How financial services firms plan to differentiate their services

As fintech shakes up the financial services and insurance sectors, firms face the challenge of digitization or they risk losing clients.

“Firms are facing digital threats from new disruptive forces, clients are demanding better user experiences and costs associated with legacy business models are not sustainable,” says David Reeve, CEO at InvestorCOM, in a release. “Increasing engagement with clients will be key for financial firms as competition continues to heat up.”

A report on digital trends in financial services from Adobe and Econsultancy finds that more than one-quarter of financial services and insurance firms (28%) rank customer experience optimization as the most exciting opportunity for their firms in 2018, compared to 18% of their peers across other sectors. More than one-third (36%) say that making client experience easy, fun and valuable will be the primary way they seek to differentiate themselves over the next five years.

Only 1% of respondents say price is the primary way their firms will differentiate themselves. That figure emphasizes “the extent to which the experience economy has taken hold as companies avoid a race to the bottom by relying solely on being the cheapest option,” says the report.

Read: Feeling squeezed by pricing pressure? Here’s what to do

Top-performing companies are almost three times as likely as their mainstream peers to have invested in an integrated, cloud-based technology stack, says the report, adding that financial services and insurance firms remain “encumbered by the curse of legacy technology.”

Wealth and asset management providers are particularly challenged in respect of technology, the report finds, with 61% rating technology as difficult to master. Part of the reason why is these firms face regulatory tightening and a greater legacy of personal client relationships, says the report.

Read: Add a personal touch to mass communications

However, the rise of robo-advisors means that “standing still is not an option in this sector, despite teething problems.”

Read: Finding your brand in a world of robos

In its release, InvestorCOM says the top benefits financial firms provide clients as they digitize are facilitating on-boarding, delivering documents in real time and offering personalized products and services.

Read the full report on digital trends in financial services from Adobe and Econsultancy.

Digitization poised to disrupt central banking, too

Bank of Canada governor Stephen Poloz is recommending to his international policy-making peers that they consider the often-elusive economic effects created by the spread of digital disruption.

Poloz says statistical agencies have been underestimating the level of economic growth driven by the advance of digitization—an effect he believes could have implications for inflation outlooks and even interest rate decisions.

He made the remarks Saturday during a panel appearance at the annual meeting of central bankers, academics and economists in Jackson Hole, Wyo.

Poloz says there are a couple of existing economic measures that provide a rough idea of the digital economy’s effects—but he believes they only represent the tip of the iceberg.

He says more information is still needed to understand the full impacts of digital disruptions on different industries—including the auto and financial services sectors.

For instance, he says the effects of digitization have led to upward revisions in recent years to earlier estimates for growth and investment, and he expects more positive adjustments could be on the way.

“The point is that our ability to measure the impact of digital technology is continually playing catch-up with the technology,” said Poloz’s prepared remarks for his panel appearance.

“The bottom line is that digital technologies are disrupting central banking along with everything else. Digital disruption is likely to be a major preoccupation of central bankers for the foreseeable future.”

About the Adobe/Econsultancy report: The report is based on a sample of about 700 senior industry leaders who were among about 13,000 digital professionals taking part in an annual digital trends survey carried out at the end of 2017 and start of 2018.

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