1. Technology helps you get closer to the customer, but you need to see the implementation through
Richard Morgans from Mambu highlighted the opportunity that technology provides to banks and financial services providers to get closer to the customer than ever before. He said that technology helps banks understand consumers’ needs better, and create services personalised to meet these needs.
But he also highlighted the challenge of implementing new technology at organisations that are sometimes over 150 years old. There’s legacy technology which needs to be considered. In many cases, established banks are choosing the “greenfield” option – creating an entirely new tech stack for a new product or service proposition, rather than trying to untangle the “spaghetti” of systems they’ve built up over the years.
2. Value-led decisions are becoming more important for consumers
Increasingly, consumers are being more deliberate with who they choose as their financial provider based on their ethics, core values and behaviour. There was an impassioned defence of the drive for financial inclusion and banking the unbanked from BrandWatch’s Abadesi Osunsade, which even drew a round of applause from the audience.
Mambu’s own Financial Tribes report showed that nearly three quarters (73%) of global consumers are more likely to use a bank that puts purpose over profits, while a further 58% are willing to pay a premium for financial services that help the environment or local communities.
Consumer awareness of the ESG agenda, and its impact on decision-making is here to stay, and financial services providers need to rearrange their businesses accordingly.
3. Diversity is key to attracting a wider customer pool
Both Abadesi Osunsade and Claer Barrett discussed the importance of considering soci0-economic, gender and other vectors of diversity in financial service design. Where customers fall through the cracks, a lot of it comes back to the people behind the product, and the unconscious bias that they may bring to the services they develop and deploy.
Traditionally, product teams have been made up of male developers with homogenous life experiences and who design products for the challenges they face. The only way to appeal to a broad cross section of society is by ensuring diversity at all levels, so that solutions reflect the challenges faced by different consumer groups.
We’re now starting to see some change, particularly with the rise of fintechs developed by women for women. These firms are helping to challenge not only the gender pay gap but the pension gap and investment gap too.
4. How to fix the ‘leaky bucket’
James Morgan from PwC highlighted the issues that exist in many banks he’s worked with, and they start during the application process. He stated that very often, financial services providers have no single view of the customer. When coupled with poor retention marketing, the result is a leaky bucket whereby banks and lenders leave revenue on the table.
As Richard Morgans highlighted, this is where technology can help. By creating a single view of the customer and understanding all the different touchpoints a financial provider has with them, customer service and customer loyalty can be improved.
5. The need for speed
There was a great case study provided by Scroll Finance’s Ashish Kashyap of how they have quickly set up and delivered a completely new financial service – delivering smart home financing from the cloud. He highlighted two key things that led to the increased speed in financial services.
Firstly, consumer demand. Customers want a frictionless experience, where they’re not required to undergo an arduous application process for financial services. Secondly, improvements in know your customer (KYC) and identity management technologies, which have helped banks speed up these processes.
Open banking was also mentioned as a key trend which is already enabling banks to ask for less customer info. Data sharing allows them to verify customers’ credit and financial history rather than having to do a new appraisal each time someone applies for a service.
6. Change is being choked by cultural inertia
As mentioned earlier, there’s a fear of change within established banks. Even when there’s a business case for doing things differently, there’s often a fear attached to securing capital and using it for what it’s intended – transforming operations.
Pioneers are people with arrows in their backs. No one wants to be the first to experiment. There’s a fear of failure and taking a risk. Of being blamed if it goes wrong or causes tension within the organisation.
As Mambu’s Richard Morgans states, the result is often ‘sticking plaster’ solutions and putting short-term stakeholder priorities before the wholesale change that will provide a solid foundation for the future growth of the business. But a tipping point will come. Increased competition and loss of market share means those resistant to change can only turn a blind eye for so long.
The silver lining for traditional banks was that, of the panellists, only one is currently using a neo-bank as their main, monthly checking account. But that may well change in the not-too-distant future. And Mambu will be at the forefront of helping banks and financial services providers to get ahead of the curve.
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