Data - and personalisation - will be key
The importance of data is nothing new, but its growing presence in 2020 can’t be overlooked. With Gen Z-ers now becoming desirable customers for financial institutions, it’s evident that new customer bases now coming through are born-and bred-digital natives. This means two very important things for the industry:
- One: That there’s even more data out there to help inform financial providers how individual customers use products, and what they really want from their banks.
- Two: That customers now expect a seamless, tailored online experience when they deal with providers across any industry – whether that’s calling a cab, booking a place to stay, or opening a bank account.
This new wealth of data is beneficial for both companies and consumers. Companies can use data to identify behaviour patterns and make predictions about what a customer needs - and when they need it - to create micro-segmented products that hold the customer at the very heart of it all. This level of personalisation, combined with the right data-driven software, can enable providers to meet all of the consumers financial needs so the user only sees services and products that are relevant to them when they need them.
Faster, seamless payments
Payment integration is becoming an important feature within platform products to provide customers with a seamless experience. Take Uber, for example, where customers don’t even have to think about the ride payment until after the fact. They can use the service to go from A to B and not have to tap a card or scrabble around for cash. In 2020, all platforms will be working to make payments this easy, with some even aiming to make the check-out page ‘disappear’ completely through pre-loaded payment settings.
The rise of cashless
2019 already saw credit cards overtaking cash as the second most popular payment method for the first time, pushing cash into third place behind debit and credit cards. Now, with more options like paying via tapping your mobile or paying through an app, cashless is catching up. Some pubs and shops are even switching to become card only to save on the costs of carrying cash.
However, it’s unlikely that we’ll see cash cancelled altogether this year. In 2019 Barclays were hit with significant backlash when they tried to cancel customers’ ability to withdraw cash at the Post Office, causing them to promptly reinstate it, and research has found that 8 million adults would struggle in a cashless society. So, while cashless is set to become king eventually, cash does still have a place in the court – for now.
Regulation doesn’t mean the end of innovation
Fintechs are here to stay, and traditional establishments in the finance industry already acknowledge this, sometimes even working with disruptors to improve their own digital offering. However, as Fintechs have become more established, they’ve become obliged to move away from the start-up mentality of ‘move fast and break things’ and take on the trappings of responsible outfits - especially as they start to hold more accountability over customer money.
Tighter regulation on Fintechs doesn’t have to be seen as a drag though. Indeed, it could be just as good for businesses as it is for consumers. A recent survey found that only 19% of consumers completely trust the challenger banks that they use, while 47% completely trust traditional banks. With more prominently regulated products, Fintechs should see their safety credentials skyrocket, giving more peace of mind to existing users and making them more attractive to potential customers.
Better customer experience when opening accounts, and beyond
As we’ve seen with the data trend, 2020 will be the year of customer-centricity in banking. While the more established financial institutions were relying on their traditional business models to keep themselves trundling along, Fintechs were busy developing a user-focused approach and addressing the specific needs of customers. This grew from simply providing a better user experience to bringing out new products and implementing new processes, all developed specifically with ease of use in mind.
Customers saw this new way of banking and started to ask difficult questions of their more traditional banks. Questions like, why am I paying such high fees when I transfer money abroad? Or why do I have to pay fees just to have a bank account with you?
The financial landscape has been changing rapidly the past few years, with this transition set to pick up speed and juggernaut into 2020 now that more established banks have caught on to where they’ve been going wrong. Fintechs are now expanding their product and service offerings, getting banking licenses of their own and going after some of the most profitable areas in financial services. This means that customers are now free to branch out when making decisions about their finances, given the new pool of Fintechs open to them.
In order to keep up, the more traditional financial institutions will have to become more customer-centric. It’s never been so vital to have a real understanding of what your target customers really want, and as we kick off 2020 we can already see that customers have new, higher expectations when making payments, on-boarding with a new provider, and when it comes to asset management.
Likewise, while the traditional banks will need to step up their customer experience game, Fintech’s will need to do more than just offer a great on-boarding experience and comparable products. Fintech’s will need to go that next step further to find new ways to offer value to customers. This will no doubt see them branching out in order to provide a greater variety of services, products and financial ecosystems to potential customers. It’s an exciting time to see which boundaries the trailblazers of Fintech will push next. The competition is gearing up, so make sure your business doesn’t get left behind.
Have a 2020 vision for your business? Get in touch with our experts to find out how you could benefit from open banking with YTS.