Digital identity technology offers superannuation funds and other wealth managers a pathway out of their current low customer engagement environments to embrace innovation and boost data security.
Many wealth management organisations are digitising their businesses to meet rising customer expectations, attract and retain customers, and drive down the cost of service.
That’s not news to anyone. What we don’t know yet is what digital strategies work. Most organisations are still at the experimental stage. Few, if any, have demonstrated the sort of innovation that sets them apart.
The difference between experimentation and innovation comes down to two words: user adoption. If customers interact digitally in growing numbers, you know the experiment worked.
There’s one small problem. Compared with other financial organisations, wealth managers have traditionally had limited interactions with customers. It’s what’s known as a ‘low engagement environment’. So, to grow the number of interactions, you need to engage digitally with customers. That means:
Digital identity binds these customer engagement functions together. Regardless of your approach, a digital identity framework is a foundation element for any customer-centric strategy. It also provides the flexibility to adapt to emerging trends, such as Apple’s Touch ID and other biometric authentication methods, which customers are coming to expect.
Having removed the barriers to digital user adoption, you can start to see what works and what doesn’t. For example, with a combination of digital identity and data analytics, you can:
Let’s say you wanted to analyse lead indicators pointing to a career change or retirement. That’s a key trigger point for members to drop out of a fund or switch funds. Anticipating change gives you an opportunity to engage with customers – perhaps offering new products or incentives – before it’s too late.
Digital identity ties different datasets to the individual so you can action predictive analytics. This may include data you already have, statistical data, data from social networks such as LinkedIn, and/or data from partner organisations.
Customer engagement is only part of the equation. You also have to offer the customer something in return. That’s why some super funds are beefing up their financial education or advice capabilities. Others are experimenting with career advancement or mentoring tools.
This ‘give to get’ approach has proven itself in many industries. But in the financial sector organisations need to be sensitive, especially with privacy. That means putting customers in control of their data and maintaining security in a highly regulated environment.
You can’t just scrape a member’s LinkedIn profile and send them a message saying, “Hey, we saw that you were looking for a new job!” Most people will be uncomfortable with that, particularly if it came through their employer’s email system.
That’s a function of a digital identity framework – to keep track of each customer’s preferences and seek their consent for data to be used in different ways. It also controls access to data in a digital ecosystem where different organisations – banks, insurers, super funds, even non-aligned businesses – collaborate via APIs to provide services. Collaboration and partnering could be a more cost-effective option if you don’t want to build it all yourself.
Wealth managers are sitting on a pile of sensitive and valuable data. Using that data to engage with customers doesn’t make it less secure, though, if the right controls are in place. In fact, digital customer engagement should enhance data security.
Let’s say your organisation suspected a potential data breach – how would you identify affected customers? How would you communicate with them quickly and effectively? How would you manage their expectations and recover their trust (and business)?
That’s another function of a digital identity framework – to adapt to the constantly changing threat landscape by applying risk-based algorithms and supporting a security dialog with customers. Automating these processes (such as dynamic risk based escalation of authentication utilising, for example, second factor, biometrics or device fingerprinting) is much more cost effective than alternatives such as denying access to large numbers of members and having to deal with the ensuing flood of contact centre enquiries.
With digitisation, there are any number of potential scenarios. Regardless of what innovations you want to pursue, digital identity technology enables cost-effective customer engagement that removes barriers to user adoption, improves privacy and security, and gives you the flexibility to adapt to a fast-moving consumer technology environment.