Legacy Systems Prevent Financial Services Retailers from Embracing “Age of Personalization”
Staff Writer | February 29, 2016
Twenty-four percent of global financial services organizations run the risk of falling behind competitors because legacy systems are preventing them from offering customers fully personalized services, according to research undertaken by Marketforce. The study was conducted on behalf of strategic business applications provider Pegasystems and Cognizant, a provider of information technology, consulting, and business process outsourcing services.
The study surveyed 500 financial services and insurance industry executives, across 56 countries, to examine the challenges and opportunities they face due to rapid technological change. The study found that, while the majority of financial services retailers have plans to use data from connected and wearable devices to build detailed personal profiles of their customers and their behavior, nearly a quarter were unable to do so.
Many of those without such plans cited the inability of existing legacy systems, such as customer segmentation tools, to use and interpret customer data as a barrier to offering fully personalized services, leaving them reliant on outdated customer segmentation tools instead of newer, cutting-edge Customer Relationship Management solutions.
Data from newer, connected technologies, such as wearables, is playing an important role in enabling organizations to provide personalized offerings to customers, and the study showed the number of retailers in the financial services sector intending to offer these products continues to grow. In fact, 38 percent of survey respondents expect to use data from wearable devices to personalize their offerings within two years, with 68 percent expecting to do the same within five years.
Almost one quarter (22 percent) also said that they expect to use data from connected cars for the same purpose within two years, with 59 percent expecting to accomplish this within five years. Furthermore, 40 percent expect to use data from these devices to accurately predict the individual requirements of customers within just two years, with 83 percent expecting to achieve this goal within five years.
Despite this, almost one quarter (24 percent) of financial services retailers said they currently have no plans to offer customers full personalization, citing the inability of legacy systems to cope with these new data sources as the biggest obstacle. Of these respondents, 79 percent cited the lack of a single customer view as a barrier to offering full personalization to customers, while 85 percent cited the difficulty of processing very large data sets.
These respondents stated that the biggest obstacle to personalization was the lack of availability of sufficiently rich customer data, with 88 percent suggesting that their existing legacy systems are unable to connect to data flows from newer, connected devices.
“It’s never been more important for financial services organizations in the retail sector to understand customers, and personalize services to meet their needs. We live in an age where ‘Generation Selfie’ is king, and the expectations of customers across all sectors are increasingly influenced by the experiences they get from digital leaders such as Amazon and Netflix,” says Graham Lloyd, director and industry principal of financial services at Pegasystems. “For this reason, it’s critical that those in the financial services sector invest in technology that enables them to mine the rich seams of available data that can help them truly recognize their customers as individuals and personalize their customer journeys accordingly. Those that don’t could find themselves falling a long way behind.”
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