Payments Functions Trailblazers: Personalized Finance Management | Market Insights™
June 1, 2017
Payments Functions Trailblazers: Personalized Finance Management
Payments Functions Trailblazers: Personalized Finance Management
Payments Functions Trailblazers: Billing
Payments Functions Trailblazers: Authentication & Protection
From an initial list of 125 startups, Everest Group narrowed the field to 40 firms based on their ability to demonstrate innovation in the payments value chain
FinTechs are succeeding in disintermediating the traditional payments landscape based on their ability to
Robotic process automation, analytics and consumer-facing technology solutions drive 10 percent growth in banking BPO market.
“If banks do not get their act right, they might soon lose their relevance,” claims Everest Group in new research addressing the business process outsourcing (BPO) market in the banking industry. The fight to remain relevant in an evolving market of new-age consumer preferences and unprecedented external pressures is driving demand in the banking industry for technology solutions and third-party assistance, as reflected in an approximately 10 percent compound annual growth rate in the banking BPO market.
Describing the future outlook for banks, Everest Group points to evolving consumer preferences, macroeconomic and regulatory pressures, and increased competition from non-traditional players. Traditional, brick-and-mortar bank branches are losing significance as consumer interest in traditional banking channels declines. Banks are also under serious pressure to reduce costs, increase profitability and respond to greater regulatory and compliance requirements. Furthermore, competition from non-traditional sources is on the rise. Financial technology companies (FinTechs) are a serious threat as they provide a better consumer experience and benefits such as ease of use and improved functionality. Also, the market for digital wallets (e.g., Apple Pay), person-to-person (P2P) transfers (e.g., Facebook Messenger and SnapCash) and new-age banking solutions (such as applications for wearables, voice-activated assistances and personalized interfaces) is growing rapidly.
“Consumer preferences are evolving fast, and banks need to align themselves with consumers’ desires,” said Anupam Jain, practice director at Everest Group. “The consumer wants their financial partner to be integrated with their daily life and to be easy to access. They want real-time advice based on their own transactions and behavior. This is why we are seeing growth in banking BPO: service providers can support banks by offering domain expertise and analytics; by leveraging technology to offer modern services; and by using tools like robotic process automation (RPA) to improve efficiency and cut costs.”
Jain points to four case studies cited in the research:
Other key findings:
These results and other findings are explored in a recently published Everest Group report: Banking BPO Annual Report 2016: Riding on the Digital Wave and Advancing in Automation. The report provides comprehensive coverage of the global banking BPO market including detailed analysis of market size and growth, buyer adoption trends, solution characteristics and the service provider landscape.
A critical factor behind the Wells Fargo fiasco was the incentivizing of employees based on their ability to achieve their sales targets by cross-selling products. While this is the easiest and lowest cost model for defining and measuring sales team performance, it can lead to fraud if left unchecked. In Wells Fargo’s case, over 5,300 employees were fired for fraud that occurred across multiple years and led to the exit of CEO John Stumpf.
The scandal raises serious questions. Did Wells Fargo not have the data and analytics tools needed to identify fraud that had been going on for so long? Did the bank’s processes not have a channel to capture customer feedback on transactions to raise a flag for the fraudulent activity? Can we create employee performance measures other than sales targets?
To answer these questions, I believe banks need to go back to services marketing basics 101:
If Wells Fargo had measured the cost of acquisition per customer and had the ability to drill down at the sales representative level, it would have realized that the 5,300 fired employees had unbelievably low cost of customer acquisition for the sales they made over the years – meaning they were doing amazing, or fraudulent, work. Whichever the case, the bank would need to explore further.
These days, measuring customer satisfaction after every transaction is the norm in many industries. After every call I make using Skype, the application asks me to rate my experience. The same is true for every Uber ride I take, and each time I book a flight online.
Can’t banks do this? I believe they can. It makes sense for multiple reasons:
While there are many more reasons why measuring customer satisfaction is valuable for banks and customers alike, let’s dive a little deeper into the idea of using it to measure sales team performance.
Banks can use the customer satisfaction measuring mechanism to capture feedback that enables measurement of the effectiveness and value added by the sales team member across the customer lifetime journey, from being on-boarded to systems to purchasing products to retiring products.
By embracing a customer-centric design philosophy for all its internal processes (not just for its products and services), including performance appraisals of all employees, with every KPI being linked to customer satisfaction, banks will be able to create a consumer-centric enterprise.
True that Wells Fargo’s case has made the idea of cross-selling a villain. But we must realize that its debacle was also caused by other more pressing issues such as top management failure to respond to the matter in time, lack of data and analytics solutions to identify fraudulent transactions, and the organization culture that promoted unethical behavior.
FinTech players in the market are looking to disrupt traditional financial services players by leveraging technology and designing for customers. However, they face challenges in terms of gaining customer trust and loyalty while building scale. Traditional banks boast of having scale and years of customer trust. But, we are witnessing erosion of that trust. While financial services enterprises are investing heavily to embrace the wave of digital disruption from FinTechs, they need to ensure while they pursue this strategy they continue to protect their competitive advantage of years of customer trust.
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