The digital age has redefined how people engage with their bank. A decade or so ago, banking options were limited by proximity and competition was thin. Now, these services are all online and there are such a range of alternative possibilities that the balance of power has shifted. We are now in an era of customer-led banking.
Today’s customers have higher expectations and greater choice than ever before. Banks are under increasing pressure to keep up with their more agile fintech counterparts and deliver not just financial services, but an exceptional customer experience too. There’s no time to lose. Research by PwC indicates that fintech companies could control 20 percent of the financial services business by 2020. As a result, 83 percent of institutions believe part of their business is at risk. The fact that 2000 bank branches have closed over the past decade alone validates this concern.
Centuries old banks may have greater manpower and deeper pockets but nimble fintechs are able to offer a transparent and highly personalised customer service. Seventy-five percent of banks recognise that the key competitive differentiator is fintech’s increased focus on the customer – yet most have not taken enough action to improve their position. This is a serious oversight and one that fintech companies have capitalised on.
The definition of service
Fintech companies put their customers front and centre. They realise that the financial services industry isn’t built solely on the delivery of high-quality finance. It’s also heavily dependent on the fast delivery of a high-quality user experience, customer support, and convenience. Whether applying for a loan or setting up an account, most customers have had frustrating experiences at the bank involving long waits, confusing forms and being put on hold or transferred from one department to the next.
Bank products and services are also usually inflexible and subject to complex regulation, forcing the customer to choose what comes closest to their needs – or adjust their requirements accordingly. Rather than go out of their way to find a spot-on solution, banks will invariably respond with ‘no’.
Fintechs on the other hand, understand that speed and service is of the essence. At Sonovate, we made responsiveness and personalisation an integral part of our customer service and product offering. Our contract finance enables recruitment agencies to start running a contractor division in just one day. By contrast, it can take up to five years to launch a contractor division using traditional invoice finance from a bank.
Smart use of digital tools has given fintech companies the upper hand in terms of customer experience. Mobile apps and cloud-based platforms make financial products and services easier to manage across multiple channels – to the customer’s advantage.
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The banks are also investing in these technologies but fintechs have the advantage of being free of legacy technology systems and not burdened by regulation and bureaucracy. Limited online functions and a poor mobile experience are not uncommon, putting banks on the back foot in terms of customer experience.
One of technology’s greatest contributions is its transparency. Intuitive mobile apps and user-friendly online platforms allow fintech customers to engage directly with their finances, helping them feel far more in control of their transactions and confident in their decisions. Monzo, a start-up challenger bank, offers a pre-paid card that links to an app on their customers’ phones to give them a real-time overview of all their payments. This kind of real-time log wouldn’t be possible with a legacy bank that doesn’t update the ledger for several days.
Financial data can also be presented to customers in a clear, actionable format that helps enhance their understanding. The success of fintechs such as cloud software company Xero, whose tagline is ‘beautiful accounting software’, proves that appearance matters. Customers increasingly expect slick design and seamless user experience, the absence of which can damage credibility.
Customer service is, like technology, constantly evolving. The agility of fintech companies gives them a clear, competitive edge over more ponderous banks. However, there is still time for older institutions to shake off their complacency and learn from these dynamic disruptors. Collaboration between banks and established fintechs is also on the rise, providing banks with greater access to new customers. As the market shifts, fintech companies move with it. They are constantly listening and responding to their individual customers’ needs – and making sure that the products and services they offer, are what people want – and need.
Featured image credit to Lobster.media