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Fintech and the customer experience battleground

Delivering exceptional customer experience has been a priority for organisations operating within the financial services industry for the past several years.

No longer is it enough for banks and other financial institutions to be paying lip service to the customer; they need to be delivering measurable improvements.

In order to do so, they have been moving from product-focus to customer-focus, fostering long-term relationships, improving ongoing engagement, building trust, amending internal culture and hiring the right people.

However, has this extraordinary effort — made at enormous cost and change management to the more traditional financial institutions — come too late?

Not necessarily. Globally, traditional banks are trailblazing some of the most exciting customer-centric digital innovations, as a joint report from inmoment and MyCustomer confirms:

In the United States of America, Avidia Bank launched Cardless Cash which allows customers to draw money from ATMs and branches through their smartphones in a matter of seconds. This has results in a 10% increase in engagement rates and a 13% increase in adoption.

Royal Bank of Scotland and Mastercard in the United Kingdom recently piloted chatbots to help manage customer finances and online transactions more smoothly.

Italy’s Banca Sella has encouraged crowdsourced problem-solving among its customers by opening up a wide range of APIs that have enabled customers to interact directly with the bank and a whole array of services.

South African First National Bank’s (FNB) employee innovation programme resulted in a loyalty scheme called Ebucks which has risen to prominence as one of the leading loyalty programmes in the world. Voted the most innovative bank globally, FNB has implemented more than 9,000 innovations over the last ten years.

Garanti Bank in Turkey introduced the iGaranti app to enable customers to create a customised mobile app home page, with 23 different applications leveraging big data analytics and personalised for each user. In its first month of launch iGaranti was downloaded more than 100,000 times.

And in Hong Kong, Citibank have designed ‘smart branches’ to allow customers to continue visiting physical banks whilst providing bank tellers who are able to interact on screens across multiple branches from a central location. Over half of Citibanl’s 24 branches in Hong Kong are now ‘smart’.

Yet these inroads into digital innovation in the name of customer experience may not be enough for traditional banks — time is not on their side. Accenture found that digital laggards in the financial services sector could stand to lose 35% of market share to digital first competition. And disruption isn’t necessarily coming from start-ups but from technology giants who offer new models of engagement.

The Fintech advantage

Europe’s first cohort of challenger banks — Atom Bank, Tandem Bank, Monzo, Starling Bank, Revolut and N26 — have broken out collectively attracting $1 billion in funding and over 2.5 million customers since 2014.

While Rakuten, Japan’s largest online retail marketplace with a messaging app of 800 million users issues credit cards, mortgages and security services. Alibaba in China offers user insight-based loans, asset management and payment services. Amazon has also expanded into financial services with Amazon Cash, Amazon Balance and Amazon Pay and offer loans to small-to-medium enterprises. 

Fintech start-ups and technology giants are leveraging their position as omnichannel, digital-first and agile organisations by focusing on customer insight, digital technology and customer-centricity. By focusing on mobile delivery, they are simplifying all engagements and removing frictions from existing processes. By being channel agnostic, they are allowing customers to choose their channel or to move seamlessly from one channel to another. And by being agile, they are able respond to customers’ need and change direction without warning.

The future is not all doom and gloom for traditional banks

While the rise of challenger banks, Fintech start-ups and technology giants might be worrisome to traditional banks, they also provide insight into new best practices and what industry might look like in the future. This may be through observation, partnerships or even acquisition.

Mike Plimsoll, Industry Marketing Director for Financial Services at Adobe told CMO, “We’re actually seeing big players acquire small Fintechs to help them become more agile,” he said. “As a result, the start-ups’ emphasis on customer experience will permeate the parent companies.

This paperless approach to app-based banking is expected to cut costs and increase revenue. It should also continue to improve the customer experience, brand loyalty and productivity as well as reduce the risk around compliance.