Financial services has not been on the cutting edge of digital commerce compared with other industries. Where it’s made some inroads is in retail banking, and this is likely to spread to other businesses out of necessity, according to Phil Copeland, CEO of Avoka Technologies, a digital business company.
“By far the biggest issue in financial services is the time it takes them for their IT organization to build out a customer onboarding experience when launching new products,” Copeland said. “We've see hundreds of different examples of this when companies are launching a new credit card or wealth management product. Typically, the IT organization has to hand-code a solution, and it typically takes anywhere from 12 to 18 months for these applications to get created and deployed.”
Although retail has the lion’s share of customer-facing applications, the situation is also applicable to commercial banking, wealth management, investment banking, and clearing -- a bank may have dozens of customer onboarding businesses, in fact.
One major bank in Australia that Avoka has been working with employed 2,500 developers in India to build out their entire digital channel, which is a big expense in its own right. “The real problem becomes the lack of agility if you want to make changes to things,” said Copeland. “If you're relying on hand-coded solutions it just takes an awful long time to do it, which increases not just the time it takes to get these things into the market, but the associated costs.”
Avoka Technologies, a 10 year-old company, works with large organizations to improve customer experience, focusing on sales and service transactions. “It's really about helping large organizations with getting customers to sign up online through individual channels for various products and services,” Copeland said.
In the financial services industry, abandonment rates average 65% for online sales, such as account opening and loan origination, according to Avoka. People who start completing an application probably want the financial product they are applying for, but something stops them from completing. This means the bank could be losing over half of its potential online customers to bad application-form design and inferior online customer experience.
Those responsible for implementing Avoka’s system in banks, who typically hold titles such as online channels manager or digital sales manager, have responsibility for driving business through online channels “Conversion rates really matter to them,” said Copeland. “Reducing abandonment is one of their KPIs, so the goal is to make it as friction-less and as easy to use as possible.”
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