Texting Technology Report. Implementation Considerations for Financial Services Firms

Transcription

1 Texting Technology Report Implementation Considerations for Financial Services Firms

2 INTRODUCTION By now, it s well understood that consumer purchasing habits and behavior have changed. Consumers are researching online, asking their trusted networks (often through digital channels), and expecting to connect when, where and how they want. When it comes to financial services, this is no different: Consumers only reach out to a financial advisor when they are 57% into their buying process. 1 Financial firms that want to enable more digital channels for consumer interaction such as texting are often faced with the challenge of navigating increased regulatory scrutiny and potentially heavy burdens for the legal and compliance teams. This paper examines different approaches firms can take to enable texting in ways that address both advisor needs and regulatory demands. When thinking about texting, it s important to note a few key differences between corporate-driven texting programs and advisor-driven texting, which is the focus of this report: Consumers only reach out to a financial advisor when they are 57% into their buying process. 1 The concept of corporate texting which has existed for many years entails sending security-related notifications (including password resets, two-factor authentication, and account or policy alerts) and/or executing texting-based marketing and promotional campaigns led by the firm s corporate marketing team. Advisor-driven texting initiatives focus on advisors needs to interact efficiently with clients, remain relevant and meet the ultra-personalized expectations of today s digital-first consumer WHY FIRMS NEED TO ENABLE ADVISOR-CLIENT TEXTING Advisors spend 63% of their time on non-revenue generating activities and only 37% on true revenue generating activities 7. Advisors waste time going back and forth with clients on administrative tasks, like trying to set up a meeting or acquiring missing documentation tasks that can be completed in minutes if done via more instant channels such as texting. The implications are substantial, and a firm stands to lose a meaningful amount of business as well as advisor productivity if advisors can t easily and quickly reach clients, and vice versa. The ability to quickly notify a client about a payment or policy change, confirm a meeting, or send a birthday or anniversary message all can be accomplished with a simple text. Texting also can help advisors develop and nurture client relationships more effectively. A recent study found that advisors who text have, on average, 23 percent more interactions with their clients than those who don t. 4 These additional touch points are critical to staying top of mind, building client loyalty, and ultimately bringing in more business. Firms should also consider compliance when weighing whether to enable advisor-client texting. Research suggests that more than 50 percent of advisors are already texting clients, putting themselves and their firms at risk. 5 In April 2017, the Financial Industry Regulatory Authority (FINRA) released new guidance on advisor-client digital communications, including text messages. This suggests that regulators are taking a closer look at advisor texting. Lastly, advisor-client texting, when recorded in a systematic way, can provide holistic insight into client interactions. When it comes to data analytics and data-driven workflows, records retention laws create a big advantage but only if firms collect client interaction data across all digital channels. 1

3 2.9 minutes average text response rate in financial services 2 80 % average customer opt-in rate for advisor texting programs in financial services 3 63 % Time advisors spend on non-revenue generating activities and only 37% on true revenue generating activities 7 THE ROLE OF IT LEADERS At many financial services firms, IT leaders are responsible for texting solutions that will serve the entire company across multiple functions. This approach makes sense in theory; in practice, however, it often overlooks how well these solutions serve the advisor community the main relationship managers and revenue drivers for the business. Texting technology should be assessed with the advisor in mind. If advisors don t use the technology, the main objective of being able to text customers to provide personalized, superior service is greatly diminished for the firm. This technology landscape report focuses on three areas of evaluation specifically for advisor-client texting solutions. number of advisors who report their firms have rolled out a texting program 6 In a world where social, mobile and digital technologies permeate every aspect of life and work, IT has a critical 61 % Clara Shih, CEO, Hearsay Author, The Social Business Imperative leadership role to play. EVALUATION CONSIDERATIONS A firm looking to implement texting technology for advisors needs to evaluate its needs in three areas: I. Solution Type Compliance-first versus advisor-client engagement. II. Solution Scope Single corporate-wide solution versus hybrid mode. III. Build Versus Buy Build in-house or buy an off-the-shelf SaaS solution. 2

4 I. SOLUTION TYPE A firm looking to implement texting technology for advisors usually takes one of two approaches: Compliance-first solution Aims to enforce policies that govern the conduct of employees and abide by industry regulations (for example, an ability to archive all text exchanges). Advisor-client engagement solutions Focuses on the firm s business needs, particularly the advisor s need to drive client loyalty and satisfaction while also remaining compliant. Evaluation Criteria The four key criteria below will help a firm determine which solution would be most beneficial for its current and future needs. In numerous requirements conversations, these business and technology criteria continue to emerge from texting program owners and IT stakeholders. End-user adoption Can this technology be managed within an existing mobile policy for advisors? Will advisors use it? Legal/Compliance Value Does the technology contain the features needed to meet specific regulatory requirements? Can it evolve with regulatory changes? Will the addition of new technologies, vendors and/or use cases increase or decrease the firm s security position? Extensibility How extensible is the solution? Can it plug into emerging channels, such as WeChat or WhatsApp, in the future? Breadth of Feature Set Does this solution solve for as many IT feature requests across as many use cases and internal departments as possible? Criteria Compliance-first Solution Advisor-client Engagement Solution End-user Adoption Legal and Compliance Extensibility, if built for regulated industries Breadth of Feature Set Medium Medium Advisor-client engagement solutions focus on the advisor s business needs for texting and typically have programs focused on training and on-boarding advisors to leverage the platform to drive increased productivity and usage. These solutions keep up with the changing needs of the consumer and their expectations of how they want to communicate with advisors and, as such, tend to be more extensible to new messaging channels and new use cases. Compliance-first solutions are quick to adapt to new regulations and changes in regulations. The recent changes to the Department of Labor (DOL) ruling in the U.S., or the implications of the Markets in Financial Instruments Directive (MiFID II) for global firms, should be well understood and incorporated into the platform capabilities. Because compliance-first platforms are built to minimize risk, high adoption and usage by the advisor community and their changing needs often aren t a priority. This results in a higher level of change management for the field. Any capabilities outside of regulatory needs are not built into the platform and may require custom development to incorporate. 3

5 II. SOLUTION SCOPE Firms evaluate two approaches when defining the scope of the texting solution. One approach is to go with a single firm-wide texting solution for all departments, and the second approach is to have a hybrid model: One for advisors and one for the rest of the organization. To determine the right approach, firms should consider the following criteria for evaluating scope: Business Value Which approach provides the maximum value to the business? Revenue Impact How will implementing this solution benefit the bottom line? Ease of Use How easy is the technology to use for advisors? Costs What is the relative cost of a single solution versus a hybrid approach? Complexity How much incremental effort would it be to implement a hybrid solution over a single solution? Criteria Single Solution Hybrid Solution Business Value ; single use case ; optimized for different use cases Revenue Impact Ease of Use, for advisors Medium, for others, for advisors Costs, if SaaS, if SaaS Complexity, if enterprise-ready, if enterprise-ready Typically, the two groups that need to use texting are central or shared resource teams (like marketing and security) and the individual advisors for client communications. The solutions that cater to these two groups are very different, even though they focus on the same texting channel. The first is meant for general, non-client specific communication like promotional campaigns, password resets and two-factor authentication that are typically scheduled by marketing and communication experts. Advisor texting, on the other hand, is built for advisors to reach out to clients in an efficient, authentic and personal manner. Many firms view advisor-client communication channels as critical to client satisfaction and loyalty, and prefer to separate the two business use cases. A useful analogy here is the way we use . There are marketing solutions like MailChimp and Constant Contact, and then there are individual applications like Outlook and Gmail. All are designed for ing, but their use cases and functionality are vastly different. 4

6 III. BUILD VERSUS BUY Companies should closely evaluate their IT resources and the work required to build and maintain the texting application when deciding whether to build or buy an advisor texting solution. Typical factors to consider are: Platform Stability Value How does the platform perform against factors like uptime and adherence to service level agreements (SLAs)? Does it have the ability to provide carrier-agnostic national mobile coverage? Time to Market How much time is needed to implement the solution? Can it integrate with existing systems, and how long will that take? Ongoing Costs What are the costs associated with this solution, including maintenance and operations? Integration to Core Enterprise Systems How will the texting platform integrate into core enterprise systems like archiving, CRM, etc.? Criteria Build Buy Platform Stability, if enterprise-ready Time to Market Slow Fast Ongoing Costs Medium Integration to Core Systems, with higher investment Medium, depending on systems Breadth of Feature Set, if enterprise Often, time to market is the biggest factor in the build versus buy decision, given its link to determining the best use of limited internal IT resources Also, to maximize cost efficiencies, in-house teams will tend to build a texting solution that works across multiple departments, which might result in a suboptimal solution for advisors. Finally, an internally-built solution is likely to incur higher ongoing maintenance costs and higher costs to perform timely upgrades to match changing business needs and client expectations. SaaS solutions, on the other hand, can amortize their build/upgrade costs across multiple customers. Many SaaS vendors also come with out-of-the-box connectors to common enterprise systems, such as CRM platforms which have the added benefit of recording all texting activities directly into corporate CRM systems. 5

7 CONCLUSION Financial services firms are constantly looking for opportunities to deliver the type of personalized, on-demand communication that investors prefer, and texting has emerged as a critical way for advisors to communicate with and engage their clients. Firms should focus on identifying a solution which will provide the biggest possible business benefit. A compliance-first solution is best for a firm on a limited budget that wants to check the box on unlocking texting as a channel for its advisors, but without accommodating advisor-specific use cases. An advisor-client engagement solution is best for a firm that wants its advisors to be more productive and to grow client interactions, but either does not have the resources to internally build a solution or wants to partner with an industryspecific expert to help define those needs. The scope of the solution should not be determined based on cost alone. Just as Microsoft Outlook complements an marketing solution used by the centralized marketing team in any firm, the use case for advisor texting should be treated differently from corporate texting. The build versus buy decision should focus on long-term needs of the advisor and the ongoing costs to the IT team for upkeep and maintenance. Firms should only build the solution if the offerings in the marketplace do not satisfy the major requirements of the business. ENDNOTES 1 CEB Study, Hearsay data, Hearsay data, Hearsay survey, Hearsay survey, Aite Group survey, Time Management for Sales Study, 2017 Hearsay Systems offers the Advisor Cloud for financial services, empowering advisors to efficiently and compliantly use social media, websites, text and to engage with customers, build stronger relationships and grow their business. Its prescriptive technology processes and prioritizes data from across digital channels and data systems, providing actionable suggestions for advisors on how they should engage with customers next. Built for the enterprise, Hearsay connects these advisor-client interactions and data to corporate CRM systems and digital marketing programs, and provides efficient compliance supervision and review workflows all on a secure, enterprise-ready platform. CONTACT@ HEARSAY SYSTEMS, INC. 6