How the cloud transforms customer experience in financial services

A McKinsey survey looking at the banking, auto insurance, retail energy, health insurance, and mobile communications sectors found that the quality and availability of digital interactions have a significant impact on customer satisfaction. Adding digital offerings is crucial to what consumer-facing companies must do to remain competitive in the face of increased customer expectations.

However, some organisations still only offer basic digital services, and not all have created integrated, omnichannel experiences. Companies that use technology to transform customer experience have increased customer satisfaction by 15 to 20%, reducing cost to serve by 20 to 40%, and boosting conversion rates and growth by 20%.

As consumers have come to expect the same experience of their financial services providers that they have elsewhere in their lives, traditional financial institutions (FIs) are increasingly looking for ways to improve customer service and deepen engagement. For many, optimising the digital experience for customers is a priority. From leveraging omni-channel communication strategies to creating more personalised experiences, the goal is to deliver the right message, at the right time, in the right channel.

Fintech firms have been faster to innovate. Many, in fact, were born to address consumer dissatisfaction with traditional financial services providers.

These incumbents - including Barclays, Goldman Sachs, Rabobank and National Australia Bank - are increasingly turning to the cloud as a way to accelerate their digital transformation. Shifting away from legacy infrastructures and towards cloud eliminates the undifferentiated heavy lifting that takes up precious time and resources, giving the institutions more opportunity to focus on responding to customers' needs and achieving greater elasticity, flexibility, and cost-effectiveness.

Finextra Research has spoken to Amazon Web Services’ Lynne Zeldenryk, Digital Innovation Program for Financial Services, and Andrew Levy, Business Development for Digital User Engagement, about the growing role of cloud to help meet dynamic customer expectations. This includes enabling a more holistic view of the consumer, quickly and easily implementing digital solutions at any scale, and making it machine learning and artificial intelligence more accessible for surfacing insights.

What does digital user engagement mean for traditional financial institutions?

Digital user engagement (DUE) has evolved from simply interacting with customers via an online service to anticipating and understanding their needs based on their actions and behaviours. As a group, FIs have faced persistent challenges that slowed advancements in this area.

“The past and present state of digital engagement within the financial services industry has been largely focused on expanding the number of engagement channels,” says Levy.

“This is no longer enough.”

Whilst many fintech players such as TransferWise and Robinhood have harnessed mobile-first services to acquire and scale new customer bases quickly, consumers today do not consciously separate digital and in-person experiences. They have grown accustomed to real-time access to information from any device, any location and at any time. As a result, they expect “right-time” information and customised offers to fit their needs.

Just as consumers can buy products with speed and convenience, they demand the same from their financial service providers. For incumbents, this means modernising their end-to-end customer lifecycle.

“Consumers want to purchase new products easily and affordably, to have flexibility in the ways they engage with their financial services providers, and to have personalised services that are focused on their individual needs,” Zeldenryk says.

This applies regardless of financial services delivered. Consumers want to be able to securely access and monitor their accounts, check transaction status, receive instance account balances and fraud alerts, and access support 24/7 in their preferred channels. For instance, younger investors are choosing online digital wealth managers who provide generic guidance based on time horizon, lifestyle and risk tolerance, while policyholders are increasing seeking tailored claims and real-time status updates.

“Customers have more choice among financial services providers than ever before,” Zeldenryk says.

“If a service is difficult to use, time-consuming, or non-transparent, consumers will switch to a provider that can better demonstrate value for their needs.”

In response, FIs are actively re-thinking their methods of engagement in order to maintain relevance, protect their customer bases, and grow revenue. Getting to an ideal digital state -across email, SMS/text, messaging, mobile app, website, customer portals, push notifications, voice and more - requires looking past the legacy technologies and sprawling infrastructures so many of them are still using.

How can cloud address the need for modernisation?

Many FIs are burdened by legacy systems and infrastructure, which makes deepening customer engagement at scale a huge challenge. Cloud enables financial institutions to run an experiment in one area of the business and then replicate it as necessary across geographies and regions.

“With cloud, you can build new solutions in one market, test and iterate that solution and then repeat those services easily across different geographies. This is a significant benefit, particularly for the large international companies that we work with,” Zeldenryk says.

This addresses the key problems FIs have in being able to solutions that can scale quickly but without incurring debilitating costs. This makes the cost benefit of cloud’s pay-as-you-go model extremely attractive.

Consumption-based pricing allows FIs to experiment with new offerings without the upfront cost of investing in new hardware, ongoing maintenance expenses and licencing commitments. In addition, physical infrastructure lacks the elasticity of cloud, preventing FIs from quickly and easily spinning up and shutting down resources should circumstances change or demand fall.

Zeldenryk elaborates: “Applications on the cloud, however, can scale automatically during peak periods or major events, enabling new capabilities to be stood up quickly and expand scale of services rapidly when events arise. As needs evolve, services can be dropped if they no longer suit business or customer needs.”

This can deliver the competitive edge in launching new products when accelerated time to market is increasingly important. Traditional FIs have shortened production cycles, and many are using cloud to shrink build time even further.

“One of the key questions I ask customers is what is the timescale from the spark of an idea to launch and the standard response is somewhere between 18 and 36 months,” Zeldenryk claims.

“Using AWS, some of our customers are launching net new capabilities to meet customer demands in as little as eight weeks and are seeing significant improvements in customer experience ratings and net promoter scores within the first few months of launching.”

How does cloud give digital user engagement new meaning?

FIs that attempt to revamp their DUE strategy can find themselves weighed down by undifferentiated heavy lifting that takes away precious time, cost, and talent resources from focused business operations. On the other hand, those that turn to cloud can quickly and easily meet the technology requirements and drive meaningful business outcomes such as higher customer satisfaction scores and retention.

Not only does cloud break down data siloes for a more comprehensive view of the end customer, it offers the data storage and compute power required for generating more frequent, improved customer insights, which have a direct impact on the bottom line. In order to provide personalised service and engagement, FIs must have a centralised view of each customer.

According to Zeldenryk: “For institutions running on legacy systems, it can be difficult to aggregate data across all channels and business units to gain a consolidated view of the customer. Geographically dispersed and siloed systems increase challenges with aggregating the data needed for delivering reliable insights and proactive customer engagement. Having disparate systems makes analysis of consumer profiles and engagement challenging, minimising the ability to effectively and efficiently personalise offers and communication.”

This means that FIs often ask their customers to provide the same information repeatedly - when they’re opening an account, applying for loans, or requesting new credit. From the consumer perspective, filling out lengthy forms to purchase new products, submit insurance claims, request policy adjustments, and process asset transfers is tiresome and results in the feeling that their financial services provider doesn’t really know them.

Moreover, as each of these transactions requires the consumer to engage with different parts of a financial services provider, maintaining consistency in brand and service across multiple parts of the organisation also means that customer experiences can vary markedly across different areas of the same business.

“An advanced digital messaging and communications strategy creates a powerful data flywheel for financial institutions, enabling them to learn more about their end customers, make smarter decisions, grow share of wallet, and deepen customer engagement,” Levy says.

While traditional digital channels dominate, FIs should not overlook their contact centres. Thanks to cloud-based contact centres, consumers are no longer interacting with only agents on the phone. For a comprehensive DUE strategy, upgrading their contact centres can complement digital tactics.

“We are working with several financial institutions to scale their cloud-based contact centers using Amazon Connect, which allows agents to work remotely and efficiently with web chatbots and voice conversational agents,” Zeldenryk describes. “Amazon Connect uses past interactions, purchases, contact history, and customer behaviour to anticipate questions before they are asked.”

According to Levy, delivering these intelligent customer communications is key.

“Financial institutions can ingest more customer data and provide more opportunities to analyse and operationalise that data,” he elaborates. “This drives greater personalisation and responsiveness to individual customer interactions and in turn, unlocks cross-sell, up-sell, and loyalty opportunities for better enterprise-wide business outcomes.”

Transforming DUE can result in expanded share of wallet, increased customer lifetime value and net promoter scores, more referrals and better word-of-mouth, reduced customer churn, and decreased cost of new customer acquisition. As Levy summarises, “the business benefits from having happier customers and successful digital direct-to-consumer programs.”

Cloud is also enabling FIs to improve their recommendations systems. The use of artificial intelligence (AI) and machine learning (ML) has accelerated in recent years due to the cost-effective and virtually unlimited capacity cloud provides.

“AWS offers a range of artificial intelligence and machine learning services that make it easy for financial institutions to build very sophisticated recommendation systems, surface customer sentiments and trends and so on,” Zeldenryk describes.

“For developers with no prior ML experience, we have a suite of pre-trained AI services, while our full managed ML service helps data scientists build, train, and deploy ML models quickly and easily at any scale - all in order to better respond to customers’ needs.”

Many FIs also are pairing ML services with cloud-based omni-channel engagement services.

“Not only does Amazon Pinpoint power unified communications, but it also generates an event stream of consumer interactions,” Levy says.

“This allows firms to achieve two things: deliver the recommendations and next-best actions generated by ML and retrain their models in real time based."

What are best practices for digital user engagement on cloud?

Zeldenryk recommends early and ongoing alignment between the business and technology teams when FIs migrate to DUE in the cloud. Otherwise, digital transformation is difficult to achieve: taking longer, costing more, and delivering less.

She states: "Cloud is a key business enabler for financial institutions. For those that are doing this well, it is the business leaders - not just IT - who are driving the adoption of new services to better respond to their customer needs."

Zeldenryk leads the AWS Digital Innovation Program, which helps companies define and execute opportunities in the cloud. The program is customised for FIs, bringing together Amazon’s culture of innovation, deep industry knowledge and technical expertise.

She describes the work done with AWS customers on their innovation programs and cites two examples of how cloud was used for DUE enhancement. The first is a retail bank that set out to use ML for personalising its offering but did not first analyse customer needs.

"In this case, the bank wanted to understand how machine learning could provide new opportunities to serve customer needs more effectively,” Zeldenryk says.

“We took the time to deep-dive its business and customer needs before looking at the technical expertise required and what solutions could be architected based around those opportunities, ultimately determining the most effective path to creating a more personalised online banking experience.”

AWS helped the bank develop a business case and framed a proof of concept (POC) for a new build using its mobile and personalisation services, including AWS Amplify, Amazon Pinpoint, and Amazon Personalize. This has led to other areas of the bank replicating the solutions and exploring further opportunities to enhance customer engagement through cloud-based solutions. 

Other customers invest significant time and resources to hold hackathons for their technology teams to collaborate on new projects. This approach is common across the industry.

“Whilst hackathons do develop technical awareness and capabilities around cloud services, many of these projects are done in isolation from the business,” Zeldenryk points out.

“This leads to solutions being built without clear application to business and customer needs.

For one AWS customer, Zeldenryk first worked with the business to understand its needs for better supporting customers. Business leaders first identified 15 core challenges that became the focus of the hackathon, resulting in the building of 15 prototypes. Although the hackathon originally had funding for only three prototypes, business leaders who had been exposed to the new services continued building another six solutions.

“We identified opportunities where the hackathon could support building proofs of concept to solve real business needs,” Zeldenryk describes. “In this way, the hackathon became more than an educational exercise, instead leading to real solutions being built for business and customer needs.”

In an environment with rapidly changing customer expectations, FIs have more opportunities to serve their customers through digital means. Those that recognise the value of cloud for smarter, faster experimentation while reducing costs and meeting security and compliance requirements will gain a critical advantage in the market.

To learn more, please download the Amazon Connect eBook entitled ‘Contact Center Optimization for Financial Services.’