In financial services, technology is reshaping the front office

Financial institutions have been making strides toward a customer-centric culture. Do the customers feel it yet?

They might before long. Digital disruption is threatening incumbent firms’ control over the customer experience, prompting leading firms to take a harder look at the makeup of their front office. To understand some of the ways that this is playing out, let’s look at the front office from three angles: automation, regulation, and talent.

Automation

To reduce costs, incumbent firms are eliminating in-person services in favor of digital self-service. They’re also looking into technologies that help them anticipate customer needs and cross-sell fee-based services more efficiently.

For their part, customers—retail and corporate alike—are demanding seamless, tailored product and service choices. They also expect user-friendly interfaces along with a level of service once reserved for the biggest of spenders. And if customers don’t get these things, they can now take their business elsewhere—perhaps to one of the e-commerce or fintech players that have entered the market.

What we may soon see: wealth management firms using artificial intelligence (AI) to customize strategies for clients, banks pooling customer data for personnel to tap into during sales meetings, and insurers embedding physical objects with wireless technologies so they can offer coverage at the point of need.  

Regulation

For incumbent institutions, regulation in the front office can be both a plus and a minus. On the plus side, it creates barriers to entry that blunt the competitive threat from upstart providers, notably technology companies. On the minus side, regulation is costly and makes it harder to provide individualized offerings through traditional channels.

But customers continue to derive confidence from regulatory supervision. They also expect rapid onboarding and a seamless customer experience. And, increasingly, they’re demanding greater control over their own information—with regulators in various jurisdictions beginning to signal their support.  

What we may soon see: investment firms engaging third-party platforms to manage know-your-customer processes, insurers applying cognitive technologies to resolve non-routine customer issues, and loan officers using blockchain technology to confirm identity and financial history at the point of sale.

Talent

Financial firms famously rely on technology talent. Their needs extend from application developers and support engineers to data modelers and cyber-risk experts. The transition to mobile technologies, with open banking on the horizon, has further raised the demand for IT know-how.

Meanwhile, as technology and data sources look increasingly similar across the industry, customers are left to differentiate firms by their front offices. The standouts combine creative domain expertise with technical skill. As a result, technology is making its way into customer-facing roles, reducing handoff issues along with the need for divisions of labor.

What we may soon see: Brokers deploying bots to carry out trades, banks using AI to interact with customers, and firms in all sectors approaching the front office as a set of capabilities rather than colleagues.

As I’m sure you’ve noticed, some of the scenarios I’ve laid out here seem pretty futuristic. How close are we to realizing them? That’s up for discussion at this year’s World Economic Forum meeting in Davos, Switzerland, which begins on January 23. I’ll be there, meeting with clients and gathering the latest news on disruptive innovation in financial services.

For an update of what we’ve been up to with the World Economic Forum, see our summary report, Beyond fintech: Eight forces that are shifting the competitive landscape. In the meantime, please weigh in here. I’d like to know what you think.