I have written several thoughts about the growth in importance of Fintech in recent months and especially how it is set to transform the entire retail banking industry. By designing new financial services from the ground up and placing the customer at the heart of the service many new companies are finding that they can gain market share just by focusing on the customer experience when planning a new service.
Many in the banking industry are not just bracing themselves for the change that looks inevitable, but also for the rate of change. Banks, as we know them, evolved over hundreds of years, but the present wave of innovation will not require decades to change history – just a few years will be enough.
But could we reach a point where the Fintech revolution actually overtakes customer expectations?
Zopa is a great example of a successful Fintech who have achieved fantastic growth in recent times. They specialise in peer-to-peer lending and were founded just over a decade ago as a kind of eBay for money. Customers with cash to invest can expect better returns than banks offer and customers who want loans can expect lower rates than a bank loan – the system matches lenders to borrowers. Zopa had £5.4m of revenue in 2013, £11.4m in 2014, and over £21m last year – they are doubling every year.
According to The Millennial Disruption Index, 73 per cent of millennials would be more excited about a new offering in financial services from companies such as Google, Amazon, Apple, PayPal or Square than from their own bank. In fact, you don’t need to be a bank to offer financial services so long as you can convince regulators that you have enough cash to meet liabilities. Apple has over $200 billion in cash on their balance sheet just waiting to be invested somewhere. Are they leaving so much cash unused because they have plans to go deeper into the financial markets?
I think the evidence points towards a continued increase in the rise for Fintech and demand still remains ahead of supply. This this is partly fuelled because of the Fintech players have a new approach to how customer service is organised which is creating additional demand.
Cost and service. They are the cornerstone of most purchasing decisions and particularly evident in the FS&I market so if you can design a service from the ground up with it generally focused around an app then it allows the luxury of designing service exactly how the customer expects. Usually this means that if the customer has a problem inside the app, they want help inside the app and would find it extremely irritating to have to leave an app, make a call, then try talking to an agent after returning to the app. Think carefully about how customers are using the service and exactly where they need support.
My view is that customers want a simple, easy life and Fintech will continue to drive customers to seek alternative solutions powered by modern technology and underwritten by simple effective service. What is for sure is that our thinking on how to serve those customers also needs to innovate to keep customer relationships on track.
How is your organisation changing to meet the change in customer expectation and demand?
The BBA report ‘Banking – A World of Change’ in 2015 documents the changing behaviours of banking customers:
- 6% decline in branch use in the past year
- 3,200 people have now used the ‘Nationwide Now’ service with 94% of “Ninety-four per cent of customers say they are either very or extremely satisfied
- 10.6 million banking app logins every day
- 22.9 million banking apps downloaded
- 43% decline in telephone contact to banks from 2008 to 2013
The evolution within Teleperformance has been significant and we’re happy to share our thinking on how to stay ahead. Leave a comment here or get in touch with me via my LinkedIn.
Photo by Steven Depolo licensed under Creative Commons.