Driven by emerging technologies, the rapid adoption of digital has empowered customers who expect seamless digital interfaces even when it comes to their finances. From a provider perspective, we have the traditional financial services firms on one side and FinTech’s, also known as neo-Banks, on the other.
Each is struggling in its way to acquire customers and retain them. To remain relevant in today’s increasingly digitised world, both are focused on consumer empowerment via multi-options services, variety of products, and are creating a revolutionised hyperconnected value chain, a platform to provide niche and specialised product offerings.
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At one point in time, they were at loggerheads with each other, vying to win customers. However, over a period, there has been a paradigm shift to collaborate and pursue newer opportunities.
Transaction monitoring, business payment initiation, income verification, multi-banking payments, digital identity, and digital client onboarding are some of the business processes that have undergone cutting-edge NextGen makeover due to this.
Customer Experience Reimagined
Traditional financial services firms have been early adopters of technology. With every change in customer behavior and expectations, they have implemented add-ons to their service portfolio by adding to their IT landscape.
Today, they have monolith IT landscapes that are not scalable and need a drastic makeover to make them nimble and agile. FinTechs, on the other hand, built their business, keeping technology at the core. They have significantly moved customer experiences by creating products and services at short time frames, ultimately making what was “good to have” turn into “must-have.”
Thanks to the diverse innovation approach shaping the consumer/producer marketplace, centered around different change levers, we now have more industry templates on “what good should be.”
How quickly can these financial service providers adopt and develop newer products to determine who gets to stay in the long haul? Some approaches that can be adopted include:
- Collaboration with FinTechs and startups
- Partnering with technology accelerators
- Consolidating business and IT systems into a firm-wide digital platform
- Encouraging innovation in analytics to drive data-driven decisions
Reshaping the Future, Digitally
From a technology standpoint, the following broad is leading to a permanent change:
- Role of data: With the convergence of market provisioning, payments, insurance, deposits and lending, capital raising with investment management have pivoted the role of data to process externalisation beyond just being an asset. This convergence has broadened the innovation canvas for the interconnected digital ecosystem.
- Adoption of no-code: FinTechs are leading the hyper transition from low-code to no code, dramatically reducing the intermediaries and automating every high-value activity along its way.
- Leveraging AI/ML: Both traditional financial services firms and FinTechs are now leveraging AI/ML to create more innovative and faster market information platforms. Modern digital user experience via omnichannel digital ecosystem and self-service client portal facilitates advanced analytics to develop new business opportunities and revenue streams from data.
- Platforming everything: Traditional financial services need to tap into their ecosystems. Platform thinking makes the open banking vision a reality in an agile and efficient way, allowing marketplace participants to collaborate incrementally and deliver significant progress.
Given these developments, financial services firms, especially the traditional ones, need to innovate at a scale, which will help them ‘innovate beyond banking”. Next phase of innovation will continue to operate around these three scales, and possibly one feeding into other, spawning the assessment cycle again on “what good should be.”
- Heritage modernisation for existing platforms wherein we cannot wholly overhaul performance guidelines
- Evolutionary modernisation for greenfield programs/fresh platform builds where we can fully customise performance guidelines
- Platforms/products integration and build regulatory change programs with high rigidity preconfigured performance guidelines
Customer Preferences Will Be a Reality Tomorrow
There is tremendous pressure on traditional financial services firms to innovate at scale to retain and capture the customer wallet share. On the one hand, while they can do it all alone, on the other, they can forge partnerships with FinTechs to help scale the technology gap. Thanks to technology, one thing is sure that customer preferences, which are aspirational today, will be a reality tomorrow.
Anand Chandra
Guest author Anand Chandra is the Global Head Banking, Financial Services & Insurance Presales & EU/APAC Growth Leader at Accolite Digital, a leading IT services company. Any opinions expressed in this article are strictly that of the author.
