Behind the Scenes: How Financial Technology Companies Are Changing the Way We Bank

The financial technology industry is disrupting traditional banking.

These platforms dismantle industry silos and turn linear value chains into ecosystems that fulfill customer needs in new ways.

This change is an ample opportunity for banks willing to adapt their products and business models to the platform economy.

Table of Contents

1 Digitalization
2 Customer Experience
3 Customer Relationships
4 Innovation
5 Resources:

Digitalization

While it is risky to make broad generalizations in the aftermath of such a massive economic disruption, one clear takeaway is that financial institutions are rethinking their business models. Startups that use scaled technology to uncouple a particular financial product or service from larger financial institutions have become known as “FinTech.” Payment apps exploded in popularity; robo-advisers captivated investors, and insurance startups have gained market share.

Similarly, emerging technologies such as cloud computing, biometrics, AI and machine learning, and big data are poised to revolutionize banking processes. However, leveraging these technologies requires a deep understanding of the core processes that drive business value and competitiveness. Moreover, it requires a willingness to embrace change and adapt quickly. Banks that can do so will thrive both during and after the lockdown. Those that do will likely be included.

Customer Experience

Fintech companies are introducing new digital tools that provide more convenient, secure, personalized banking services. These tools include chatbots, which help customers resolve their problems quickly. This allows banks to improve customer satisfaction and increase loyalty.

In addition, banks can offer their customers a more comprehensive range of financial products. This is due to the wide adoption of fintech solutions like payment processing. Customers can now transfer money online, pay bills, and deposit checks.

The rise of fintech has challenged the status quo and forced traditional banks to innovate. Some primary challenges banks face are losing customer confidence following the global financial crisis and stricter regulation.

Customer Relationships

Whether they go into a branch or call a contact center, customers want to see and feel that banks care about them as people. Rigid product mindsets need to disappear, and this can only happen with an integrated, digitally augmented experience.

For example, challenger banks share company goals, financial tips, and customer success stories on a public blog, which creates an open, transparent relationship with their community. This makes them a more relatable brand; our research shows they are winning with consumers because of it.

Banks can also nudge customers to migrate from non-digital channels using a variety of tactics, such as IVR intercepts, in-branch digital and co-browse tutorials, messaging on statements, incentives, gamification, and more. With the right technology and capabilities, they can streamline enrollment into digital channels, drive awareness with marketing and communications, and enable self-service by making it easier to log in with seamless logins and pre-authentication. This causes a more convenient, low-cost-to-serve digital experience and increases customer satisfaction.

Innovation

Fintech is a disruptive technology changing how financial services are provided to consumers. It is allowing these new startup enterprises to deliver products and services that are cheaper, faster, and more convenient than traditional banks can.

FinTech companies are rethinking the way we pay for online goods and services by making it easier to use multiple payment methods in one place. For instance, they have integrated cryptocurrencies and digital wallets into their solutions so customers can make payments easily.

They are also helping to prevent fraud and other financial crimes by interpreting large volumes of data. They are incorporating biometrics like fingerprints, face recognition, voice recognition, and iris scans to create safer user authentication options than passwords. They can also detect patterns of behavior that could indicate a possible fraudulent transaction. These new capabilities are being incorporated into banking apps that help to improve consumer security. This is an essential trend in the financial industry.