In a digitally-driven economy, the financial services sector sits at the epicentre of change.
Now more than ever, customers seek the same simplicity they receive from other service providers for the management of their finances; they expect a seamless experience that is tailored to their needs. With the emergence of crypto-currencies and frictionless payments, consumers aren’t prepared to wait for traditional banks to catch up. In fact, PWC’s most recent Digital Banking Consumer Survey urged banks to take a mobile-first approach, finding that 15 per cent of customers are now mobile dominant, a sharp increase from the previous year.
As customer demands evolve to reflect cultural change and regulatory change increases the cost of compliance, firms in this fast-moving sector have been forced to adopt cutting-edge technology into their core strategies to improve their value chain.
But what impact is this having on the financial services industry on a whole?
Consumers in the digital age have grown accustomed to the efforts companies have made to simplify or streamline their experiences with them. Whether it’s ordering a taxi, purchasing train tickets or ordering a meal before arriving at a restaurant, most of us don’t expect to have to go out of our way to make a transaction: when we are forced to use the “outmoded” method, we grow frustrated and impatient.
The vast development and proliferation of mobile apps has influenced a new area of customer behaviour, and financial service firms are well aware of the expectation. The move towards the “platform economy” has seen conventional FS businesses in this sector forced to create seamless digital experiences in order to retain their loyal customer-base and stay competitive in the face of innovative market entrants.
Be it an insurance premium selection app or one that sends automated text alerts on bank balance and financial advice, FS firms know the only way to stay ahead of the curve is to continually find new ways to enhance the customer experience.
Meanwhile, a tidal wave of fintech start-ups eager to capitalise on the gap in the market continue to lead the way in the new age of financial services. By leveraging the latest innovations in Artificial Intelligence, Blockchain, Robotics and biometric applications, these agile challengers continue to disrupt the market with innovative solutions to financial services that address the needs of the modern consumer.
Take Monzo, for example: in the space of three hours on December 5th, the fintech start-up with the tagline ‘the bank of the future’ smashed their crowdfunding target of £18 million, reaching £20 million in the largest ever crowdfunding round for a British fintech company. It’s thought that around 36,000 of Monzo’s customers invested in the mobile-only bank, a figure that serves to illustrate the shift in customer preferences towards tech-centric companies.
But they aren’t the only ones taking advantage of technology: today, anyone with the digital capabilities and access to funds can create a finance app or program to meet modern expectations: with the right marketing, they can also take market share.
Due to factors such as regulatory constraints and cumbersome legacy systems, traditional financial service firms find themselves outpaced by their fast-moving, technology-born counterparts.
Naturally, these start-ups are able to devise competitive solutions and garner funding from eager investors with ease, leaving conventional financial services firms the choice to either undertake digital transformation or strategically connect with fintech partners to offer more for their customers.
The latter has so far proved beneficial not only for established firms, but for start-ups struggling to scale in a highly regulated sector. However, while large FS firms may be familiar with acquiring other businesses, partnering with smaller players from technology-led ecosystems is a whole new ball-game: in order to reap the benefits of a successful partnership, they will have to tread carefully in their search, create and commit to a framework for experimentation and establish mutually beneficial terms.
At OJO Solutions, we help financial services firms to implement technological solutions that meet their unique objectives. Should you need advice or support through digital transformation, get in touch with a member of the team today.