Digital Disruption in Financial Services: A Surprising 1-2-3 Connection
It’s not news that the financial services industry is being vigorously shaken by digital disruption. While this is true across industries, the wind gusts are particularly strong for financial companies.
Financial Services (FSI ) firms are predominantly aiming their digital business initiatives at improving their customer experience. Yet, what about employee experience? Is it a human resources initiative to attract talent and improve retention? Well yes, but also and perhaps surprisingly, it’s the blended focus on employee experience and customer experience that can better prepare FSI firms for a digital future.1
- Digital Disruption—an FSI Imperative
We think of this cross-industry disruption as a “digital vortex,” with industries inevitably moving toward a digital center. There, business models, offerings, and value chains are digitized to the maximum extent possible.
FSI companies are among the most impacted by this vortex effect. More than a year ago, the Global Center for Digital Business Transformation ranked financial services as fourth of twelve industries regarding the extent of competitive disruption it will face, resulting from digital technologies and digital business models. Recently, a Deloitte study reconfirmed this, finding that 90% of financial services respondents strongly agree/agree that digital technologies are disrupting the industry to a great or moderate extent.
- Customer Experience—Top FSI Focus for Digital Business
FSI companies are clearly targeting their digital business initiatives at improving customer experience. PwC noted that bank executives say that a customer-centric business model is ‘very important’ and also 75% of banks are making investments in this area.2 The Deloitte study found that 93% of those with a digital strategy strongly agree or agree that the objective of their digital strategy is to enhance customer experience and engagement.
- Marriage of Customer and Employee Experiences—Combination Effect
Consider this comparative point. As above, more than 90 percent of the Deloitte study respondents agreed that digitization is strongly disrupting FSI. Additionally, a similarly high percentage of respondents whose firms have a digital strategy stated that its objective is enhancing the customer experience. Makes sense so far. Yet less than 50 percent of the respondents agreed that their firms are adequately preparing for digital disruption. Why the disparity?
A limited focus on employee experience may be contributing to low preparedness for the digital future. In some ways, employee experience remains a blind spot in FSI firms’ digital efforts. Seventy-six percent of the Deloitte respondents considered it extremely/very important to work for a digitally enabled organization. Yet, only 38 percent strongly agreed/agreed that their firms provide resources and opportunities to develop skills to thrive in a digital environment.
By focusing primarily on digitally improved customer experiences, FSI firms are not devoting enough attention to the flip side—employee experience—and the combined effect of both. By interconnecting the two, companies may create rich customer experiences through high levels of employee engagement.
Spur Your Thinking
Digital disruption is coursing through the finance sector. Spur your thinking by reviewing a visual depiction of what’s happening, what’s at stake, how you might respond. The positive correlation between employee experience and customer experience might be a new twist to consider.
1 Digital transformation in financial services: The need to rewire organizational DNA, Deloitte University Press, 2016
2 Retail Banking 2020: Evolution or Revolution? PwC, 2014