If banks weren’t already feeling the pressure from financial technology (fintech) startups, they should be now: Fintech companies are officially mainstream. A report conducted by the tech company LinkedIn, the advisory firm Capgemini and the non-profit Efma found that half of banking customers around the world now use at least one product or service from a fintech firm. The study, released in November 2016, showed that fintech adoption is particularly high in emerging markets like China and India.
Given how much this space has grown in the past decade, the mainstream adoption of new technologies in the financial industry shouldn’t come as a surprise. In the first quarter of 2016 alone, fintech startups saw an influx of $5.2 billion in funding. In tandem with the billions of dollars of venture capital coming in, more fintech companies like the Lending Club are showing stellar success.
As if the financial services industry needs more competition, the explosive growth of fintech has attracted the attention of established tech players like Google and Apple.
Half of banking customers around the world now use at least one product or service from a fintech firm.
If you’re a business executive at an incumbent financial services firm, now’s not the time to stand on the sidelines. The Strategy& report 2016 Financial Services Trends proposes a solution: creating a fintech ecosystem and putting your organization in the middle of it. The report suggests that instead of simply upgrading your bank’s legacy systems, a better approach is to look outward and assess whether third-party technology providers could add more value.
Key to Strategy&’s recommendation is to evaluate possible tech partners with the goal of improving the entire customer experience. Focus on your company’s strengths while leaning on the strengths of fintech companies to drive innovation for your customers.
When implementing this strategy, you can’t afford to ignore your own customers. Engage them every step of the way as you build and perfect your fintech ecosystem.
Establishing a customer-centric culture
You can’t implement an effective fintech ecosystem without the right culture in place. According to the Strategy& report, this must start with “a fundamental shift in identity and purpose” and requires building a “culture that is forward looking, that responds to customer demands relatively quickly, and that can adopt new technologies as they evolve.”
Many of the most successful fintech companies are ahead because they’ve uncovered insight about financial services customers.
How do you build a culture that looks ahead, rather than reacting to the latest consumer trends? By fostering a customer-centric culture. Many of the most successful fintech companies are ahead because they’ve uncovered insight about financial services customers. They’ve tapped into trends that others haven’t. To do the same, you need to understand the motivations, aspirations and lifestyle of your target market—something you can gain by engaging frequently with your customers.
Focusing on customer interactions
What Strategy& recommends is much more than having the right technology in place or partnering with innovative fintech startups. The impact on customer experience must be a major consideration. As you integrate new technology, “you must set high standards for customer interactions and be able to draw a comprehensive picture of customer expectations for the firm’s brand,” says Strategy&.
Before you evaluate potential partners, consider your customers’ end-to-end experience. Where are the pain points, and how can other fintech companies fill in the gap? How can your bank or financial services company integrate your own technologies and processes with fintech innovations—without negatively impacting the current experience?
As you integrate new technology, “you must set high standards for customer interactions and be able to draw a comprehensive picture of customer expectations for the firm’s brand."
To determine the impact of your fintech ecosystem strategy, engage your customers before, during and after implementation. Track the impact of your tactics with customer feedback and key business KPIs to get a clear picture of your customers over time.
Engaged customers are key to a successful fintech ecosystem
Fintech adoption has nowhere to go but up. Young consumers are gaining purchasing power, demanding new technologies and better, faster services. It’s time for big banks and other established players to leverage their brand, their existing customer relationships and their considerable (but shrinking) market share to build an ecosystem that remains beneficial for their business. Creating an ecosystem that benefits your company, your customers and your innovation partners ensures that no matter what happens to the financial services industry, you’ll be in the midst of it.