The Changing Landscape of Financial Services Client Communications

As digital transformation accelerates, financial services firms are grappling with regulatory and efficiency challenges while trying to maintain focus on the diverse preferences of clients and advisers.

We caught up with Helen Clark, founder of Mint Blue Consulting, to discuss how financial services firms can adapt their communication strategies amidst technological and regulatory change.

The Evolving Challenges in Client Communications

The COVID-19 pandemic has accelerated the adoption of digital communication tools like Zoom, Teams, and Slack.

These tools have become the new norm in the financial services industry.

According to Deloitte, 71% of financial services firms are focusing on improving their digital customer experience.

However, adviser firms are often overwhelmed by the many available technologies that promise to streamline their comms.

"Adviser firms are really overwhelmed with the choice. It's so easy to say we'll just take bits of tech in here and add tech in there, and they haven't really had the chance to fully consider the implications of doing that."

— Helen Clark, Mint Blue Consulting

Moreover, not all clients are ready or willing to embrace digital communications.

According to a study by the Office for National Statistics, around 5% of UK adults had not used the internet in the last three months in 2023. This is a digital divide that firms need to navigate.

Trust issues also play a significant role; some individuals are reluctant to use online banking or digital platforms due to concerns about security and privacy.

"Not everybody wants or can use digital communication. Trust is actually another issue. I've got friends who don't even want to do online banking."

— Helen Clark, Mint Blue Consulting

Additionally, inconsistent internet connectivity, especially in rural areas, poses challenges.

Despite advancements, Ofcom reports that 8% of rural premises in the UK still cannot access decent broadband.

Balancing Compliance and Innovation

Regulatory requirements, such as the Consumer Duty, compel firms to enhance their communication strategies to make sure clients are treated fairly and achieve positive outcomes.

The Financial Conduct Authority (FCA) emphasises the importance of technology in meeting these new regulations.

While digital innovation can facilitate compliance, it also introduces complexities that firms must manage carefully.

A 2023 Thomson Reuters survey found that 73% of financial firms expect the cost of compliance to increase in the coming year.

"Consumer Duty is trying to take us back to the basics in a lot of ways. But digital technologies can make that both easier and more challenging at the same time."

— Helen Clark, Mint Blue Consulting

One challenge lies in integrating new technologies while maintaining compliance with other regulations like GDPR and making sure client communications are secure.

Simplifying Technology Stacks

The allure of new technology can lead firms to adopt multiple systems rapidly, creating messy and inefficient tech stacks.

A 2022 Accenture study found that 67% of banks still rely on legacy systems for core banking functions, complicating integration efforts.

Helen emphasises the importance of having a clear technology strategy and mapping out existing systems before integrating new tools.

"Every firm needs to have their own tech strategy. It's very easy to take on different pieces of technology... It's about making sure that whatever you take on, you're actually actively piloting."

— Helen Clark, Mint Blue Consulting

Streamlining technology not only improves operational efficiency but also enhances the client experience by reducing the number of platforms clients need to engage with.

Adapting to Diverse Client and Adviser Needs

Differing levels of technological aptitude among clients and advisers can impact communication effectiveness.

While digital adoption is growing, there's still a significant portion of consumers who prefer traditional methods.

A 2023 J.D. Power study revealed that 78% of U.S. retail banking customers use their bank's mobile app or website.

However, 69% still visited a branch in the previous year, indicating that in-person interactions remain important.

"It's actually a bit of a fallacy that all older people can't use tech and all younger people are whizzing around on laptops."

— Helen Clark, Mint Blue Consulting

Understanding these nuances allows firms to tailor their communication methods appropriately, making sure that all clients have inclusive and accessible communication.

According to Statista, smartphone ownership among adults aged 55-64 in the UK reached 84% in 2023, indicating high levels of tech adoption among older generations.

The Future of Client Communications

Emerging technologies like Artificial Intelligence (AI) and API connectors are set to revolutionise client communications further.

However, firms must remain cautious and make sure that these technologies are implemented thoughtfully, with attention to regulatory requirements and client preferences.

"We're already seeing meeting notes replacing the old telephone coding methods... With that kind of innovation going on, that's just going to accelerate."

— Helen Clark, Mint Blue Consulting

Gartner predicts that by 2025, 80% of financial services firms will either go out of business or be rendered irrelevant by new competition, changing customer behaviour, and advancements in technology.

This underscores the urgency for firms to adapt and innovate.

Preparing for Generational Shifts

As Generation Z becomes a dominant force in the workplace and as clients, firms need to adapt to their communication preferences, which favour digital and mobile platforms.

At the same time, Baby Boomers, who may have different preferences, are retiring but increasingly comfortable with technology.

"You've got a cohort of retirees for whom technology will be the norm... At the same time, you've got Gen Z dominating the workplace, so they'll be bringing their own technology approach."

— Helen Clark, Mint Blue Consulting

Firms that can navigate these shifts and cater to a diverse client base will be better positioned for success.

Implementing Effective Change Management

Successful deployment of new technology requires careful planning, training, and change management strategies.

Helen recommends breaking down implementation into phases, running pilots, and using case studies to demonstrate positive outcomes.

"Planning can take some time and it can be a bit of a pain, but it pays off in the longer term."

— Helen Clark, Mint Blue Consulting

Engaging both advisers and clients in the process makes sure that new tools are adopted effectively and deliver the intended benefits.

Simplicity and Strategy

In an industry inundated with technological options, the key to enhancing client communications lies in simplicity and strategic implementation.

By understanding client needs, streamlining technology stacks, and carefully managing change, financial services firms can improve operational efficiency and client satisfaction.

References

2023 Financial Services Industry Outlooks, Deloitte Insights, 2023.

Future-Ready Banking Systems, Accenture, 2022.

Gartner Says 80% of Heritage Financial Services Firms Will Go Out of Business by 2030, Gartner, 2020.

2023 U.S. Retail Banking Satisfaction Study, J.D. Power, 2023.

Economic Well-Being of U.S. Households in 2021, Federal Reserve, 2022.

Consumer Duty, Financial Conduct Authority, 2023.

Fintech, Regtech and the Role of Compliance 2023, Thomson Reuters, 2023.

Internet Users, UK: 2023, Office for National Statistics, 2023.

Connected Nations 2023: UK Report, Ofcom, 2023.

Smartphone Ownership in the UK 2023, by Age Group, Statista, 2023.

Reviewed By

Sabrina McClune, 04.12.2024

Sam Kendall, 04.12.2024