The financial services industry (FSI) is certainly making strides in digital transformation, but the road ahead remains long.
That was the key finding of a new study by Adobe and Econsultancy, which looked at how average and below-average FSI performers stacked up against their industry’s digital leaders. (Note: Adobe is CMO.com’s parent company.) The majority of average performers and laggards—dubbed “mainstream”—reported their companies were neither leading the way nor disrupting the industry. Instead, 46% of mainstream executives said their organization’s strategy is that of “fast follower,” meaning they watch the market closely and match demand once a concept is already proved.
“The financial services companies that are leading disruption report that their digital sales are higher, their future goals for digital sales will be higher, that what they spend currently in digital is higher, and their future investments in digital will be higher,” said Christopher Young, director of industry strategy and marketing for financial services for Adobe’s Digital Experience Business.
That said, the majority of FSI organizations reported they have made commitments to digital transformation, and most have a digital center of excellence or one specialty team that handles it. Those that don’t currently have a dedicated team said they realize they must make organizational changes and expect to shift to a center of excellence model.
“Financial services is still an industry that’s in flux after the shift from human interactions to the digital world,” Young said. “They still rely heavily on offline interactions through bank branches, investment advisers, or insurance agents to drive most of their sales. But what the leaders show in this report is that digital maturity is attainable. Financial services institutions, in many cases, are struggling with excelling in digital, but it can be done. Unlocking the value of digital and driving significant digital sales is possible.”
Generally speaking, most companies across the FSI spectrum said they plan to increase their digital investments in the year ahead. Retail banking respondents are most likely to do so (76%), ahead of insurance (71%) and investment firms (65%).
Across the board, FSI respondents said they see the greatest impact on their digital maturity advancement from multichannel analytics that blend online and offline data, according to the report. FSI digital leaders, however, are further along in their journey to deliver personalized customer experiences—one of the reasons they are ahead of the competition.
Indeed, the financial services industry is beginning to invest more into its digital foundation, with more companies using data management platforms (DMPs), marketing attribution tools, marketing automation technology, and multichannel analysis solutions. However, large gaps in adoption exist between mainstream companies and digital leaders.
“We looked closely at the types of technology responders are using today and saw some big differences between what the leaders were using and what mainstream, in many cases, were not using,” Young told CMO.com. “And those were things like data management platforms, attribution, and multichannel analytics. These are technologies or capabilities, inherently, that enable greater precision in targeting and personalization. All the benefits that the leaders are expressing are backed by more advanced capabilities.”
Another reason the digital leaders are ahead of the pack, according to the report: A larger proportion of them have turned to cloud computing technology across the organization—not just in marketing.
Looking ahead, 90% of digital leaders said they have begun to apply artificial intelligence in their customer-facing areas or have prioritized it for 2017, compared with 78% of respondents overall, according to the report.
“I think it’s really important to note that a lot of the lag in financial services has to do with organizational matters,” Young said. “I’d love to say that this is solely a technology issue, but it’s not. A lot of the times you find the financial services company in conflict with itself. These are large, complex organizations. They do have competing internal interests. They are product-centric in many cases, channel-centric, and not necessarily customer-centric. And a lot of what holds back their digital maturity is themselves.”