2021 Financial Services (FSI) Trends Report shows the full extent of how the pandemic has affected the financial services industry. Produced in collaboration with Econsultancy, our annual report reveals the key trends and compares the top-performing FSI companies from 2020 with their mainstream competitors.
Economic uncertainty has created a demand for financial tools and guidance, giving providers a chance to deliver more than just a service. The 2021 FSI Trends Report offers insights from thousands of top-performing companies about the best way to approach digital transformation - from replacing legacy systems to creating meaningful interactions.
Within the space of a few months in 2020, digital adoption skyrocketed as the pandemic had a monumental impact on consumer behaviour. Digital transformation has been taking place in FSI for years, but this sudden shock to the system caused an uptake in digital adoption across the industry. For instance, NatWest Group experienced over 500,000 new mobile app downloads and 485,000 new online banking customers in the first half of 2020. Meanwhile, Santander UK noticed that live chat and chatbot use was sixteen times higher in July 2020 compared with January of that year. To reduce pressure on telephone and branch services, many FSI providers are encouraging the use of digital and mobile channels. In many cases, these are convenient or lower-cost alternatives to in-person services that were less available. However, as well as offering convenience during a time of upheaval, this is also a chance to deliver more meaningful interactions.
Our top recommendation for 2021:
Along with a vaccine comes a much-anticipated return to normality. FSIs should use recent momentum to continue investing in digital transformation.
One knock-on effect of the pandemic is the impact on people’s finances. From job losses and mortgage holidays to furlough and changing circumstances - consumers are realising the value of financial planning. Research from FundsNetwork indicates that the pandemic will increase demand for financial advice over the next five years. For instance, digital-only banks like Starling and Monzo offer added-value insights to help customers better control their spending. Because retail banking plays such a key role in people’s lives, 55% of employees in this sector emphasised the importance of meaningful digital interactions. Consumers are also leading this change. The use of open banking doubled between January and September 2020, with more than two million UK consumers using aggregation apps every month to give better insights into their finances.
Our top recommendation for 2021:
The pandemic has revealed consumer demand for better insights into their finances. FSIs should focus on added value through advisory and support.
Enter the 2021 Digital Trends Experience and immerse yourself in a new world of opportunities. This is where trends come to life.
Each year, FSI companies spend millions investing in their core systems. In the 2021 FSI Trends Report, 53% of executives told us that ‘modernising core legacy systems’ is the number one priority, closely followed by ‘enabling frontline staff’. This trend seems most relevant to sectors where customer experience is a high priority. For instance, 57% of retail banks and 56% in insurance companies are focused on core systems compared with 42% in wealth management companies. The pandemic has highlighted that convoluted and outdated technology is still a major issue. Nearly two-thirds of retail banking executives struggle with legacy systems while over a quarter of financial services and insurance respondents work across multiple martech solutions. As well as being frustrating and time-consuming, this fragmented approach also prevents companies from seeing a unified customer journey. This is a missed opportunity, especially at a time when record numbers of customers are moving online.
Our top recommendation for 2021:
Transforming core technologies shouldn’t be thought of as a radical, one-off project. Digital transformation can be done incrementally to minimise disruption.
The key to future success in initiatives such as automation or integrated technologies comes down to data. In the 2021 FSI Trends Report, just 25% of companies believed that lack of customer insights was holding back their marketing and customer experience efforts. At the same time, only 27% said they have significant insight into the customer journey. This could reveal a blindspot for many FSI organisations, indicating that they are undervaluing the future potential in this area. Delving further, we asked financial services and insurance firms about the type of data they are gathering. 66% are using data from website analytics and 64% are using CRM systems to craft connected, personalised customer experiences. However, when it comes to off-line experiences, only 38% are integrating records from off-line interactions such as branches or call centres. Even more revealing, less than half of the firms we spoke to viewed these as critically important.
**Our top recommendation for 2021:**Data is the key to future success. FSI firms should focus on integrating both online and off-line data to deliver more personalised customer experiences.
By the end of 2020, it was clear that some FSI companies had performed significantly better than others. These leaders are companies that significantly outperformed their primary competition in the last six months of the year. In the 2021 FSI Trends Report, we compare these firms with the mainstream (companies that kept pace or underperformed in their sector). One immediate difference was their perception of customer experience (CX) maturity. 34% of leaders rated their strategy and technology alignment as ‘very advanced’ compared with 12% of the mainstream. For instance, leaders are 10% more likely to use website analytics and 6% more likely to use organic and paid media interactions. It’s likely that enhanced CX is giving top-performing companies a complete picture of the customer, enabling them to offer more relevant and personalised content, products and services.
Our top recommendation for 2021:
Expectations around CX are being shaped by other sectors with fewer regulations and technical barriers. FSI companies should continue to innovate outdated processes and make the most of strictly controlled data.
of financial services and insurance company employees agreed that they had an unusual degree of freedom to experiment and innovate.
of all financial services and insurance executives surveyed report that digital and mobile currently account for half or more of their sales.
of employees are optimistic about corporate strategy and 72% reported feeling optimistic about the outlook for their business in 2021.
