The traditional banking sector has well and truly been disrupted.
In a recent PwC report on how fintech is shaping financial services, it estimates the cumulative global investment in the space could exceed 150 billion over the next few years.
So, what exactly is it that fintech is bringing to the table to warrant all this capital?
According to the same research, it’s largely to do with the growing importance of digital experiences to consumers.
In 2016, the report surveyed CEOs, Heads of Innovation, CIOs and top management to get their perspective on the digital and technological transformation in the banking industry.
More than 60% of those surveyed, believed that by 2021, the majority of their clients would be using mobile applications monthly to access financial services. So, when challenger banks came along and launched online-only banking services, the industry and its leaders took notice.
But the disruption of banking is about more than just apps and mobile sites — what the “online only” approach really represents is a much wider shift towards customer centricity.
Challenger banks and wider fintech organisations are giving consumers what they want – access to all the details on their finances all day, any day, from the convenience of their palm.
Through truly great user experience, fintech is helping to shape what customers now expect and has begun to pave the way for the industry.
Specifically, here’s how fintech is putting the user first and evolving banking:
Democratisation of banking
According to McKinsey, there are two billion people in the world that live outside our financial system. This means that simple day-to-day tasks such as paying bills, or sending and transferring money, can be time-consuming and costly.
Many live in remote or rural locations and can be hundreds of miles away from their nearest banking branch. Without an online option, they’re left with no choice but to live outside the financial system.
With fintech, more individuals can access banking at the click of a button, and without leaving their couch. And it isn’t just about convenience. Fintech also opens the door to other banking functions such as transferring cash, loans and credit cards.
As long as consumers have access to the Internet, they have access to a bank branch.
Transparency is critical when it comes to earning the customer’s trust. Fintech has created a new way of speaking to customers by being upfront with fees and making customer service more accessible than ever before.
Fintech firms such as Revolut, which initially started as a travel card, rose to success by being more transparent with fees and providing a direct portal of customer service.
And it’s not limited to banks who are hoping to get a slice of the fintech pie. Larger, more established brands, are also adopting similar approaches.
For example, Apple’s launch into the fintech space with its laser‑etched titanium credit card aims to “completely rethink everything about the credit card” by being completely transparent with fees and by actively encouraging customers to pay off their credit card bill before incurring fees.
According to Apple, this is the first card that actively encourages users to pay less interest by incentivising them to pay back credit on time. The move helps the brand establish trust and transparency in customer relationships.
When exploring what makes a successful digital product, what becomes clear is the importance of dialogue between the business and the end user. The digital banking revolution has forced traditional banks to get back in touch with what consumers want – and often this can mean asking them.
As an example, Monzo, the British digital-only bank, regularly uses its social media platforms to poll its followers to find out what features they’d like to see integrated into the app.
Through utilising Twitter as a community forum, Monzo has been able to efficiently and effectively navigate what their users want; from the colour of the bank card right through to potential new features.
In 2019, banks know that great user experience isn’t just a “nice to have”. Thanks to the increased competition, traditional banks have begun to step up, adapt and evolve.
Ultimately, this has meant more people now have access to genuinely useful services. And it’s not just that.
Putting users at the forefront of all design and technology decisions leads to improved business performance, an increase in users, growth and more revenue — a win for all.
- Lucas Coelho, is Group Head of Design at digital design firm Roam and a TEDx speaker living in Auckland, New Zealand. He’s worked with large companies, startups and governments around the globe, helping them create digital products and experiences.