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Why Banks And Insurance Companies Need To Continue Investing In Tech

While some companies are keen on trimming the number of legacy IT applications through consolidation, they all agree that investments in technology are critical when it comes to operating in a digital world that has created incredibly high customer expectations. The adoption of mobile devices has significantly changed the operating landscape.

During his remarks that discussed the company’s outlook for 2017, TCF Financial CEO Craig Dahl said, “We’re going to continue to leverage technology to create new product and service solutions that meet the financial needs of our customers and drive operating efficiencies.”

In an interview with Dennis K. Berman, financial editor of The Wall Street Journal, Bank of America CEO Brian Moynihan discussed the key attributes of today’s bank. “You have to be able to meet every customer, everywhere they want, and no one channel wins,” Moynihan said. While customers are still walking into brick-and-mortar branches, the increase in and importance of other channels have forced executives to expand online and digital capabilities to better focus on customers.

When highlighting how the company has been performing recently, Provident Financial Services’ Chris Martin, who serves as the chairman, president and CEO, said, “With the increased acceptance and use of our multiple digital channels, we continue to see efficiencies from our customers who prefer to self-serve. Our technology spending incudes more mobile applications…” These strategic “digital” investments are happening at the same time as the company is consolidating branch locations.

In an update on Morgan Stanley’s Project Streamline, a program aimed at reducing $1 billion in expenses through approximately 200 expense initiatives, chairman and CEO James Gorman said, “We need to invest behind the bank, we need to invest behind that digital strategy, we need to invest behind upgrading the technology.”

However, while omni-channel is essential in today’s environment, financial institutions are, in fact, shrinking their real estate footprint and cutting back on their workforce. When it comes to employees, many companies have realized the benefits of reducing the number of personnel who sit between management and customers and offsetting them with technology, in order to provide customers with quick decisions. This helps organizations provide service that is meaningful and filled with domain expertise.

The widespread use of digital devices has introduced new levels of vulnerability that have never been seen before. Cybersecurity, such as fraud and DDoS attacks, is an area that is receiving tremendous attention and investment. Companies must protect the trust between them and the customer.

In an SEC Form 10-Q, J.P. Morgan indicated that it planned to increase its annual budget to battle cybersecurity from $250 million to $500 million. In an interview, Bank of America’s Brian Moynihan said that they are not capping themselves when it comes to fighting cybercrime. It is “the only place in the company that doesn’t have a budget constraint…you’ve got to be willing to do what it takes.”

Initiatives that revolve around the use of customer analytics continue to be at the top of the to-do list for companies. Remember, these transformation initiatives are necessary to drive efficiency and create new revenue. Better insight into customer and prospect data can help relationships evolve and new ones develop. The ability to cross-sell and generate additional dollars out of existing relationships is one of the most effective revenue-generating methods and ways to spur growth.

To that end, companies also understand that they need to provide more effective sales training and better tools to facilitate business development activities. This, of course, requires investments to be made in both strategy and technology.

In our newest thought leadership piece, The Executive’s Guide to Driving Efficiency in Financial Services, we explore:

  • How can organizations drive efficiency?
  • What initiatives do companies have in place?
  • What have been the results of these programs thus far?

Click here to download.

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