Financial services is arguably the backbone of our economy. As most industries, during these times, transformation has accelerated. To get a glimpse of the future, on June 26, 2020 I moderated a panel to discuss how leaders, during this unprecedented time, think about and shape their strategy of this highly regulated sector of the economy.The panelists were:
– John Schlifske, Chairman, President and CEO, Northwestern Mutual
– Roger C. Hochschild, CEO and President, Discover Financial Services
– Kevin McMahon, Chief Information Officer of BBVA USA
– Salene Hitchcock-Gear, President of Prudential Individual Life Insurance
– Dino Trevisani, General Manager, IBM Financial Services USA
While the pandemic may have accelerated digital transformation, technology will change the industry for a long time to come. A common theme among the leaders was the need to adapt to the acceleration of the digital world.
John Schlifske, Chairman, President and Chief Executive Officer of Northwestern Mutual discussed how this acceleration has already impacted how their business and his team operates. He shared, “For some time now, our focus has been on building out our digital capabilities and client experience, and the pandemic simply accelerated the path we were already on. For example, we moved from traditional ways of underwriting insurance with a paramedical exam to online medical health questionnaires for some clients. We’ve moved to this digital capability not just because of the pandemic, but because it’s what customers want and provides a better experience. Another example of this is our focus on building digital tools to help simplify and personalize financial planning for our clients. This allows them to be constantly connected to their financial plan, so they can understand the decisions they’re making financially and how it affects their goals. At Northwestern Mutual, our holistic approach includes insurance and investment strategies – so integrating these digitally in one place creates not only better outcomes, but a better experience for customers overall. This acceleration to everything virtual, everything digital, is exactly the path we’ve been on.
Roger C. Hochschild, CEO and President of Discover Financial Services, talked about putting the company in a position to take advantage of recent technology trends while still prioritizing the customer experience. He shared, “One clear shift we’ve seen is from cash to cards or digital payments. Even for a two dollar purchase. Most don’t want to take cash anymore. We’ve also seen accelerated growth in contactless payments, the tap and go, which are viewed as cleaner. So for us, we already planned on having our whole portfolio enabled for contactless by the end of the year, as we’ve seen an approximately 50% increase in contactless spending so far this year. Another accelerating trend is the shift from branches to digital banking. We’ve always been a digital bank since our founding. But, at the same time, we’re seeing there’s also nothing like having that voice on the other side of the phone for a complex conversation or a dispute about a transaction. And so, again, we are trying to balance our efforts between digital chats, voice, text messaging, and other ways people want to talk.”
This balance between high-tech and human touch is something Salene Hitchcock-Gear, President of Prudential Individual Life Insurance, has also seen the industry working toward for a long time, now highlighted as a result of the pandemic. She shared, “The move to digital is not just permanent, it’s critical. We now have a new part of our organization called Assurance IQ, which is a completely digitally-enabled environment and just last month launched our first product on the Assurance IQ platform—SimplyTerm—to help meet the needs of online life insurance shoppers. There are a lot of people who are leaning toward a more digital experience even in insurance, which we know is a tough nut to crack. So, we are really trying to expand our footprint in a way that we can reach more people and expand our markets and, yet, it’s a dual world. You still need people for advice. People are still an important part of the equation, and from a technology standpoint, in this time of social distancing we’ve seen financial professionals increase use of our eCapabilities. And so, our path is to try to intersect technology and human touch in a way where we create seamless experiences for advisors and customers, regardless of how customers prefer to engage with us. And if we’re thinking about experience first, the technology components tend to fall in line.”
For Kevin McMahon, Chief Information Officer of BBVA USA, they have been working on integrating digital identities, digital signatures, and electronic documentation for years. However, he believes the bank’s work in this area of technology is far from over, as it works to implement robust end-to-end capabilities,, sharing, “Digital is obviously the way of the future, but we don’t have to wait or go slow because the technology exists to do it now. It’s taking the time and making the priority to put it in and actually expand it across everything we have. In the past we’ve done it based on profitability or volume, but now, everything is affected by it. So, we have to get in there and make those capabilities large enough or robust enough to cover everything that our customers need.”
However, while they all certainly have made efforts to adapt to the current situation, the leaders agree this is just the beginning of the digital future. In the long-term, greater changes will need to be made. Dino Trevisani shared, “Eventually, you will need to redesign your processes, re-engineer your backend mainframe systems to be more agile and data enabled to really speed to digital. You can’t use the same terms and conditions you were using before for today because you’re trying to help your clients transition. We can’t operate in the same business models. We have to think differently.”
Trevisani summed up the future of financial services, “The accelerated shift to digital interaction is really a short-term thing. We need systemic change, which is all about process re-engineering and intelligent automation. In other words, this is just the beginning of what we are going to have to do, we are just reprioritizing right now. Financial services organization that are actively digitizing client experiences and automating their back-end processes right now are going to be at the forefront of industry innovation.”
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