Outsourcing is no longer limited to a specialisation in offshore call centres, as the sector has expanded to fit customer and business demands. Its use in financial services has been steadily growing by around 6.79 per cent annually, and is forecast to be worth 4.9 billion by 2020.
With the Second Payment Services Directive (PSD2) and the General Data Protection Regulation (GDPR) coming into force this year, there will be a significant focus on using outsourcers to spur business development, particularly when it comes to managing risk and compliance.
With their expertise in customer-facing services, BPOs have been driving improved customer experiences, on top of simply driving down cost. Consumers now expect to communicate with providers through a variety of channels – from phone calls and email to SMS and social media. They expect any information relayed through each of these channels to be recorded and remembered by service personnel, so that they are not passed from pillar to post.
PSD2 and the Open Banking Initiative, which opens up vital customer data to third parties, now puts a price on this data and banks’ use of it. New challenger banks and Fintechs are already taking away services from larger financial services providers, particularly by offering fast service powered by agile technology. Once the customer data of traditional institutions becomes more widely available, these challengers will grow in prominence, whilst new players such as tech giants Facebook and Amazon enter the financial transactions space.
Banks will be under increased pressure to make good use of this data to drive a competitive customer service offering. Once the GDPR comes into play, which will allow customers to have their data erased, banks will need to convince customers that their data is being put to good use. This will it even more important for banks to show they know their customers well, and put their data to good use.
Outsourcers are leading the way by bringing innovation into their processes to drive tech adoption. Through BPOs, many banks are now making use of voice-recognition software that recognises a specific customer, matching this to their personal data and, using AI programmes that make conclusions about the likely subject of their call, automatically forwards calls to the best place, rather than sending customers between various points of contact, repeating their details each time.
Reducing friction by using technology like this can improve conversion rates by 16 per cent, as a direct result of customer satisfaction. As well as improving the customer service offering, it also increases efficiency – a vital advantage as banks run into increased competition from slimmed-down, agile Fintech providers. But this does not mean banks should cut in-person service. Working with tech innovating outsourcers to improve complex back-office processes frees up the staff who would be diverting calls to focus on more important customer-facing roles.
A record 802 UK bank branches were shut down in the last year, as many UK banks see the rise of tech-led banking as a spur to reduce their offering in the physical world. But the huge success of new challenger providers like Metro Bank, who have been taking the opposite route and continued to open new, large brick-and-mortar branches, is a sign that in-person service is still a valuable asset for financial providers.
The answer lies in modernising the way this service is provided. Whilst large banks may not wish to foot the bill for a large number of high-street buildings, uber-like scheduling technology provided by BPOs can now be used to allocate nearby mobile teams and advisors to where they are needed most.
But if PSD2 encourages banks to get creative with their use of data, GDPR will require them to be circumspect. Any business holding customer data will need to be able to track every place along its infrastructure that this data is used or stored, ready to delete all of it at a customer’s request.
Banks will also need to make sure data shared with third parties is done in a managed, GDPR-compliant way, and they will need the data management and protection tools in place to protect against cyberattacks, and detect if one has taken place. This means that, if working with third parties, no customer data is shared unnecessarily, and the tools used can be trusted.
With the huge regulatory burden of 2018, the deep expertise of outsourcers will prove invaluable not as simply a way to save money, but a means to drive real innovation and keep financial service providers competitive.