With the Internet of Everything, Canadian Banks Can Drive a New Level of Customer Engagement — and Profitability

For financial services institutions, the battle to acquire new customers and increase business with existing clients centers on customer engagement. A superior engagement, differentiated experience, and sense of distinctive value at all points of interaction with customers (and potential customers), is key.

With more Canadians seeking to fulfill their service needs through mobile and other digital channels, Canadian financial institutions must ensure that their operations, distribution, and delivery models are digitized to produce the highest value to customers. The way to do that is through the Internet of Everything (IoE), the networked connection of people, process, data, and things.

What’s at stake? Quite a lot it seems, as indicated by the results of a new Cisco study of more than 7,200 financial services customers in 12 countries. Financial analysis within the study suggests that a bank with annual revenues of $5 billion has the potential to increase its bottom line by 5.5 per cent. That’s a net gain of $189,000,000!

Canada and the World

As shown in the survey, Canadian Financial Services firms are faring better than their global counterparts in a number of areas. Canadian Customer perception of how well their needs are understood, the level of trust they have in their financial services institutions, and their willingness to switch their business to traditional competitors and new entrants such as non-banks are better in Canada than in the other countries in the survey.

These results are due to a number of factors, including the level of investments directed toward building digital distribution and service delivery capabilities. Canadian financial services firms are already on the path to becoming digital, with a number of innovations in the areas of mobile and Internet-based client interaction and transaction offerings. However, more must be done, and quickly. The results clearly show the need for Canadian financial services firms to expedite the transition to enable more and complete services in the digital channels.

How so? In the survey, 75 per cent of respondents indicated that they would move their money to institutions that offered digitally delivered services that made their interaction and transactions easier, faster, more convenient and productive. In addition, 43 per cent of customers globally said that their primary bank doesn’t understand them or their life situations well enough.to provide the right advice or the expected level of overall value.

As a consequence, there’s a value-gap for customers and an increasing risk that they will seek another financial institution – possibly one outside the traditional realm of banking – to fulfill their needs.

The good news is that, for the most part, this value-gap is smaller for Canadian customers than global ones. When it comes to being understood and getting the right advice, only 16 per cent of Canadians felt the advice given was ineffective. Yet for Canadian banks, important caveats emerged in the survey: one in five Canadian respondents would consider a different institution for their next service; 28 per cent would choose an institution that offers fully digitized services such as video-enabled virtual mortgage information, application, and approval capabilities; and 17 per cent would move their money for similar virtual financial advice via a personal mobile device or a digitally equipped branch.

These are significant numbers and it is clear that delivering these digitally-enabled services can help Canadian Financial Services firm to retain customers (or lure them from competitors).  As shown through the results, Canadian customers’ needs and expectations of financial institutions are changing fast and being influenced by their experiences in other sectors like retail. Furthermore, their increasing affinity and comfort level with digital transactions is directly related to their use of social media in their day-to-day interactions.

Canadian financial institutions the message in the Cisco survey is clear: Canadian customers are ready for – and want more – access to sophisticated digital services.

The Internet of Everything (IoE)

As a part of the survey, Cisco tested the desired and perceived value of five digital delivery concepts enabled by IoE. The concepts provide better advice (virtual financial advice, virtual mortgage advice, automated investment advice) and more valuable mobile services (branch recognition, mobile payments). They also closely align to the core strengths of Canadian financial services firms; their coast-to-coast physical branch networks, deep financial expertise and rich base of customer data. The concepts also create the capacity to effectively serve the many newcomers who arrive in Canada each year and who need access to financial guidance in their own language.

When asked about the potential value of video-enabled interaction with mortgage specialists and financial advisors and automated advice systems, 60 per cent of Canadian respondents indicated that they would move their money in order to access one or more of these IoE-enabled capabilities. Forty per cent indicated that they would be likely to open an account with an institution in order to gain a feature-rich mobile payment offering. Nearly one-third (32 percent) would move at least a portion of their savings and investments to a financial services organization offering an automated advisory platform.

For Canadian financial services firms, the digital transformation of traditional distribution and delivery operations are vital for continued growth, winning new customers, and keeping existing clients.

Digital transformation is key to enabling the continued strong historical trajectory of bottom line profitability. Digitizing the operation, distribution and delivery model will enable Canadian financial services firms to massively scale advice and other valuable services to a broader and more diverse base of customers.  It will also drive internal productivity, optimize costs and increase the agility of the business (a key factor when considering their continued focus on expansion through mergers and acquisitions).

For Canadian financial service firms, the potential prize for successfully making this digital transformation is worth the effort and investment required. To capture it, Canadian financial institutions must continue to invest in IoE-enabled digital transformation and increase the speed and efficacy by which they bring new digital offerings to their clients.

By not making these changes, there’s a potential risk for significant business leakage due to the migration of clients, deposits and fee income to competitors.

How do you think IoE will influence the financial services industry? Leave your comments below.

About Geoffrey King

Geoff is the Lead for Cisco’s Business Transformation solutions for the Financial Services Industry in Canada. Geoff works with Business leaders in Retail Banking, Wealth Management and Insurance to develop initiatives that leverage Cisco’s expertise, products, services and partners to improve operating economics, deliver distinctive client experience, and drive service delivery model innovation. Geoff draws on a broad base of international leadership, business transformation and mergers and acquisition experience in large private sector organizations and private-public sector partnerships in Canada, the US, and Emerging markets. Prior to joining Cisco Canada, Geoff worked with the Toronto Financial Services Alliance, a strategic partnership composed of the major Financial Services organizations, three levels of Government, and Educational Institutions, focused on building the international reputation of the Toronto region as a vibrant and strong Top 10 Global Financial Centre. Prior to his return to Canada in 2009, Geoff was based in Barbados, where he was a member of the senior leadership team building and expanding CIBC’s Caribbean multi-line franchise, CIBC FirstCaribbean International Bank with operations across 17 countries, and in Houston Texas with Williams Communications Solutions, leading the integration of several acquisitions. M. King est le chef des solutions de transformation des activités pour le secteur des services financiers de Cisco Canada. Dans le cadre de son travail, M. King collabore avec des dirigeants d'entreprise des domaines des services bancaires au détail, des services de gestion de patrimoine et des assurances pour élaborer des initiatives qui tirent profit de l'expertise, des produits, des services et des partenaires de Cisco pour accroître la rentabilité des activités d'exploitation, offrir une expérience utilisateur distincte et favoriser l'innovation en matière de modèle de prestation de services. M. King s'appuie sur une vaste expérience de leadership international, de transformation des activités et de fusions et d'acquisitions, laquelle a été acquise au sein de grandes sociétés du secteur privé et de partenariats publics-privés au Canada, aux États-Unis et dans des marchés émergents. Avant d'entrer au service de Cisco Canada, M. King a travaillé au sein de la Toronto Financial Services Alliance – partenariat stratégique composé de grandes entreprises de services financiers, de trois paliers de gouvernement et d'établissements d'enseignement – centrée sur l'accroissement du rayonnement international de la région de Toronto à titre de centre financier fort et vibrant figurant parmi les 10 plus importants centres financiers au monde. Avant de revenir au Canada en 2009, M. King travaillait à la Barbade au sein de l'équipe de cadres supérieurs chargée de bâtir et de faire croître la CIBC FirstCaribbean International Bank, franchise multigamme de la CIBC aux Caraïbes, qui exploite des bureaux dans 17 pays. Il a aussi travaillé pour Williams Communications Solutions à Houston Texas, où il a dirigé l'intégration de plusieurs acquisitions.
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