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Community Blog How Customer Experience is Driving Emerging Technologies in Retail and Financial Services

How Customer Experience is Driving Emerging Technologies in Retail and Financial Services

Learn how technologies such as artificial intelligence and machine learning are making businesses more consumer-friendly throughby delivering new experiences.

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Emerging technologies are breaking down barriers to digitalization and accelerating our digital world. Powering many of these exciting new innovations is high-performance cloud computing technology that along with artificial intelligence and machine learning is transforming the way organizations differentiate their products and services. At the heart of this transformation is the ability to make doing business more consumer-friendly.

By 2025, cloud-native platforms will serve as the foundation for more than 95% of new digital initiatives — up from less than 40% in 2021 - Forrester

Growth Opportunities in the Retail Sector

The retail sector is undergoing a digital transformation that very much puts the customer at the forefront of change. Physical and online shopping will become more integrated and the shopping experience on both sides will become more personalized and customer-centric.

However, the sector also faces a number of challenges. There is increasing pressure to raise revenue and reduce the complexity of organizational structures at a time when finding and retaining employees is becoming more difficult. Finding new customers, offering them products they want to buy, and managing inventory are additional challenges.

Artificial Intelligence

Against this backdrop, emerging technologies such as Artificial Intelligence (AI) offer significant growth opportunities. For the last decade, in-store retail has been at a standstill. Consumers have become used to the efficiencies and personalization of e-commerce and want to see that progress within the physical retail space. Forbes Technology Council member and AiFi Head of Product, Thomas Knox, said: “As we start to capitalize on things like computer vision and machine learning, we're able to build complex algorithms that are able to convert a physical space into a digital space, basically allowing you to look at a physical space as if it was a website.” Such technology can allow retailers to better understand customer movements, what they are looking at in-store, offer discounts or dynamic pricing to loyal customers, and carry these learnings back through to a customer’s online browsing.

Stores may in fact become more like places of entertainment than simply somewhere to go and pick up and purchase items. Alibaba Cloud Intelligence Head of Southeast Asia Regional Solution Architect, Kan Yang, calls this “shoppertainment”, where digital media and even gamification is used to keep customers in the store for longer, drive their interest in products by providing them with a personalized experience, and ultimately turn this increased dwell time into a conversion.

Making use of the information provided by these new technologies requires a lot of low latency processing power, but for many retailers the cost of installing and maintaining servers on-premises is prohibitive. Cloud computing offers the ability to minimise overheads by utilising servers at a fraction of the cost, whilst maintaining customer experience. Deloitte Consulting Chief Strategy Officer, David Linthicum, says weaponizing technology like cloud computing is next destination for retail: “It's mixing things like mobile computing, it's mixing logistic systems, understanding where the customers are location-wise, what their needs are, and providing them with the opportunity to get things that they perhaps even didn't know they needed.”

The Rise of Autonomous Stores

Technology is also enabling the rise of autonomous stores, where there is no human presence for services such as check-out. “In the United States and Europe, they're still in this proof-of-concept phase. However, in Asia, this is already hitting mainstream adoption,” says Knox. In these stores, customers simply walk in, scan what they want to purchase with their mobile phone and then walk out while payment is taken automatically from their online wallet. “We're not only able to purchase goods in a much more effective and pleasing way, but also, by removing the cost of having checkout people, the retailer can save money and pass those savings onto us,” says Linthicum.

It’s not only on check-out staff that costs can be saved, according to futurist, Haresh Shah, who says that technology can also help stores that are struggling to find staff that want to take on physically demanding jobs: “There are robots that are used to stack shelves, be it milk bottles, be it vegetables, be it clothing, or electronic items. You can have completely humanless stores for in-store shopping. That's where innovation is leading in-store shopping in the foreseeable future.”

Global metaverse revenue opportunities could approach $800 billion in 2024 - Bloomberg

The Advent of the Metaverse

In the online retail sphere, experts see huge potential in the nascent metaverse. While the metaverse initially grew on the back of gaming and virtual entertainment, Shah sees a world where people will soon be visiting virtual stores in virtual shopping malls. These stores will be displaying virtual products digitally twinned with their real-world counterparts, and using haptic technology that simulates the sense of touch, customers will be able to feel them as if they were real. “So real that perhaps we may not even feel or experience the difference between shopping in an actual physical mall and a virtual simulated mall,” says Shah.

Imagine a world in which you live in Singapore, and you put on a VR headset and a pair of haptic gloves. Then you visit the virtual clothing store of a company based in Los Angeles. Despite being a small company, the store is large because it can be any size in the metaverse and has all of the company’s products displayed, which you can look at and feel. Sensors will scan your body and allow your virtual avatar to try on clothes with a real sense of not just whether they suit you, but whether they actually fit as well. You decide to buy something and make your payment. The retailer is then able to choose a manufacturer close to your home in Singapore and have your purchase made and shipped to you from there, saving on costs and the environmental impact of transportation.

The global retail cloud market size is expected to reach $39.63 bln by 2026 - Forbes Business Insights

All of the possibilities are made feasible by cloud computing. With Cloud Computing, business doesn’t need to start from scratch to build the technology infrastructure. Applications and innovations, along with the processing computing power needed, are built in the cloud, which ensures low latency, development efficiency, real-time processing, image/video processing and data analytics ability. Cloud enables the holographic construction and simulation of virtual worlds and allows the integration and linkage of these virtual worlds with the physical world. It provides solutions for remote rendering to support fast digital content, and enables the combining of computer vision, machine learning, natural language processing and intelligence speech. Plus, through blockchain technology, it can protect the underlying data of the metaverse.

Digital Transformation and the Future of Finance

Financial services is another sector where the trend is towards smarter, more personalized, and frictionless customer service. Growth opportunities in this industry are likely to come from the digitalization of services and operations, rendering them either automatic or more intelligent. Digital payments and the blockchain also offer potential opportunities for growth. Opportunities will not be just for the big players. Just as in the retail sector, small and medium sized companies will find digital solutions offer tremendous potential to break down barriers to entry.

Garry Sien, Global Lead Architect of Global Financial Services Solutions at Alibaba Cloud Intelligence, says banks are going to be big spenders on technology: “Right now with, a lot of digitalization initiatives, especially due to the pandemic, it's really forcing a lot of financial institutions to fast track their investment, accelerating it to meet the demand of their customers.”

Banks and Investment Firms Will Spend $623 Billion on Technology Products and Services in 2022 - Gartner

Digitalization of Services and Operations

According to Deloitte’s Linthicum, banks that are digitalizing their offerings and allowing customers to buy investments without dealing with people or paperwork, are getting the upper hand on their competition. “People no longer want to do that. They don't have to do that in dealing with retail organizations, and they don't want to do it around doing financial transactions,” he says.

Alibaba’s Sien says there is now a fundamental shift in how many banks approach customer onboarding and servicing that is driven by digital verification technology such as eKYC (Electronic Know Your Customer) supported by the cloud. This is also important in screening for anti-money laundering validation.

Once the digital onboarding process is enabled, many companies are leveraging cloud to transform their business applications. Cloud technologies gives developers the agility to cope with the increased volume of customers being brought into the funnel more efficiently through digital channels. All of these new processes generate a lot of data which can drive insights into customer behaviour. Customer insight trends will then be handled in the cloud, which provides applications to both store and analyze vast amounts of information that can provide insights relevant at the point in time the business needs to service its customers.

Digital Payments and Blockchain

The world of payments has been at the forefront of technology adoption compared with other areas of financial services. However, according to Alibaba’s Sien there is still a great deal of investment in this space, particularly in shifting the infrastructure of digital payments to the cloud.

Co-founder of cloud solutions firm Meylah and President of Women In Cloud, Chaitra Vedullapalli, highlights Blockchain as an emerging area in the payments sphere that will help companies to instantly verify transactions without relying on a central authority. Vedullapalli is seeing a lot of banks adopt Blockchain infrastructure to digitally track the ownership of assets. This, she says, can “speed up transactions, cut costs, and also lower the risk of fraud.”

As we become less and less reliant on physical assets, the importance of Blockchain in building trust will become even more important. Alibaba’s Sien thinks there is still a ways to go before the wide scale adoption of the technology. He adds that, “without cloud computing, there will be no meaningful Blockchain at scale.”

The Rise of SMEs

While large financial institutions have always invested big in technology, and will continue to do so, Alibaba’s Sien thinks the ease of innovation that cloud computing provides will help many small and medium-sized businesses grow. “It's a bit like changing your engine midway through a flight, but cloud native technologies allow them to do that,” says Sien. Cloud computing allows businesses to manage risk by providing the flexibility to scale up if they are expanding quickly, and scale back if expansion does not turn out as expected, without incurring losses on huge up-front capital investment in IT infrastructure.

For this reason, Vedullapalli says there has never been a better time in history to start a small business. “Building a million-dollar business is much easier than it was 10 years ago,” says Vedullpalli, “You just get your basic infrastructural needs, and if you use cloud and AI it will help you leapfrog into the new world.”

For Deloitte’s Linthicum, it’s a pattern he is seeing repeat itself from his experience in the retail sector, “Just like we saw retailers 15 or 20 years ago take over the larger retailers in the market by building better processes and better technology, we'll see the same thing in the banking industry.”

37% of financial services organisations have incorporated emerging technologies into the products and services they sell - PwC Global FinTech Report

While every industry has its own unique set of challenges and opportunities, the ability of cloud computing and its related technologies to simplify processes and help understand the customer with a view to making their journey more personalized and frictionless, is likely to be a game-changer across both retail and financial services, as well as a great many other sectors.

As one of the leading global cloud providers with proven digitalization and innovation best practices for retail and finance, Alibaba Cloud provides relevant cloud and intelligence products and solutions to accelerate the innovation of industries.

Co-authored with New Scientist and originally published at newscientist.com/

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