Almost three quarters of millennials would rather go to the dentist than listen to their bank. It’s safe to say the financial services sector has traditionally struggled with customer experience, especially since more people are not even walking into a branch where the customer experience can be personalized. To address this trend toward a technology-enabled banking relationship, more financial institutions are harnessing the technology offered by fintech solutions (software that provides financial services) to inject a better customer experience into that dynamic, engendering trust and building customer loyalty.
“Customers have higher expectations than ever before and they are expecting companies to leverage all available data to tailor solutions to fit their needs,” explains Kevin Bottoms in FinTech Weekly. “Customers also have more options.” These options include non-traditional loan and money management solutions.
The combined expectations of increasing customization and the multitude of choices in a geography-free online marketplace heighten competition among established financial services brands. Fintech providers, or technologies targeting the financial services sector, help by offering a seamless customer experience in an increasingly commoditized vertical, providing a competitive advantage for financial institutions.
“By leveraging the technologies offered by fintech … financial services companies can increase customer satisfaction and nurture customer loyalty.”
Fintech, when intentionally leveraged to improve the customer experience (CX), have the two-fold effect of attracting new business and building loyalty with current customers. With CX at the heart of many of these companies’ missions, fintechs perceive themselves as more customer-centric than traditional banks.
Banks are learning that fintech can either be an asset or a competitor.
“For virtually every financial service, there’s a financial technology (fintech) company innovating to produce a great UX to rival big banks,” explains CX solutions provider Telus International. “Consumers are increasingly gravitating towards these user-friendly fintech applications, in lieu of similar experiences offered by legacy institutions.”
What drives customers to leave? Customers are migrating to startups and other competition in search of:
Novelty & Simplicity:
- New ways to do their daily banking
- Simplified processes, products and communication
Transparency, Friendliness & Convenience:
- Friendly companies
- Ultra-convenient solutions
- 24/7 services
- Personalized services and products
Traditional financial services organizations will need to rethink how they engage with fintechs in order to transform how they engage with customers or they risk missing out on a key demographic segment of the market. Unless they harness the technologies offered by fintech vendors they could end up competing with new fintech entrants.
Increasing Customer Engagement
The ongoing shift to digital interactions also creates a new question for traditional financial services organizations – How do I make sure my customers remain engaged even though we don’t get to see them in person? We know that keeping customers engaged pays off in the long term. In the retail banking industry, customers who are fully engaged bring 37% more annual revenue to their primary bank than do customers who are actively disengaged.
Innovative fintech solution providers such as Juntos and mobile banking app Tigo Pesa use behavioral research to help empower new customers, motivate positive behaviors and increase engagement. Juntos sends culturally specific, customized text messages to new customers. They first conducted extensive ethnographic research with Tigo Pesa users to determine customer behavior, habits, requirements and goals. Then they used the results to identify the obstacles to using the product and the behavioral triggers that could increase customer usage. In emerging markets these technologies are spurring “the adoption of new financial behaviors and the development of lasting financial habits.” Leveraging these digital innovations to drive engagement can help financial services organizations make the shift to compete in the new and ever-changing fintech market.
Wondering how to effectively integrate CX innovations into your organization? Contact a Growth Strategies Advisor to get started.