The use of digital capabilities defines our lives, and the financial services industry is not sitting on the sidelines.
Here are the five key digital capabilities trends in the Financial Services industry you need to know:
Trend #1: Digital is the new status quo.
Use of tech and digitally enabled interfaces, tools, and apps have proliferated in the life of today’s American consumer. Across all industries, what was originally thought of as innovative or forward-looking is no longer so. For a firm to have a website, Twitter account, and mobile app is great; but that is just the start. Are these tech applications empowering today’s consumer? If not, the firm can be falling behind – and fast. Digital options and interfaces are no longer reserved for the nimble tech start-ups of the world, they are a must, especially when we turn to the financial services industry.
Trend #2: Financial service firms take a look outside.
Financial service firms may feel the struggle to keep up. The most relevant and impactful innovations will need to come from the outside. Today’s consumers would like to manage their finances like they manage all other aspects of their lives: through a digitally enabled interface and a few clicks. And the real innovation today is coming from the most consumer-centric business – think retail. This means that financial services firms will need to hone their learnings from the outside.
Trend #3: The world has changed in a few short years …
The rate of acceleration of digital capabilities has picked up tremendously. Looking back at 2010, we saw that consumer banking firms were quick to integrate mobile apps into the marketplace. Over the past six years these mobile applications have grown more interactive and enabled. More high-touch, consumer-facing industries moved to innovate, but the need for innovation has moved to the more “traditional” financial services like insurance. Competition is growing, R&D cycles are more condensed, and consumers are more tech-savvy and increasing their demands – the time to innovate is now.
Trend #4: … Thanks in large part to Millennials.
The Millennial generation (those currently aged 18-34) is coming of both age and wealth and demanding more products and services that best meet their needs. This generation comes to expect a digitally enhanced experience and does not necessarily know how to operate in the “old” way. And considering that by 2017 Millennials will have more buying power than any other demographic in the U.S., this is not something to sneeze at.[i] So what does this mean? This means more digital options, and a need for an omni-channel experience. This generation is looking for instant gratification and will quickly defect if they are not happy with a provider.
Trend #5: Understanding the Impact in Financial Services
This new digital innovation is not the exclusive territory of a narrow elite in the marketplace; it is everywhere and it is now. Consumer banking firms have been quick to address the needed innovations that consumers demand but now is the time for the rest of the financial services industry to catch up. As we see the world of the “Pays” (Apple Pay, Android Pay) become more commonplace and more insurance claims processing offered through smartphone apps, we can suspect that the next innovation is right around the corner. Will you be prepared to compete when this innovation arrives?
Want to learn more?
Download our one-page overview of digital capabilities in financial services to understand more about these current trends and potential impacts to your business.
[i] “Ten Things Millennials Won’t Spend Money On.” Money Magazine. July 16, 2014.