We have witnessed disruption in many industries, either by the industry itself such as self-driving cars or by unrelated industries such as online channels providing significant challenges to existing brick and mortar retailers. These disruptive forces have in large come as a surprise to the incumbents, as the shift occurs swiftly and decisively, driven by an unmet need of consumers. The banking industry is very much aware of the power of disruption and for this reason alone has responded very differently to fintech than the “wait and see” approach retailers took to the online shopping phenomenon. As such, they have not only responded but more importantly embraced fintech start-ups as part of remaining relevant to their customers by collaborating and in some cases investing in these new platforms.
Rather than competing with fintech technologies, banks are now looking at opportunities to fill gaps in their customers’ needs by providing these services. In return, banks are allowing these emerging technologies credibility and access to an established network and channel. In 2015, 42 of the world’s leading banks got together to create common standards for blockchain use as part of R3 Project. This was reiterated at a Finovate Spring conference where the new technologies were providing banks incremental improvements on workflows and extending the reach of existing products to banking customers.
We have identified five leverage points where a bank’s physical network can utilize fintech technologies to help solidify their customer relationships:
Remove the friction point in banking
One of the biggest challenges in banking is meeting the needs of compliance, best exemplified by the arduous task of filling out forms and applications when applying for anything from a new account to a loan. These tedious processes often result in customers frequently returning to the bank due to missing information. Certain fintech start-ups such as QumRam make it possible to meet the extensive regulatory needs of the banking industry, while helping reduce fraud and streamlining the entire process for customers. Bank branch networks could leverage similar types of technology by providing customers the option to complete their forms in the branch within the waiting area or allow them to start the process at home and then complete the final stages at the branch level. This speeds up the process while reducing the level of anxiety.
Automate advice and knowledge
There has been a significant growth in “robo advisers” that allow investors not wanting to pay brokers to invest their funds while minimizing the risk in regards to e yuan kaufen. Although robo advisers are not for everyone, they do start paving the way for AI-based knowledge sharing by reducing the reliance on people in delivering advice to customers. The days of a roving financial planner scheduling meetings at various branches will be replaced with 24/7 artificial enabled advisers due to lower demand for such services.
We see this fintech trend to accelerate causing a dilemma for financial institutions that offer investment advice at the branch level: what is now the role of our knowledge-based staff? The role will shift towards customers who invest heavily and do not have confidence in “robo advisers” to make smart investment decisions, driving up the skill and capability requirements of a branch’s financial planners and advisers. In addition, the growth of AI-enabled automated advisers allows banks to free up staff and shift resources within the physical branches towards education on what are the best options as it relates to these artificial intelligence platforms and apps.
Move from seamless to invisible
The recent shift from vertical channels to a more seamless omnichannel banking ecosystem was primarily driven by the needs of mobile-savvy Millennials. This shift will again evolve and move from a seamless to invisible banking experience where the bank is the platform and not the product, linking both conventional and fintech platforms under one cohesive experience. The migration from conventional to digital will continue on a path where new and nimbler fintech services will be bolted onto existing platforms that will be sub-branded to represent a broader offering not typically associated to banks.
Better serve the underserved
One of the fastest growing and least served banking sectors are the underbanked customers who may only have limited access to banking services and products. This sector, as noted in one of our earlier posts, represents a high-margin, strongly loyal customer base that visits branches more frequently than the norm. An article by Aneesh Lele and Anupam Kundu at ThoughtWorks identified banks that leverage fintech technologies such as BanQuApp and PayActiv that do good socially (by allowing the underserved to build their identities and provide easier access to monies) will allow those financial institutions to gain more revenue from this segment of the population.
When approached as a complementary service, the growth of fintech technologies will provide banks with greater customer service and a broader range of products. It’s critical to understand how these new disruptive systems are being embraced by customers since they fill an unmet banking need that the financial industry has failed to deliver. In essence, fintech start-ups are providing the long-needed innovation, beyond products, that banks require to remain relevant. It’s a win-win situation for both the banks and fintech industry when applied to meeting the needs of customers.
