Over the past few years, fintech has disrupted traditional financial services by putting customers first. According to a PwC report, 53 percent of financial institutions see themselves as customer-centric compared to more than 80 percent of fintech companies. As one global banking executive says, “We thought we know our customers, but fintechs really know our customers.”
Emphasizing a seamless customer experience is growing even more important as services become more automated and individualized. Here are a handful of reasons why startups should continue to perfect their customer experience far into the future.
1. A laser focus on user experience
PwC reports that more than 80 percent of traditional financial services fear they may lose business to stand-alone fintech companies. Part of fintech’s effectiveness lies in its precision. Instead of trying to offer an array of services, Fintech focuses on making access to a single financial service as convenient as possible. Take a company like Venmo, for example, which focuses solely on processing payments, or Wealthfront, which specializes in managing investments. People appreciate this convenience, so much that they’d stay with fintech businesses if they offered more services than they already do. According to a 2014 Accenture survey, half of respondents say they’d bank with the startup Square if they expanded to offer banking services.
The U.S. has tripled its investment in fintech in recent years—jumping up to $12 billion in 2014 from $4 billion the year before, according to The Economist. These growing investments show how healthy the industry is, and fintech should continue growing faster than other industries. Three-quarters of PwC’s clients name the industry’s focus on meeting changing customer needs as the most important impact fintech will have on their business. PwC predicts fintech will endanger nearly 30 percent of banks and payment companies by 2020. As UX expert Albert Pumpers assert, the banks that survive will have adopted similar user-centered thinking,.
2. A growing millennial influence (25 percent of the population!)
This past year, the acronym HENRY (High-Earning, Not Rich Yet) came into popularity to describe the population of mostly young people on their determined path to wealth. This generation grew up doing everything online—as The Financial Brand says—90 percent of millennials use online or mobile for everyday banking tasks, and they’re increasingly relying on fintech companies to do so.
As the largest portion of the U.S. workforce, millennials represent more than $200 billion a year in buying power. According to AgilOne, millennials want personalized experiences more than other generations, with half wanting brands to remember their birthdays. The tech-savvy group will become even more influential in the future as their buying power grows.
3.Improved automation allowing for personalization
Logic says that automation would make services less personal. That is not the case. Financial leaders in the PwC study say that letting computers deal with asset allocation and wealth management is the second most important trend in fintech. Robo advisors, for instance, are gaining popularity with investors who want to save money while maintaining more control and privacy over their portfolio. Collecting data first allows customers to seek live help, further streamlining the process.
Financial journalist Jane Bryant Quinn expects automated services like financial advising to continue to expand. As she tells Inc. only one company, Betterment, offers “an automatic plan for dealing it [your money] out over your retirement. The others will probably get to that eventually, because you really need both kinds of automatic planning.” After all, the future is automated. One would expect fintech to catch on.
4. Customer experience differentiating companies from their competitors
With the rise of the internet, customers have more options than ever before. According to Avaya and BT Research, it should be no surprise half of consumers see ‘loyalty to companies’ as outdated. (Price and convenience play a larger role.) According to Accenture, in fact, 28 percent of consumers are loyal to products and brands. Customer satisfaction can differentiate you from the pack. About 80 percent of customers want companies to offer help on a variety of channels such as social media, web chat or mobile apps, and add that companies fail to make switching between channels convenient.
As a result, customer experience will become even more central for differentiating fintech as technology progresses. Almost 90 percent of companies have targeted customer experience as the main way they’ll compete with other businesses, according to Gartner. In fact, the firm predicts companies will shift 50 percent of their products and services spending to customer experience innovation by 2017.
5. Embracing long-term solutions
Kevin Bottoms, global vice president of TELUS International, says that too many fintech companies focus on launching an idea rather than long-term planning to sustain customers to keep their company relevant. Because loyalty today is not valued as much, focusing on customer experience is essential to keeping customers. As Avaya notes, many are turning away from getting help from companies themselves, instead turning to other sources to solve problems.
As fintech continues to evolve, its unique emphasis on customer experience will remain central to its success. SparkLabs Global expects fintech’s impacts on a larger scale won’t be fully realized for a decade, but it may eventually replace banking and insurance companies. Others predict big banks will remain central. No matter the outcome, centering customers will keep distinguishing fintech from the traditionalists.