FICO Survey Reveals That Financial Services Firms Are Severely Lagging in Online Consumer Services

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Decision Management & Optimization

SAN JOSE, Calif. — October 22, 2020 —

HIGHLIGHTS:

  • FICO and Arizent release new report entitled Clear and Present Danger: The Threat of Digital Disruption in Financial Services and What Banks Can Do to Vanquish It.
  • Only three percent of bank executives are extremely confident their insitution has taken all the necessary measures to protect their businesses against digital disruption, while a majority (71 percent) voiced doubts around their company’s ability to respond to digital disruption.
  • Just over one-half (56 percent) of banks are confident in their ability to anticipate and proactively respond to customers’ needs.
  • Omni-channel delivery is a major pain-point for banks with almost two-thirds (62 percent) struggling to deliver consistent service across all channels.

Today, FICO released a report from business information firm Arizent that examines the perceptions of hundreds of financial services leaders from banks and fintechs to better understand the banking industry’s progress towards digital transformation and its preparedness for digital disruption.

Conducted by Arizent and sponsored by FICO, the report and underlying survey found that a shocking three percent of traditional bank executives feel their company has taken the necessary measures to protect their businesses against digital disruption, while a majority (71 percent) voiced doubts around their company’s ability to respond to digital disruption. Just four percent are extremely confident that they can offer the level of personalized, data-driven services consumers receive elsewhere

“Consumers today are accustomed to an amazing array of highly-personalized, data-driven services from digital service providers like Amazon and Google,” said Bill Waid, vice president and general manager of Decision Management Solutions for FICO. “However, when they look to their financial institutions to provide comparable user experiences for their banking needs, most banks are falling far short.” 

The survey shows that the majority of financial services firms are struggling with digital transformation and in providing customers with the types of personalized on-line experiences they receive elsewhere. As a result, those firms risk the type of widespread customer defections plaguing the traditional banking industry today.

For example, when it comes to anticipating and proactively responding to customers’ needs in real-time, the majority of banks are woefully ill-equipped. Only 14 percent of banks rated themselves as outstanding, and less than half (42 percent) rated themselves as very good at being able to anticipate and respond to customers’ needs.

Likewise, omni-channel delivery is a major pain-point for banks with almost two-thirds (62 percent) struggling with consistency-of-services across all channels (e.g. in-bank, online, mobile, call center). This is a stark contrast to fintechs, where 63 percent of respondents are highly confident in their delivery of services across multiple channels as very good. Despite these disparities, banks appear to be narrowing the gap with fintechs when it comes to delivering personalized products and services. 40 percent of banks believe they are extremely or very good at it, versus 55 percent of fintechs.

“Consumers today expect highly-personalized interactions that predict their needs, surprise them and delight them. They expect to feel valued and treated as the most important customer. At the same time, financial institutions want to efficiently acquire customers and keep them for life. However, the survey shows that most financial services firms are struggling to deliver the personalized, digital experiences consumers expect and would be required to to keep them for life,” said Nikhil Behl, chief marketing officer at FICO.  “Without a customer-centric approach to digital transformation, that uses data and analytics to predict consumer behavior and optimize interactions, customer defections in financial services will continue to hover near the all-time highs we are seeing today.”

While the financial services sector is largely struggling to adapt to the new realities, there are banks that have embraced a digital-first approach to delivering personalized experiences to customers, while navigating future disruption. The report highlights best practices two forward thinking leaders in the banking industry; Canada’s Bank of Montreal (BMO) and Brazil’s Banco Bradesco – are employing to meet the shifting needs of their customers. 

Those interested in obtaining detailed information about these important trends can visit www.fico.com/ABresearch

Those interested in in-depth educational materials on digital disruption and digital transformation can also visit www.fico.com/DTeducation

About Arizent
Arizent is a business information company that advances professional communities by providing insights and analysis and convening industry leaders. Through its full-service research solutions, Arizent taps into their first-party data, industry SMEs, and highly engaged communities across banking, payments, mortgage, insurance, municipal finance, accounting, HR/employee benefits and wealth management. They have leading brands in financial services including American Banker, The Bond Buyer, PaymentsSource, Financial Planning, and National Mortgage News, and in professional services, such as Accounting Today, Employee Benefits News, and Digital Insurance. For more information, please visit www.arizent.com.

Interested in learning more about how to put Arizent’s full-service research capabilities to work for your company? Please contact: Janet King, vice president of research, janet.king@arizent.com, 207-807-4806.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956 and based in Silicon Valley, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 195 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, telecommunications, health care, retail, and many other industries. Using FICO solutions, businesses in more than 100 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time.

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Media contact:
Greg Jawski for FICO
Email: greg.jawski@porternovelli.com
Phone: +1 212-601-8248
 

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