The global financial services industry has reached a new era, where banks and FinTech companies are coming together rather than working against each other. The reason? Customers’ expectations.
In their research on consumer banking trends in Central and Eastern Europe, EY found that 38% of clients would change their financial services provider for better digital services. But “better digital services” is easier said than done. As financial services companies increase digitization efforts, there is a massive opportunity for FinTechs to provide the underlying functionality to drive these initiatives forward.
Banks and other financial providers have started partnering with FinTechs to fulfill regulatory requirements, take advantage of shifts in the market, and ultimately, deliver services customers want (e.g. digital banking, instant payments, and asset management). Rather than building these capabilities themselves (which takes time, resources, and expertise they might not have in house), banks are turning to FinTechs to fill their innovation voids. On the flip side, many FinTechs are upping their research and development spend and increasing capabilities to ensure banks and other financial institutions recognize the value they can provide.
Here are four ways FinTechs can take advantage of the opportunity in front of them and maximize their market potential in 2021:
1. Take a customer-oriented approach
Users expect financial services products to operate with the same levels of ease and intuitiveness as the other apps they use on a daily basis. Instead of solely focusing on customer acquisition or revenue, there needs to be a greater emphasis on improving customers’ journey through the product. For FinTechs and other types of software alike, the product is the customer experience, and companies need to orient around this mindset when planning and strategizing around the product.
In addition to a shift in mindset, improving the customer experience requires the right tools, data, and insight into what that experience looks like. Product teams at FinTechs need to understand how users are engaging with the product, what keeps them coming back, and how they can retain and grow their user base effectively.
2. Use product data to guide decision making
Building with the customer in mind starts and ends with data. As banks look to FinTechs to help improve their own digital offerings, they are going to choose the platforms that feel like they were built to solve their problems. With product analytics, FinTechs can collect data on workflows and usage patterns to better understand what users’ needs are, as well as identify their highest value customers. This deeper insight allows teams to validate hypotheses on user behavior and then track changes in usage as they make improvements to the product over time.
3. Identify the right paths to innovation
Compared to other industries, innovation in financial services can be more complex because of existing regulations, investment in legacy infrastructure, and long-standing institutions that already have large presences and customer bases. In order to appeal to potential buyers, FinTechs needs to diversify their offerings and show that product innovation is one of their top priorities.
This means FinTech providers need to identify the right features and functionality to build, based on what will be most valuable to their users. FinTechs are also in a unique position in that they can not only help banks deliver against current needs, but also advise on what their focus areas should be into the future.
Being customer-oriented in these capacities requires a capability to collect feedback efficiently, and the best way to accomplish this is in the application. This way, you can give customers a place to provide feedback while they’re using the app, making them more likely to share their opinions while their experience with the product is top of mind. By combining quantitative data (like product usage) with qualitative customer feedback, teams can also cross-reference ideas with users’ behavior and ensure initiatives are relevant to a large enough portion of their user base and worth pursuing.
4. Automate and personalize user experiences
By leveraging data on customers’ interactions with their application (e.g. product usage data, sentiment, and feedback), FinTechs can provide a more personalized user experience and build relationships with customers inside the app itself. This requires both understanding how different segments of your user base are behaving, and guiding them to success based on their specific needs.
For example, segment product data by users’ role, location, or company size and then track how different segments navigate the application differently. What workflows are key for each group? Do only certain types of users access parts of the app? Is that how it should be? From there, you can set up automated in-app notifications that guide users through the workflows you know are key to their success, and tailor the messaging accordingly.