Seismic changes in UK policy and legislation could be negatively impacting the UK financial service industry’s ability to build a globally competitive digital customer experience.
According to an international study commissioned by identity data intelligence specialist GBG and conducted by Forrester Consulting, the UK financial sector is lagging behind China, Singapore, the US and Australia in adopting new approaches to authenticating customer identity.
The findings show that 84 per cent of UK financial service firms – spanning incumbent institutions as well as fintechs and challengers – are concerned about their ability to identify customers. Traditional financial service firms in the UK are less focused on new technology solutions to address this and appear more inward looking, more focused on cost-control, and less inclined to invest in new technology than their global counterparts.
Major regulatory changes this year including Open Banking and GDPR, as well as ongoing Brexit negotiations, are impacting the sector. At the same time customer expectations continue to rise as a result of digital empowerment and great experiences from the likes of Amazon, Apple and Facebook.However, UK fintechs are boosting the overall picture, with a much more positive approach to adopting new technology and investment in digital customer experience than the traditional financial service firms in the UK.
Interest in new technology such as facial recognition, automated data capture and social media data has yet to be widely adopted in the UK, meaning customers are currently missing out on seamless online transactions enjoyed in other markets. However, UK fintechs are much closer to the global competition than the UK’s traditional financial service firms, in terms of their interest in these new technologies and their plans to implement them in the next 12 months.
UK Fintech provides hope
When identifying and onboarding customers, UK fintechs are again much closer to keeping pace with global competitors, despite facing the same challenges as the established financial service institutions.
In 2018 we’ll see unprecedented change in the financial service sector. At the same time, consumers are increasingly happy to use everyday digital services provided by organisations from across the world.
According to the Forrester study, financial service firms will live (or die) by delighting customers via digital channels. A tough economic environment, increased regulation, and greater competition have created challenges for incumbent financial service organisations; on the flip side fintechs delight with great experiences but lack the strategic execution to comply with regulatory requirements.[i]
In order to improve customer retention, loyalty, advocacy and customer satisfaction, UK financial service firms need to address the gap between their approach to new technology and that of their global competition.
Financial service firms should build relationships through services that exceed customers’ current expectations and anticipate their future needs, improving financial wellbeing.
Mick Hegarty, Managing Director at identity data intelligence specialist GBG, said: “Our research clearly shows that without fintechs, the UK financial service sector is seriously lagging behind its global rivals when it comes to new technology and investing in the digital customer experience. Although the UK is currently behind the rest of the world in this area, there are some promising signs for the future. UK-based fintech innovators and challenger banks are more interested than the established banks in adopting new approaches and more are planning to increase investment in the next 12 months. This will prove vital to the UK financial service sector in keeping pace with the rest of the world.”
[i] The research: Leaders In Financial Services Are Experts in Customer Identity, January 2018