Technology has been shaping consumers’ demands and expectations, leading to an imminent disruption in the financial services sector.
Banking institutions, credit unions and big financial players have been playing catch up with new software developments and advances in technology mostly introduced by fintech startups. This phenomenon is quickly and irreversibly changing the global financial landscape.
The revolution of financial technology (fintech) is now rapidly spreading around the world and affecting a multitude of processes in the sector, including customer service, financial advice, payments and transactions, lending, insurance services and account management.
Fortunly summarised how disruptions from fintech startups have impacted the financial ecosystem in the last few years, showing some ascertaining statistics:
- 85% of banks have made of digital transformation a business priority
- 3 out of 4 global consumers are using fintech services for money transfer
- 77% of financial institutions want to innovate more
- 60% of traditional banks would team up with fintech startups, and 82% expect these partnerships to expand within the next 5 years
In the new digital era where customer centricity is the focus, fintech is innovating with solutions that can better respond to customer needs in terms of accessibility, convenience and personalisation. With all these changes, what does the future look like for the industry?
Here’s 5 ways in which the fintech revolution is disrupting the financial services sector:
1. Omni-channel customer experience
As digital channels continue to dominate the way customers connect with businesses, there’s been a quick shift in user interactions, and banks have progressively moved away from traditional procedures and branch-based activities to operating almost entirely in digital ways.
An omni-channel experience that meets new consumers’ demands involves not only mobile, but social media and multiple messaging channels – email, live chat and SMS. The need to facilitate customer communication through any channel is marking the path forward for companies aiming to achieve true customer-centric operations.
For users in banking, an omni-channel experience means customers can get consistent and seamless interactions online; no matter what device they use, as well as offline – with “smart” branches that effortlessly integrate with digital services. As user behaviours shift, the emergence of fintech means that financial institutions are getting smarter, with an aim to migrate transactions and sales to digital channels that help to create the unified, enhanced user experience.
Fintech startups are fiercely emerging in line with this trend, as they can provide the software for financial institutions to adopt multi-channel messaging, combined with AI, machine learning and automations to streamline communication between business and consumers – a winning formula to boost sales and customer engagement.
Adding to this formula; co-browsing is one of the latest technologies that has come to assist financial services in their journey to deliver omni-channel support. Beyond banks and credit unions, this tool is also being used by agents in insurance, lending, and financial advisors who can co-browse with consumers and provide in-person assistance.
The main advantage of co-browsing is that agents can navigate along with visitors and customers on specific webpages, to step in and help with a show and tell approach during crucial stages of the buyer’s journey: from form filling for pre-sale applications, to post-sale customer onboarding.
2. Customer service chatbots
Chatbots are growing in popularity especially amongst banks, who are using the functionality to streamline a number of customer interaction processes – something that it’s also come to be known as conversational banking.
Agents can benefit greatly from the implementation of these virtual assistants, as they can spend less time on the phone handling basic queries and focus on more relevant or complex tasks.
Some of the main advantages that chatbot technology offers for financial services include speedy response in support delivery for simple queries, pointing customers in the right direction (relevant web pages or service departments), and automating data collection.
Chatbots can also integrate with applications and other technologies, and also make use of machine learning to continuously expand usability. Open banking is one of the developments that can be integrated with chatbot technology, to automate a number of queries and gather relevant financial data from customers.
From the customer’s perspective, chatbots are handy bits of software because – unlike human interactions – they can provide assistance 24/7. Virtual assistants are now more than ever handling support queries and helping consumers to find information online in seconds, resulting in improved customer satisfaction rates.
Even though some people still prefer human contact for a number of processes, a digital hybrid approach seems now easily viable and most likely to become the ‘new normal’ for financial services.
3. Open innovation for new developments
The digital transformation has kept a focus on openness. Financial giants have increasingly engaged with external solutions and opened up to third party innovators to onboard new ideas and developments.
A report by Accenture shows how the open concept is embedded in the approach of many of the new fintech companies. A real-life case is Fidor Bank in Germany, which established a middleware with an open Application Programming Interface (API) that connects to existing banking platforms to offer a range of services in lending, arranging emergency loans, and sending money via Twitter.
The open approach in innovation is continuing to grow in popularity, fostering competition as it goes. Established banks and credit unions can partner with fintech providers offering open banking technology to streamline processes such as affordability assessment, credit searching and bank statement reporting.
4. Transactions with Blockchain and cryptocurrencies
Following up on the open innovation movement, a big opportunity for businesses in the financial services industry is to take an approach in the area of Blockchain. Cryptocurrencies have been disrupting the banking sector for the past few years, offering users quicker and cheaper ways to complete transactions.
We’re yet to see how this wave continues to affect the sector to analyse its long-term impact, but it’s notable how it has been implemented and quickly reshaping ways for payments and transactions. Blockchain provides a solid trading platform with increased transparency, and customers have been benefiting from cryptocurrencies for transferring money, reducing costs and saving time.
5. Automations for financial advice
Robo-advisors or virtual assistants have taken the world of financial advice by storm, imposing a significant threat to traditional operators. The pressure will most likely prevail, but developments in automated technologies for financial advice are continuing to emerge and offer competitive solutions.
These automations are implemented in the form of automated messaging through live chat and other communication channels, as well as workflows that can be built around specific company needs and triggered by consumer behaviours – to power sales and customer engagement.
The delivery of financial advice can be automated with a hybrid approach of human and machine. The use of automations in this sector extends to a range of processes, from delivery of basic advisory, to data-driven insights for more tailored services and automated systems for customer onboarding.
Automations can help financial advisors and agents in wealth and asset management to capture leads, build relationships with customers, and deliver a more comprehensive service offering.
Fast-forward to the future
Digital banking expectations are evolving, forcing the banking industry to reimagine how products and services must be delivered. At the same time, advances in fintech are now encompassing all stages of the customer journey with chatbot technology, machine learning and AI, co-browsing, modern messaging and automations, with more developments are in the way.
The focus for banking institutions and financial services must be to keep a strategy that puts the customer at the centre of their processes, in order to ensure a more seamless and omni-channel experience.
Traditional retail banks will need to monitor the digital revolution steered by fintech startups and challenger players in the industry, and consider opportunities for partnerships, open innovation and strategic investments that can considerably improve their operations in line with the digital revolution.
At Ibby, we are building an innovative platform that will help companies in financial services to implement technologies for sales and support, from real-time messaging tools to co-browsing, open banking and more.