiences and/or functions. So how can a company cut through the clutter?   

The answer is simple: brand. A solid brand strategy clearly defines what promise a company makes to its customers and how it uniquely delivers on the promise. Next, this will be translated into a brand identity system that closely aligns with the strategy and guides the development of truly ownable experiences.  

For many financial services companies, brand has not been considered and managed as a strategic asset. Therefore, before aspiring to create any signature experiences, companies need to build a solid foundation first by carefully looking into their brand strategy and identity to define their own experience principles. 

2. From “Product Distribution” to “Omni-Channel Experience” 

Internet companies and FinTech pioneers have disrupted and transformed the retail side of financial services (e.g. Ant Finance and Ascend Money). Many companies now rely heavily on these platforms to broaden their reach to retail customers. But platforms can be restricting, and the company could face constraints in building distinct experiences and owning customer relationships.  

As a solution, some leading companies have started to invest in their own digital ecosystem. For example, Fidelity created SmartRetire, a one-stop retirement solution platform. By building their own digital experience, companies can not only design and own the customer experience, but also collect data to enable targeted, more relevant engagements, that in turn can improve the customer journey in the long term.   

If creating owned ecosystem is not feasible in the short term, companies should at least build a holistic plan across touchpoints and identify opportunities to maximize owned experience and relationships. 

3. From “Experience as External Resources” to ‘Experience as Internal Center of Excellence” 

Many financial service providers leverage third-party vendors to deliver service and experience at lower costs. However, service quality could be at risk under this outsourcing model and differentiation could be harder to sustain if the vendor relationship is not exclusive.  

Companies should prioritize experiences that are most desirable to customers, viable to businesses and feasible to execute, building an internal “center” that breaks the silos, connect the dots and assures quality. A strong center of excellence enables great experience from within, bringing higher efficiency and sustainable competitive advantage in the long term.  

Excite with Experiences: Become a Financial Services Company that is Loved by Customers 

4. From ”Fill the Pits” to ”Elevate the Peaks” 

There could be a huge perception gap on “excellent customer experience.” Research³ shows that 80% of financial services companies believe they deliver excellent customer experiences, while only 8% of customers agree. One of the reasons behind this is that most companies focus only on fixing the pits upon functional pain points, but not on creating any peaks that delight and excite customers in memorable moments. 

Customer lifetime could be quite long in financial services. To become a company that customers choose, trust and love, companies must build a holistic view of the customer lifetime journey, by identifying and prioritizing moments that matter and creating signature experiences that customers truly desire.  

5. From ”Transactional Moment” to “Real Life Relationship”  

Many financial services companies are facing infrequent interactions and transactional relationships with customers. Research⁴ shows that 60% of Asian customers have had zero engagement with their financial service provider in the past 18 months.  

To go beyond the transactional moments, companies should look to expand their role and presence in other areas of customers’ everyday lives through partnerships and co-branded experiences. For example, Neo Bank MOX in Hong Kong partners with merchants favored by its customers and provides exclusive cash back. Another example is insurance company Beam, which partnered with a smart toothbrush brand and launched an oral health solution, offering premium incentives based on customers’ usage and behavioral data. 

Companies should take a broader view of the customer journey, identify opportunities to meet people where they are in life and enable their lifestyle beyond financial needs. With expanded partnership and engagement, companies could also build an enriched understanding of customers on top of transactional data and enable future products and service innovations. 

6. From “Data Enabled Personalization” to “Human Enabled Personalization” 

Research⁵ shows that 80% of financial service customers desire more personalized experiences. In Asia, customers are 1.5 times more willing than customers in Europe to share personal data in exchange for personalized experiences. Yet it takes time to build data and analytics capabilities that enable meaningful personalization at digital touchpoints. Customers in Asia also still desire a certain level of in-person engagement – even in younger customers, research⁶ shows more than half believe financial services are not human enough.  

So, while building data capabilities, companies should invest in empowering their front employees (e.g. RMs, agents) to deliver better, more relevant experiences with smarter tools and insights (e.g., need analysis, claim tracking). These tools should be designed not only to enable higher quality engagement but also to capture customer insights/data into the centralized database – to maintain customer understanding and relationships at risk of potential people turnover.  

Lead the Future: Go Beyond the Frame of Reference as a Traditional Player 

7. From “Proactiveness” to “Intelligence”  

Customers are increasingly sophisticated and their expectations will rapidly evolve. Being “proactive” will become a table-stake part of the experience and companies could aim to lead by creating “intelligent” experiences that are three steps ahead with AI technology. In 2021, HSBC HK saw 10 times higher engagement between relationship managers and customers when it leveraged AI to offer 22 thousand different sets of wealth management solution advice to individual retail customers⁷. 

Deep learning and hyper-personalization are among the top strategic priorities for CX leaders in 2022⁸. Leading financial service companies should not only identify close-in use cases, such as product innovations or credit risk assessment but also stretch-out use cases that help the company go further into customers’ lives. 

8. From ”Valued Customers” to “Empowered Customers” 

Being “customer-centric” has been the center of gravity when creating experiences, but it still treats customers as “buyers,” in the position of receiving. As we move into the future, this relationship will be disrupted, and we will see customers as active stakeholders in deciding what type of experiences are created for them.  

Creating better experiences requires data, but customers are increasingly conscious of their privacy and the power of data ownership. Research⁹ shows that although Asian customers are more willing to share data in exchange for better service, 90% of them are concerned about data privacy and 84% of them desire more control over how their information is used.  

Leading companies should see this more as an opportunity than a challenge. Financial service brands should look at customers as empowered individuals, transform data collection into a “value exchange”, enhance data transparency with a sense of “co-ownership” and develop solutions and experiences through customer “co-creation.” 

9. From ”Boundaries” to ”Boundless” 

In the future world of Web 3.0, traditional boundaries will be blurred – online versus offline, virtual versus physical, consumers versus owners, etc. This boundless space will change how financial service companies organize and deliver value to customers throughout the lifecycle.  

The entire model of “financial services” might change in the context of this – the role of a company could transform from a “service provider” or a “transaction middleman”, to an ecosystem or a community that enables peer-to-peer connections and better decisions among employees, partners, and customers.   

The fast disruptions of fintech will never stop. Financial service companies should be open and embrace the changes to experiment with new ways of delivering value in the future, starting from small use cases.  

Data source:  

1. Harvard business review, Taking the Financial Services Customer Experience to the Next Level
2. Salesforce, Trends in the financial service industry
3. Bain, How to achieve true customer-led growth and close the delivery gap
4. Genesys, The era of 4.0 experience in Asia financial service industry
5. Mckinsey, Future of Asia financial services
6. Capgemini, The customer engagement imperative for financial services
7. South China news portal, HSBC leverages smart analytics to develop new tools that enhance the personalized customer experience
8. Genesys, the state of customer experience in financial services
9. Warc, APAC consumers increasingly concerned about data privacy

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The most lasting change of the pandemic is likely the “digital load shift,” as people rapidly adopted new tech habits that experts once thought would take years to establish.

These behaviors have radically changed the way people experience the world. They’re buying houses they’ve never physically stepped inside, working with people they’ve never met in real life and investing in stocks recommended by their social-media community.

Even as COVID-19 vaccination rates, this digital load shift is here to stay, and with it are increasing privacy concerns and higher expectations for what a “good” experience feels like. Better-informed consumers are demanding more from the devices, networks and brands they use. For financial-services companies during their own digital transformations, this presents a valuable opportunity to re-assess priorities across their own digital roadmaps.

A Growing Sense of Vulnerability

It’s not entirely accurate to link consumers’ growing wariness to the pandemic. Certainly, the 2018 Facebook/Cambridge Analytics scandal rattled trust in Big Tech. And the mistrust doesn’t stop there. “The Social Dilemma,” a Netflix documentary detailing the ways companies like Google and Facebook manipulate consumers, was one of the most popular releases last year Google, at least for the moment, has an edge in the battle for trust, with 66% of people saying they generally trust it, versus just 38% for Facebook).

As companies try and move past the pandemic, they must address these suspicions. If businesses want people to share data, they need to offer more in return, including greater customer control over the data, transparency in how it is used, and greater value for data exchanged.

It’s not likely people will cut back on their digital life. American adults now spend 16-plus hours per day with digital media, up 25% from pre-pandemic levels. But they’re smarter, with 54% saying COVID-19 has made them more aware of the personal data they share.

While they are alert to high-profile breaches, 50% say they are still willing to share – as long as they get a fair value in return. The majority – 56% – want more control and better information about how that information will be used. Google Pay, for example, has released a control center for users to control their data for personalization, payments profile and transactions and activities.

Linking Digital Experiences

Winning with these skeptical consumers will become more difficult as the load shift from analog to digital channels accelerates.

“They’ll increasingly expect experiences that link and mutually enforce each other across all other channels.”

Consumer preferences and behavior have leapfrogged by years and 75% of consumers say they’ll continue using the digital channels they’ve started to use during the pandemic. This spans across age groups and channels. About 44% of consumers say the pandemic has led them to use their banking apps more. Some 71% of consumers aged 55 and older prefer an internet chat/video insurance claim process to replace the traditional in-office approach. Two-thirds of consumers prefer to book and reschedule appointments online rather than over the phone.

Forward-looking firms know these changes are here to stay and are actively solving for the new future state, rather than trying to play catch up to the 2019 status quo. About 86% of financial services executives plan to increase their AI-related investments through 2025. One-third of banks plan to increase spending on digital channels over the next year.

Emerging as a category leader takes exceptional strategic innovation and a digital roadmap that can adapt to unforeseen market changes.

Capital One, for example, uses cloud and artificial intelligence to connect customer experience across all touchpoints. Prospect and customer feedback is gathered across channels and stages of the journey and is synthesized using natural language processing to optimize the experience. As the first U.S. bank to operate completely on the cloud, Capital One uses cloud data systems to maintain a unified customer view across all channels.

As financial services companies transition from analog to digital experiences, they must follow consumer preferences closely to innovate more quickly. It’s more than having the right technology to deliver those experiences – it’s cohesively linking those experiences across channels.

Three Ways to Strengthen Digital Trust and Reinforce Omnichannel Experiences

1) Create an “opt-in” strategy

Include methods for asking for “opt-in,” centralizing how prospects and customers can manage their data within the ecosystem.

2) Perform qualitative research to understand the importance of data control in experiences.

Audit prospect and customer touchpoints that request data. Is it clear how data will be used? Is the value exchange meaningful and easy to understand?

3) Define existing and new opportunities for points of convergence.

To develop mutually reinforcing and cohesive multichannel experiences, companies must prioritize opportunities. Which experiences are most desirable to our customers? Are they viable for our industry? Are they feasible for our business? Leaders must adapt their transformation roadmaps to make sure both experience design and technology builds toward this convergence.

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In the last 15 months, the world has vaulted years ahead in digital acceptance. As consumers gain tech experience, their standards get higher. They’ve developed the ability to tune out fake empathy and cringe at personalization efforts that are either lame or creepy.

Yet empathy counts more than it ever has before. During the pandemic, unemployment because of a harsh reality, many individuals lost or were separated from loved ones, several were forced to postpone milestone moments and no one was able to participate in the communities that made them feel the happiest and safe.  Brands and companies that build true connections are those that understand that context is everything. Personalization is only relevant and timely when it relates to what prospects and customers are going through at that moment.

Financial services companies have a clear advantage compared to other industries, with more data-driven insights that reveal specific struggles. While not every family’s finances have been impacted, 51% of consumers added to their credit card debt during the pandemic. Additionally, Pew Research reports 27% of consumers are worried about the cost of healthcare.

Catch Up With Missed Milestones

Financial services companies can improve personalization efforts by helping people catch up with milestones. The weddings, graduation ceremonies and retirement parties that were put on hold due to COVID-19 left emotional holes. Consumers are still coming to terms with the impact of that disruption. And as vaccination rates rise and cases drop, people are looking to reclaim those “lost” moments.

Weddings are a happy example. The Knot predicts this year will be the biggest wedding year ever, increasing by 20 to 25%. And many couples who got hitched during the pandemic will celebrate with a long-delayed bash.

Moving house – always a significant financial transition – has also taken on outsize proportions, with millions of millennials struggling to find affordable homes. They are trying to navigate a real-estate reality that’s markedly different, not just because of the pandemic. Housing prices are soaring, up 23.6% – a record increase. And after two decades of declining home construction, experts say America needs an additional 5.5 million units.

It’s a market more confusing than their parents ever faced­. Instead of buying dream houses or starter homes that make them feel financially comfortable, they’re often stuck. They need content that helps them make the best choices and financial partners that understand their frustrations and disappointments.

Consumers also need support for events that aren’t happening. The birthrate has been falling for some time, but experts believe COVID-19 caused a further 8.6% decline. Again, this loss is felt more keenly among millennial women.

But baby boomers and Gen Xers are taking some emotional lumps, too. About 40% of retirement savers say the pandemic has shaken their confidence in their financial plans, and 32% in their 50s plan to delay retirement as a result.

Even more disruptive? Nearly 2 million older Americans have been forced out of work into a retirement they aren’t quite ready for.

To handle these curveballs, people need new planning tools, focused content and a tone that recognizes new challenges. Even automated content needs to be more human, sensing what consumers crave at each touchpoint.

Understanding The Pandemic’s Lasting Economic Impacts on Women

The pandemic fundamentally altered life for many women in deep and profound ways. Not only did women lose more jobs than men, but one in four employed women have considered leaving the workforce or downshifting their careers, according to Lean In. The pandemic also pushed women to take on multiple roles including juggling more family responsibilities. Lean In says moms are 1.5 times more likely to be spending three or more hours a day on housework and childcare.

And while many companies just spouted generic “We’re here for you” messaging, some built genuine relationships. For instance, fintechs like Betterment and Ellevest are personalizing marketing and content messaging to emphasize what female customers can do for themselves in light of COVID career setbacks and how they can help other women directly impacted by the pandemic.

These enormous problems will shape family life for years to come. Companies that tailor valuable content, compassionate messaging and thoughtful timing can achieve relevance. Those that don’t risk getting dismissed or, worse, alienating a key customer base.

Three Ways Financial Services Companies Can Dial-Up Empathy

1) Give existing marketing messaging a compassion check-up.

How should personalization strategy change given the effects of the pandemic on life events? Which use-cases should take priority? How can marketing and content be more empathetic to new realities?

2) Identify changes in customer needs across the journey.

Using consumer interviews and behavioral insights, identify how customer needs have shifted because of the pandemic’s wide-sweeping effects and how that impacts their customer journey. How might products and services need to adapt to best meet these needs?

3) Develop personalized experiences around life events that are more likely to occur post-pandemic.

From the brand’s perspective, prioritize the most relevant life events that relate to the customer journey and develop personalized touchpoints for them.

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Insurance customers’ needs are rapidly changing, but the industry is not. With insurtech companies – like Hippo, Root and Lemonade – overwhelming the market, longstanding insurance leaders can’t shake organizational norms and industry standards, preventing them from connecting with digitally native consumers ahead of new disruptors.

We often hear our insurance clients ask us, “How can I best prepare for the future needs of our customers?”

Insurers are ready to mobilize their transformation efforts to become more customer-centric businesses, but they often implement new technologies or point solutions without a clearly defined digital strategy to guide their efforts. Without a holistic understanding of digital transformation (which goes well beyond technology implementation), insurance companies miss the mark with their customers. They struggle to find the true sweet spot between consumer privacy and personalization – while providing the right level of transparency and autonomy. Not to mention, customer expectations are changing each day making it extremely difficult for legacy insurers to keep up with their demands.

“Without a holistic understanding of digital transformation insurance companies miss the mark with their customers.”

Prophet’s new research report, The Insurance Customer of the Future, was written to highlight the most pertinent market trends set to impact the insurance industry in the next decade and explains how these trends are changing the relationship between customers and their insurance providers.

We centered the research around “Jamie,” an insurance customer living in 2030. By understanding and anticipating the generational trends and technological possibilities that will shape Jamie’s environment, insurers can make the right transformation moves to win Jamie’s – and her peers – business in the future.

But it won’t be easy to become the kind of insurance company Jamie wants to choose. While battling new entrants and advancements in technology, insurers need to keep their ever-evolving customers’ needs, values and expectations at the center of their transformation agenda.

Here’s how insurers need to transform their businesses over the next decade:

1. Go beyond personalization
2. Find partners to build holistic ecosystems
3. Transform business models to serve next-generation customers
4. Double down on capital-light, value-added services
5. Reimagine the mind, body and soul of the organization

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