What can businesses learn about the UK’s digital future from the financial services sector?

It is vital for any business leader to look to the future and to anticipate how it may affect their company. Failure to do so has consequences for everyone involved; if sales or engagement fall then jobs are put at risk, market positions are lost and reputations suffer, perhaps irretrievably. Yet relatively few businesses take the time to really understand how they might deal with what’s on the horizon.

By Mike Kiely, Sales Director Financial Services, IDnow

The business world changes rapidly, so the assessment and plan for the future has to be almost constant. However, one of the continuing key factors in the conduct of business will be the reliance on digital. But looking towards the future, what does the average consumer feel about using their smartphone, tablet or computer to go about their daily lives? The FinServ community has always been at the forefront of innovation and it is an industry which has a reliable and steady finger on the pulse of current and anticipated consumer behaviour, as much of the business world at large is shaped by its transactions.

Recent research commissioned by IDnow has shown what UK banking customers want from their digital experience. The results of the survey are more broadly indicative of what consumers expect from a digital future in the UK.

Digital is clearly the future

Well over 60 per cent of 2,001 UK adults surveyed believe that digital banking processes – which in this case might encompass remote account opening, online banking options or an easy-to-use app – were either extremely important or important when it came to deciding which bank they should entrust with their money. More widely, the same attitude is likely to prevail in the experience of interacting with a business; digital is convenient, always-on and now so familiar in so many areas that the app or mobile-friendly website is frequently the first choice. An easyto-use digital presence is now one of the basics in practically all sectors. The survey also found that limited opening hours, lengthy processes and having to physically attend a location were given as the top three annoyances with financial institutions. There is no doubt that consumers in other sectors have similar gripes. If a consumer in any sector of UK business is faced with a process which takes a long time, it will frustrate them owing to the increased expectations of immediate gratification. It is here where digital processes have one of their distinct advantages.

Security first

UK consumers are not naïve. They appreciate that while interacting online, particularly making purchases, is a favourable way of fulfilling their needs, it is not without its dangers. This is amply highlighted by the fact that in 2022, the UK had the highest number of cybercrime victims per million users, as 4,783 fell victim to some form of attack.

Slightly more than half of IDnow’s survey respondents said that they had opened a bank account online and felt safe as they did so, which should act as an eye-opener for businesses; it is imperative that they show consumers that they take their digital safety seriously as they register to use their services.

Of the 47 per cent who said they did not feel safe, cybercrime and fraud were cited as the main reasons for their unease. This opinion is not unjustified – in 2022, 88 per cent of all UK businesses experienced some form of data breach.

It does not matter if the business is a well-established name in its sector or if it was founded last week; whilst customers want digital, they also want to be safe. The responsibility for this rests with the business by putting in place the highest security standards. These might include the installation and continual update of data protection software, the use of secure networks and data encryption. Multi-factor authentication and other methods of making sure that the customer is who they say they are, such as Know Your Customer (KYC) processes, may also be used. It’s important to educate consumers about how they can help themselves to keep their data safe too, both at the sign-up stage and via regular communications once they have onboarded.

However, this need for safety must also be balanced with a friction-free sign-up process. If registering to use a business’s services online is cumbersome or fraught with what the users see as unnecessary steps, they may simply lose interest and look elsewhere. 13 per cent of respondents to the survey had abandoned trying to register with a bank online at this stage. This is likely to transcend the business world too.

Traditional versus new kids on the block

Financial institutions can be roughly categorised into traditional banks and their new, ‘challenger’ counterparts which predominantly exist online. The same definition can be applied elsewhere in business as traditional names in retail, healthcare, hospitality or telecommunications now vie with newcomers, which have substantially different outlooks and strategies and usually follow a digital-first or digital-only approach.

Digital adoption plays a massive part in this and has only increased in the last two-and-a-half years, as what came about through necessity is now the standard. However, the survey revealed that, for banking at least, the traditional model was still the favoured kind of institution with which to deal. Its hybrid appeal of the in-person balanced with the online showed that living life purely online is something that most of us aren’t quite ready for just yet. These hybrid ways of working are a huge opportunity for the more traditional brands and businesses which are equipped with, and are prepared to embrace, the digital technologies that are rapidly becoming expected of them.

The age-old question

Although recent digital use experienced the sharpest of increases out of sheer necessity, it is no surprise that widespread adoption was driven by the younger generation.

The survey showed that considerably more 18-to-55-year-olds were comfortable in registering to use a financial institution online than their fellow respondents aged over 55, with those in the latter category still preferring to visit a physical location to set up their accounts. For some of the older generation, there is still a need for the shop or office where a consumer can talk to an expert face-to-face.

Despite digital being a chief consideration of respondents aged 18-to24, the same age group are also the savviest when it comes to knowing that something in the onboarding process isn’t right and abandoning it. Friction-free onboarding is therefore a primary consideration for businesses if they want to attract and retain younger customers.

The key to unlocking potential

Despite the physical world still being important to the majority of the over55 market and smaller segments of other age groups, it’s clear that digital is only going to continue its inexorable rise. Online safety is paramount to users of digital services and the research suggests they will have few qualms about halting their interaction with a brand if they feel that this safety is not guaranteed.

It’s therefore vital for businesses to get their digital strategies right –quickly. There is a world of opportunity waiting to be harnessed but only if consumers are given not only the tools to use digital quickly and efficiently but also safely. Investment in digital needs to focus on these core elements in order to provide a clear pathway to successful digital interactions for everyone.