Numerous surveys point to personalization as the key success factor for financial services, a market that has grown extremely competitive in recent years. But delivering the personal touch raises the stakes for service providers, who own all the responsibility of protecting customer data and ensuring responsible business conduct and communications.

For this reason, financial service providers need to formulate compliance archiving and supervision strategies with the same priority they formulate other technology strategies.

The State of Service Customers’ Experience

An analysis of the financial services industry released by Salesforce in November 2020 revealed two striking insights about the state of service customers’ experience. First, 68 percent of customers said that COVID-19 had raised their expectations of service providers’ digital capabilities. Second, only 27 percent expressed the opinion that the financial services industry is customer-centric. Further, an even smaller fraction – 23 percent – said that they believe the industry handled the pandemic well.

Where do financial service providers fall short, according to survey respondents? The study pointed first and foremost to customer experience (CX), which respondents rank as important as a firm’s product and service offerings. As a corollary, the study found that respondents expect their providers to understand the unique needs and expectations of each of their customers.

Better Personalization Through Digital Enablement

Not surprisingly, the key enablers for personalization will be digital technologies. The customer experience once depended on personal relationships built over years through branch office conversations with well-trained account managers and advisors. Customers now demand convenience and transactional immediacy. Yet they refuse to sacrifice personalized services – investment and strategy recommendations, or the ability to consult with experts while opening or modifying accounts, for example – for this convenience.

To meet customers’ growing demands for personalized services, financial service providers have turned to digital technologies, including offering live chat options on web sites or apps, chatbots on transaction pages, and new forms of convenience enabled by partnering with third-party social collaboration vendors.

Of course, the digitization of financial services can bring new efficiency and scale to service providers. In addition to satisfying customer needs for the personal touch, many of these innovations can add efficiency and scale to service providers’ business operations.

As customers volunteer personal data in exchange for a more tailored and meaningful experience (as they used to when working with an account manager or investment advisor), service providers can glean insights to inform new product development, strategic innovation, and competitive differentiation. Plus, as customers grow to rely on their financial firms, they develop a sense of trust that drives increased brand loyalty and faster adoption of new services to meet their evolving needs.

Increased Responsibility and Risk in Managing Personal Data

Within this fabric of interdependency lies the paradox of personalized financial services. Service customers demand ever-higher levels of personalization from their service providers. Financial service providers turn to digital technologies to personalize the CX efficiently and at scale.

By asking customers for information to help guide investment decisions, service providers and customers enter into a mutually beneficial trust relationship. To sustain and nurture this relationship, service providers bear virtually all of the responsibility for protecting and preserving this customer data.

It’s important to note that extracting value from this data – both for customers and for the business – usually involves moving it from its point of collection. Organizations need to aggregate the data centrally before processing it to identify patterns and trends. They need to correlate it with account information in their Customer Relationship Management (CRM) system, as well as with other market and demographic data.

Service provider employees often need to import or ingest data into more specialized systems for more detailed analysis, reporting, or presentation. They can automate the flow of this data for routine processing and analysis, and thereby protect it from inappropriate handling or exposure. But process exceptions happen, especially for high-growth financial service trailblazers. These exceptions – often simple process workarounds improvised by employees under deadline pressure – can put the company at risk for compliance violations, litigation, and crippling reputation damage.

Compliance Archiving and Supervision: Obligations and Opportunities

Financial service providers face a growing list of regulations to collect, retain, and preserve electronic communication data to maintain legal business conduct. In this regard, archiving and supervision are often considered a necessary burden, a cost of doing business in the highly regulated financial services sector.

Yet financial service startups can also view archiving and supervision as another tool for innovation. As they experiment with different ways to meet their customers where they live, and query the data these customers share, employees will inevitably stumble. An employee blunder may risk exposing customer data, sharing insider information, committing an act of collusion, or worse. The act may be calculated or may be completely innocent.

Given the enormous obligation service providers have to police employee behavior, an effective archive is mission-critical for monitoring day-to-day communications and taking necessary corrective measures. To manage legal or regulatory challenges when they arise, service providers need an archive engineered for rapid search and context-rich analysis. These solution attributes are essential for conducting early case assessment (ECA), determining the firm’s likely success in litigation.

To proactively monitor employee communications and conduct, financial service providers need AI-powered supervision and surveillance capabilities. Supervision allows compliance officers to run periodic samples of employee communications data to spot potential acts of fraud, insider trading, collusion, or other illicit or inappropriate behaviors. AI technologies integrated into supervision systems enable continuous improvements in accurately and effectively detecting red-flag events.

Conclusion

Consumers and institutional investors alike increasingly choose their financial service providers based on the personalization features of their user experiences. Service provider upstarts need to innovate constantly to improve their reach, operational efficiency, and scale.

We’d love to hear your thoughts on this blog. Comment below.

The Micro Focus IM&G team

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