How will digital disrupt the financial services industry over the next 10 years?
Over the past couple of days, I’ve been meeting with clients at Forrester’s Forum For Technology Leaders in Orlando. Clients mostly want to know how digital will impact their business. My approach in responding to this question is to think like the CEO of the company in question: First, understand the customer’s desires; then figure out how those desires can best be met profitably — I imagine how future technology changes might create new sources of customer value.
We’ve already seen massive change in the financial services sector: Technology is dramatically changing our customer experience and helping firms educate their customers. What more is yet to come? And what will companies need to do to win customers in the future?
While this is a complex question, it’s not hard to imagine a very different reality to the one that exists today:
Most parents cheerfully mark the key milestones in their child’s path to adulthood: first step,first word, first school, first sleepover, first broken bone, and so on. But for many parents, no milestone causes as much anxiety as “first-time driver,” which is bestowed on all USA-based teenagers upon their16th birthday.
While surviving the experience of having our child become a driver may seem far removed from the world of access governance and entitlement certification, I found some parallels between managing a teenaged driver and managing the access rights and IT privileges of the end users in your organization. You can read more about it in my latest report, “Wake-Up Call: Poorly Managed Access Rights Are A Breach Waiting To Happen,” but here is a quick preview.
A common problem facing parents of teenaged drivers and IT organizations is that they have properly authorized users but often lack visibility into actual usage of those access rights. In the case of the teenaged drivers, parents often seek data around vehicle usage (Where did it go? At what time and at what speed?). For IT security professionals, organizations can no longer rely purely on static lists of authorized users and their access rights. So, just the way parents can impose mileage restrictions (reading the odometer to limit the distance a car can go in a given night) or fuel restrictions, an IT security team cansupplement access governance processes with additional usage data such as:
1. Has the employee accessed the application/system during the last certification period?
2. How often did the employee use the given entitlement?
Omnichannel is now a must-have. At both events, omnichannel retail was front and center. Adyen underscored the opportunities inherent in integrating online and offline payments. At the Borderfree event, Stephen Sadove, the former chairman and CEO of Saks, kicked off the event with 10 disruptive trends. He declared that #1 and #10 were most important: #1 was the shift to omnichannel. Sadove cited the substantial gross margin implications of being able to move inventory between channels; he also emphasized it’s “not a sustainable point of view ” to believe that getting one view of the customer is just too expensive.
The demands of retail leaders have shifted. Other issues that came up regularly with attendees at both events were the changing needs of retail and the challenge of hiring qualified talent (“talent requirements” was the #10 big trend on Sadove’s list above). Today’s business leaders must be able to deal with a laundry list of new topics — e.g. mobile payments, cross-border eCommerce — many of which wouldn’t have registered on their agenda just a decade ago.
Naysayers love to complain that real customer experience (CX) improvement is only for the private sector because government is subject to unique and insurmountable pressures. Don’t believe these cynics. Many major corporations must overcome the same hurdles, and some federal agencies are finding ways to break out, too. Use this list of comebacks to subdue government CX skeptics the next time they start raving about:
Entrenched organizations. Even the most stagnant agency can change. The Department of Veterans Affairs (VA) is taking a wrecking ball to its ossified structure with a major CX pivot that includes an overhauled organization; revised policies and procedures; and personnel changes that include the appointment of a chief customer officer. Private sector companies in perennially paralyzed industries like airlines are also breaking free. Delta Air Lines has soared in our CX Index™ thanks to major innovations to its policies, procedures, technical capabilities, and training.
Complex regulations. Healthcare companies groan under the weight of federal and state regulations, yet some companies in this industry find new ways to provide outstanding CX while working within the system. Blue Cross Blue Shield of Michigan shot up more than 20 points in our CX Index last year by simplifying technical terminology and making interactions clearer for customers. Despite being hamstrung by outmoded regulations and congressional meddling, the US Postal Service just tied for first among the 18 federal agencies on our CX Index.
All the big data technology in the world won't close the gaps between data and action. One global bank told us, "even with all the capabilities and tools in place, we are drowning in data and starving for insight."
To harness the power of all your data to attract and serve customers -- to be a digital business -- you also need a new way of consistently harnessing insights that matter: insights teams using an insights-to-execution process anchored by a new digital insights architecture. We call this combination of people, process, and technology "systems of insight" (see Figure 1).
What we found is that successful firms go beyond big data and business intelligence practices to build the business discipline and technology to harness insights and consistently turn data into action. This approach works by linking business actions back to data and discovering and testing insights to take action (see Figure 2).
Systems of insight embody five essential advances over previous approaches:
Today, it is vital for companies to understand and connect to every moment of the digital customer journey. But for most organizations, there are so many delivery challenges that they can’t do it alone: 84% of companies we surveyed use agencies and/or system integrator partners to help deliver digital customer experiences.
Choosing the right services firm takes some match-making magic: the partnership can either end up as a happy marriage or end in bitter divorce. In order to help Forrester clients, we recently released our report, Market Overview: Digital Experience Services Providers 2015, in order to provide an overview of nearly 50 services vendors with significant digital experience delivery practices. These are all vendors that have experience helping firms strategize, design, implement, and optimize customer-facing web and mobile experiences. Over the course of this research we discovered:
Despite similar messaging, services vendors come from distinctive DNAs. Thousands of services providers have popped up, hoping to help firms solve these digital experience delivery challenges. But despite similar vendor promises that they can “solve it all” we found that firms come from a variety of different DNAs (e.g. technical services, global agencies, specialist agencies, consultancies) that reveal which types of initiatives they are best –fit to help solve. For example, technical services firms are often better suited for initiatives with heavy integration needs and large, complex global implementations.
Two weeks ago, I stood on Forrester's mainstage at its 2015 Forum For Marketing Leaders in New York (see a few minutes of the speech below). There, I told an audience of hundreds of our clients about hyperadoption, a term that I'm amazed no one has coined before now. Get used to the word. Because it's the characteristic that will define the next 10 years of your personal and business experience. In fact, in our first report debuting the concept of hyperadoption — released the same day I stood on the stage — I claim that hyperadoption will cause the next 10 years to generate an order of magnitude more change in your life than the past 10 years did.
That's an audacious claim. Because the past 10 years gave you the smartphone and the tablet. But I mean it, and over the coming year, I intend to prove it in my research.
Forrester clients can read the report, which synthesizes much of the work I've done over two decades, where I've had a front-row seat to the changes in how consumers adopt, such as the first consumer experiences in what was then known as the World Wide Web, including that very rare behavior known as online shopping. That experience, combined with the neuroscience research I've followed since my own days in the lab, has convinced me that the economics of digital disruption now allow people to bypass the ancient, loss-avoiding algorithms running in our heads that used to make us cautious of new things and now no longer do.
In digital business analytics, only delivering insight at the point of action matters. Did your customer get the right information, in context, at her moment of need? Did your firm use that engagement to make the right offer and up sell? Do your sales or call center reps have the insight they need to set priorities or meet customers needs efficiently? Talk of big data, advanced analytics, and agile BI is all about turning data into insight. But that is only part of the solution. How is your firm systematically testing insights and finding those that matter? How are you embedding insights in the software that your customers and employees use to engage? Are you even thinking about how to tap all the data that results from that engagement to find out what worked and what didn’t?
If you are not addressing all of these holistically, then Hadoop and that shiny new predictive analytics or streaming tool that sit on it are going to leave your business wanting. Don’t get caught in the trap.
My colleague Ted Schadler and I spent a year researching what it really takes to be successful; we found many companies drowning in data and starving for insight that made a difference. But a few leaders were working at the beginnings of closed loop systems to: 1) discover the insights that matter most; 2) embed them into the software their customers and employees use to engage; and 3) continuously measure and learn from the results.
We call these “systems of insight” and believe they will be the engines that power the digital business of the future.
This blog is the first in a series I've devised where I've asked a few millennials (some on my team, some in my family, and others) to look at their shopping experiences across the multichannel field and report back. Those reports will be featured here, in my blog over the next few months.