Accessibility and customer experience are two prime needs of digital natives that legacy companies have neglected. But there’s still time to turn it around. You can learn more about the Microsoft Cloud for Financial Services in our newest e-book, Digital Disruption in Financial Services – How to manage change
Digital natives present a significant challenge to legacy companies in the financial sector.
The young, tech-savvy generation expects to engage digitally with banks, insurance companies, asset management firms etc. The need for constant accessibility marks a pronounced difference to how these companies used to interact with customers.
The good news? Legacy companies have two crucial advantages over newly established generation alpha competitors.
According to Lucas Santacruz, Customer Service Director at AlfaPeople, this is the reality of legacy players in the financial market:
They must adjust their business towards a younger and more digitally inclined demographic, the digital natives, and while they might be faced with an uphill battle, they do have the tools to win the race.
“Of all the distinctive features of digital natives, I think the most important one to understand is the sensitivity to user experience. Digital natives have been brought up in a world where the same things you would previously need to book a physical meeting for can be achieved with a few clicks in a mobile app,” says Lucas Santacruz.
“Digital natives are used to an extremely high level of accessibility. So if and when they encounter a lack in customer service or customer experience, the reaction can be quite stern.”
Pressure from new players
All over the world, legacy companies have seen the world they knew and thrived in change. And the Coronavirus (COVID-19) pandemic has only accelerated the transformation into a digitally based financial sector.
At a financial market convention in late 2021, Pentti Hakkarainen, Member of the Supervisory Board of the European Central Bank (ECB), delivered the following observations in his keynote speech:
These platforms enable customers to unbundle their consumption of financial services and offer them a wider range of choices beyond the familiar banking names. When choosing payment methods or taking out a loan, customers have access not only to banks but also to unbundled specialist providers.
He added that: Banks are facing intense competitive pressure and they must meet their customers’ demands for digital convenience. To remain relevant, banks need to be available for their customers 24 hours a day, 7 days a week, 365 days a year – and the only way to do this is to embrace the effective use of modern technology.
Lucas Santacruz has noticed that legacy companies in the financial sector sometimes reach drastic measures to earn the favour of digital natives. These include establishing entirely new digitally based brands to offer online services.
“Look, it is the legacy companies that have to make all of the transformation. New companies in the financial sector are typically based on a digital infrastructure. They are already there. It is the legacy companies that need to update their various interfaces and integrations to a new digital experience,” explains Lucas Santacruz.
Strength of the legacy companies
While legacy companies are tasked with the transformation of their business, they have two significant advantages on their digital competitors.
“First of all, there is data. This is the main advantage of legacy companies. They have much more data than the new players in the market. We’re talking data on customer background, transaction history, customer profiles, preferences and so forth. There is so much information that can be extracted from this data to help legacy companies provide the best personalised services for their customers,” explains Lucas Santacruz.
The second advantage is the versatility of legacy companies:
“Completeness of offers. Legacy companies can offer so many different products and services, which provides a variety of opportunities to establish a relationship with customers. These new digitally based companies tend to have one speciality and that’s it. Legacy companies have a real edge on their competitors here.”
Does your company have the right software?
But exactly how should legacy companies leverage their data and completeness in services into a competitive advantage?
According to Lucas Santacruz one of the keys is the right software:
“What companies need is sophisticated and dynamic software. Take something like Microsoft Dynamics 365 which is extremely flexible both in terms of creating the right interface solutions for the end customer and unifying different aspects of the business to deliver the best customer experience. Also, Microsoft Dynamics 365 excels at gathering data and using data actively to improve the processes of the company”.
Learn more about the Microsoft Cloud for Financial Services in our newest e-book, Digital Disruption in Financial Services – How to manage change.
Interested in learning more? You can always contact AlfaPeople