By Eleanor O'Connor – On
First, let’s go over the basics.
The Meaning of Financial Transparency
In the dictionary, transparency is defined as "characterized by visibility or accessibility of information."
But what does this mean for the Financial Services sector?
For the business and finance circuit, transparency is defined as "financial statements of high quality." In layman’s terms, you can think of financial transparency as being honest about your business operations and performance with the goal of gaining consumers’ trust.
Transparency is an Emerging Trend
Companies are finding ways to improve consumers’ perception of the financial services sector.
Banking: The Example of Wells Fargo
In September 2016, America uncovered the secret Wells Fargo had been keeping since 2011.
The secret came out when clients began to notice unanticipated fees and receive unexpected lines of credit. Eventually, the mystery was solved. It was found that there had been top-down pressure from high-level management to open as many accounts as possible. This led branch workers to create fake accounts using the identity of existing customers without their consent, leading to unwanted fees and damaged credit scores.
We're not here to figure out how it got that far. We're here to talk about how, after $185 million in fines, Wells Fargo is still putting its reputation back together. This time, one built on transparency.
Their new campaign, from BBDO, features television, print, and digital assets as well as a new transparency-focused tagline: “Established 1852. Reestablished 2018.” In fact, one of their video ads is entitled "Earning Back Your Trust."
When we talk about trust, we usually talk about it in the context of our personal relationships. Not necessarily our financial institutions. But that appears to be changing.
According to their CMO Jamie Moldafsky, the campaign increased traffic to the company’s redesigned website. It’s already resonating with consumers “because the ad is very honest and transparent.”
Finance: The Example of Ant Financial
Ant Financial Services Group is a "fintech" company with an online payment app used by more than 600 million and a valuation of $150 billion. Aside from their mobile and online payment platform, they offer the largest money-market fund in the world, run the Sesame credit rating system and have created a facial recognition payment technology.
It would appear that its popularity and admiration is not limited to the simplicity of its financial handling - In 2017, they ranked sixth on Fortune's Change the World list - their innovation in finance was recognized for its positive environmental impact.
The Financial Times went so far as to say that Ant Financial represented the "upending of finance by digital disruption." They expect that a blur in the dividing line between finance and technology will ultimately lead to "widespread sectorial consolidation."
These 'fintechs', as they are known, are "developing a sophisticated asset management model and eliminating the need for asset managers and analysts," according to Sajid Rahman for Medium.com. According to his analysis, the likelihood of AI eventually showing better portfolio management than a human is likely. And because they require lower fees and balance requirements, they have gained a large millennial customer base.
Where Technology is Heading in the Financial Services Sector
In May 2018, Information Age discussed the role of technology in the financial services sector. They point to three main elements of our personal finances that were directly affected by technology: Customer service, online banking and fraud detection.
Creating Transparency With Better Customer Service
The Application of Technology
So we understand that transparency in the financial services sector is important, but how do we create it? Applying different technologies for the betterment of customer service is a great starting point, and emerging trend in the industry.
There are few words to describe the frustration that comes when all you want is to talk to a human and can't. Automated banking is convenient in some ways but enraging in others. Chat support, if it's done well, offers huge benefits. Rather than having to wait until business hours, which are usually when the rest of us are at work too, customers can get answers immediately and follow-up in real-time.
AI can be broken down into a simple equation - machine learning + automated interaction.
Although there are some signs pointing to AI replacing humans, experts say not quite yet. Currently, AI technology can be useful in addressing basic questions and concerns. Rather than replacing jobs, AI is shifting jobs in the financial services sector. Companies have been able to transition those responsible for answering basic questions to roles where they’re able to answer more complex inquiries - truly the best of both worlds.
As much as it is to customers, AI technology has also become an asset to employees.
Machines are able to support agents during their conversations with customers to help them maintain a sense of transparency and accuracy.
According to Shep Hyken for Forbes, the mobile phone still is and will continue to be the best way to connect and interact with your customers.
"Just about everybody has a mobile phone," he says.
As automated as the world becomes, it's worth noting that we are in the "Era of the Customer." Customers are more informed and expect a level of transparency that’s clearer than ever before. They expect their experience with your business to be seamless from start to finish. Interruptions like a dropped call or static become complaints. Complaints, then, require a way for the company or agent to make it right and restore a level of trust. When a consumer downloads your app or shares their number, you have a unique opportunity to connect with them. On the business’ side, a mobile phone that doesn't drop calls or interrupt service is just as vital for financial agents and advisers.
In addition to this, BYOD (or bring your own device) is becoming the norm for finance professionals. As this trend continues, VoIP phone systems continue to grow in popularity for the banking industry.
Crowdfunding platforms have achieved the "platform-based, capital-light" balance by connecting start-ups with potential customers. This kind of technology has led to extreme transparency in the financial services sector. Customers can sway the success of a business using their own money, rather than handing it over to investors.
What This Emerging Trend Means for the Industry
- Customers are looking for transparency and reliability more than ever before
- Technology that promotes transparency is becoming increasingly available
- Financial institutions need to utilize this technology to meet customers’ needs
Ant Financial - September 27, 2019:
Ant Financial is continuing to develop blockchain systems and other technologies to further financial transparency between consumers and institutions.
After stating that they would be developing a blockchain system to prevent charities from inflating total funds raised, Ant Financial announced that they would be working with Bayer Crop Science to develop a blockchain-based system for agricultural product monitoring.
Geoff Jiang, VP and general manager of Ant Financial’s Intelligent Technology Group, stated that “together with Bayer, our exploration of blockchain in agriculture will improve the transparency and responsiveness of its supply chain, and bring more value to consumers, farmers and the society.”
Impact of Fintech on Banks - October 10, 2019:
AI technology continues to wreak havoc on the finance and banking sector.
It has been predicted that within five years traditional banks could lose ten to twenty percent of their market share to FinTech firms using AI to reduce costs and provide consumers with more affordable pricing.
Preemptively, some banks have decided to take action. For example, Lloyds Banking Group has discussed their use of AI in improving customer experience and risk management.
Additionally, in a recent survey conducted by KPMG, a majority of auditors and risk management officials believed that AI would provide them with a competitive advantage.
Most importantly, we’ve already started to see that competitive advantage become a reality. According to a survey published by Deloitte, financial services firms that used AI in their operations saw revenue growth of nineteen percent.
As technology continues to advance, AI will increasingly become a win-win solution fostering financial transparency between financial institutions and consumers.
Curious about how Arbeit Software can help your business save money and improve communications with customers? See how we were able to double one business’s productivity with our TCPA compliant solution, Arbeit Click.