The rise of digital innovation has leveled the playing field for fintechs wanting a spot at the financial services table, and forced traditional finserv firms to rethink their business models. Once Apple, Amazon and Google got a piece of the financial services pie, it was clear mainstream firms would have to catch up. Pair that with the rising number of millennials that have joined the financial fold over the last decade and you’ve got a recipe demanding change. Industry research indicates this highly-studied population is less trusting of traditional banks, expect to manage their finances on mobile devices, and are more welcoming of the big tech players for their everyday financial needs. One study suggests 68% of millennials expect how they access money over the next few years will change drastically, with 73% indicating they’d be receptive to a service provided by Google, Apple, PayPal and Amazon over their own bank. This is indicative of how they feel about other financial service needs, too. This begs the question for many mainstream finserv leaders: How can we think and act more like a fintech companies? The answer to that question lies in understanding what’s given rise to fintechs, what they’re doing right, and how traditional players can innovate by pivoting to where the next generation of consumers and financial trends are headed.
Finserv Firms Must Think & Act Digital First
Financial service firms must worry less about where they have a physical presence and more about how they are making their digital footprint accessible. This means investing in consumer-facing apps, mobile-friendly websites and the ability to connect and alert a customer via text. The rise of the branchless bank isn’t a limitation for traditional finserv firms, it’s an opportunity to join the digital innovation bandwagon. Your customers are busy and they don’t have time to fit their lives within the confines of visiting a physical location, or calling a person to get their questions answered or services addressed. They expect to turn to apps, chat bots and websites to engage with their financial service needs, and they want this experience to be seamless and ubiquitous across every digital touch point. Not embracing that forward-thinking, digital-first mentality risks the chance of customer churn. Thinking more like a fintech means having an app that allows customers to do everything they could do both in person or on the web. The tech giants have mastered the art of delivering quick, automated services that fill a diverse set of customer needs — all without having to actually talk to a human. They’ve also learned to anticipate needs and provide recommendations before a customer even asks. You’ll still need actual people to fill in the gaps when technology can’t check off all the boxes, but you’ll want to empower your customers with easy to navigate digital tools to serve their everyday needs.
Finserv Firms Should Invest in AI, Machine Learning & Big Data
Your financial service firm already has tons of valuable data on your customers. When and how they interact with your services and what their financial habits are. Why not leverage that data with sophisticated technology that can bring context to the value of each one of your customers? Enter the power of AI, machine learning and big data. AI and machine learning use predictive analytics to anticipate the needs of your customers based on past patterns. This approach enables your firm to personalize the offers and services to each individual customer based on what they actually value. Instead of taking a blanketed approach with customer interactions, thinking like a fintech means embracing big data that provides valuable and actionable insight into how your customers manage their finances. AI/machine learning and big data can anticipate how your customer thinks, what services they might benefit from in the future and how they can get the most of the services they are currently using. These technologies can also protect your customers from outside threats. Big data provides your team with better insights into how prospects are interacting across your various digital touch points so you can craft better customer acquisition strategies. Thinking like a fintech means embracing these innovative technologies that have already been helping the big tech players gain an edge in the market for years.
Finserv Firms Must Embrace Leading Security Technology
Speaking of cutting-edge technology, there’s a lot of value to using AI, machine learning and big data besides the customer-facing opportunities. These analytical-driven tools also help your firm proactively protect your customers from outside threats such as widespread data breaches and emerging fraud threats that play a significant role in customer satisfaction. In 2019 alone, banks and financial service firms accounted for 108 data breaches, and the exposure of more than 100 million sensitive records, according to data from the ITRC. Fintech firms built their platforms with the latest and greatest technology, but many finserv firms are still playing catch up. This gap is widely noticed by sophisticated fraudsters that have targeted smaller finserv firms that haven’t been savvy enough to invest in predictive risk technology. Staying ahead of the curve in today’s tech-forward ecosystem means getting one step ahead of the fraudsters and investing in technology that protects customer data, while also managing the fallout of an incident when a security breach does occur. Not doing so leaves your entire organization at risk, and impacts your ability to scale with current and prospective customers. Couple this with a customer-centric and digital-focused mindset, and your finserv firm can be on the path to thinking and acting like its fintech counterparts.
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