Digital Trends in Financial Services
Narrowing down to the one basic necessity of every Indian – financial prudence it is a clear that government directive of convergence of public systems and data is to bring ‘Financial Inclusion’ to every citizen of our country. Such a massive agenda brings out an inevitable need for every institution to start thinking from a digitization point of view to service the customer and merge with the overall mandate of financial inclusion.
Financial advisors should embrace technology and accept that financial services are now an equal mix of domain knowledge and technology expertise; unlike 10 years back when domain expertise was the only factor in determining the success
To large extent digitization of financial services is pegged on Aadhar – the Indian equivalent of social security number of the US. Government is steadily building penetration of Aadhar and also linking every service to it. Today using Aadhar you can access almost any basic financial service without a piece of paper – both Banking & Investing. This foundation will go a long way in making consumption of services through digital mediums; the mainstay and in turn the primary way of engaging customers for intuitions like ours. Coupled with these advanced techniques in big data, machine learning, blockchain are giving a very fresh perspective to this age-old business.
Technology brings the underlying benefit of comfort and control at the same time. This is the sole reason why adoption is faster than ever. Speaking from a client’s standpoint it gives transparency, control over the transaction and for institutions it brings a unique opportunity of achieving scale while keeping margins intact.
Having established fact that technology is an indispensable part of the financial ecosystem let us drill down to the simple; yet impactful avenues where I feel it is being used or will play a pivotal role:
1. Mobile first Approach
India is one of the fastest-growing internet markets and penetration is growing by leaps and bounds. Nearly every consumer company is operating through apps and financial services are no exception to it. Every new offering is app-driven and this phenomenon is expected to continue on the backdrop of higher internet penetration and affinity to access everything on mobile. Having a mobile presence also improves the readability and acceptance by a great degree. Companies like ours have a ‘mobile-first’ approach in place to make sure every offering is available over a smartphone and it will not be a matter of choice going forward.
2. Last-mile connectivity
India is land of many cultures, and because of the diversity, there are actually varied financial needs and understanding across the country. A huge portion of regional demographic audience exemplifies the business case for companies like us to provide services with a regional language feature to make sure the acceptance rate is higher. Such is the power of Indian language users that Amazon already has a Hindi version to its application.
Financial service providers like us are already reaching out to their prospects and clients in other languages like Hindi, Tamil, Gujarati, etc. through voice blasts, SMS, email, WhatsApp communication, etc. To top it all there are visible developments by leading players to regionalize their mobile & web offerings as per the location to improve readability and in turn, drive traffic.
Not only is the content being localized, but the medium with which it is consumed is also given the local touch. Videos are becoming increasingly important to drive home in the simplest of the manners. There are many large financial players who have now adopted the video route for sending quarterly results, portfolio performance, etc. through videos which makes it crisp, easy to grasp for clients and aid in making the right decisions.
Arun Chaudhry, Head-Online Business & Product Development, Broking & Distribution, Motilal Oswal Financial Services Ltd
3. Personalization – moving from Optional to Way of Life
Effective personalization is the linchpin of a successful financial services company these days. Just to put things in perspective, personalization that I am talking about moves beyond the realms of segmenting customers, personalization of websites, etc. The true importance of personalization lies in transforming the interactions with the customer by using data and anticipating “individual” needs and not “customer” needs. Being a B2I oriented player also helps in engaging with the customer at the exact moment of behavior rather than being generic. This improves the chances of getting the desired outcome manifold.
Personalization is in the form of 2 things which clearly impacts the customer:
• Product – customized advisory products offer individual portfolio investing and no two portfolios are alike.
• Advice – there are tools in the market which use AI and insights to provide recommendations and on-demand report specific to that individual.
If you look around us, most banks and financial players will use personalization as a means to reach out to individuals and make the products more and more specific rather than “one size fits all” concept.
4. Extensive use of Artificial Intelligence / Machine Learning in business
With increased digitization and financial inclusion, more and more people are being exposed to the financial ecosystem. This also necessitates the need for providing the same level of service to an increasing base of clients; which makes it very difficult to address in a conventional manner. This is the basic tenet of having AI practices in place which actually has the capability to analyze huge volumes of data and bringing out patterns of behavior and in turn needs of the clients.
Using advanced machine learning and AI principles provides a huge lever and brings out clear advantages to institutions servicing a large base –
1. Behavior-driven engagement – having the capability to analyze client behavior and touchpoint preferences, gives an immense ROI advantage when we touch base with clients to pitch offerings. Using behavior-driven engagement we are now able to exactly reach the client at the right moment & with the right information at hand. This makes the client very comfortable in establishing a long relationship with us as ‘trusted advisors’ and paves the way for a sustainable business model.
2. Reduced Manual Effort – Using NLP techniques (both voice and text) we are now in a position to mechanize routine interactions through a robot and chatbots are very common these days. Taking this thought further, there are enough reasons to automate emails and voice-based transaction systems for all routine work. This significantly reduces cost and frees up advisor bandwidth which can be better utilized for complex interactions with clients. For the client, it translates into lower TAT and standardized responses across the engagement.
3. Predictive analytics for proactive action – till date most companies in my domain have been taking a reactive approach to client behavior. Analytics and unsupervised machine learning can be predictive in nature and provide fairly accurate trigger signals for a specific client behavior – for example ‘when will a client stop investing’, ‘what is the client likely to buy next’ etc. Using such triggers, we can take proactive measures to direct our efforts towards the desired outcome.
5. Rise of pre-packaged solutions
The run for a better life has resulted in what I call “Money Rich Time Poor” clients – basically there is a good section of people who have the money but neither the means nor the expertise to learn the tenets of investing and manage money, yet they seek control in their own hands.
Almost all financial companies have spotted this evident necessity and nearly all advisory companies like ours have come up with packaged offerings giving the user the flexibility, transparency and at the convenience of investing at fingertips without having to go through the steep learning curve. For companies like us, such tech backed products bring in sustained revenue, scalability and client longevity.
To conclude I would like to say that financial advisors should embrace technology and accept that financial services are now an equal mix of domain knowledge and technology expertise; unlike 10 years back when domain expertise was the only factor in determining the success.