Upending financial services
Upending financial services
The worldwide fintech pie is projected to be worth a staggering $4.7 trillion by the end of 2019. (Goldman Sachs) These +12,000 financial technology (fintech) startups are building momentum in democratizing products, services, and financial access. Fintechs are showing the world what efficiency looks like as these agile digital challengers explore the art of making the impossible possible. Meanwhile, the amount of status quo business at risk continues to grow.
"Marketing automation and AI are essential elements in today’s marketing arsenal that need to be in place at any financial institution"
There is no denying fintechs are changing consumer’s relationship with money. In sophisticated markets like the U.S., consumers are even curating best-in-breed financial solutions for their needs, not relying on one institution only and today, growing your customer base while delighting clients is a new game. As a former banking CMO and finserv expert marketer for 20 years, I have helped both fintechs and financial institutions (FIs) navigate this change.
Fintechs are zeroing in on consumer problems and finding useful solutions with which to address them. This wins consumers over — good news for banking, but bad news for banks. Pain points suffered from banks are being discovered and addressed. Now a customer’s financial life can be fast, easy, convenient, and even delightful. It’s not just for the rich and prestigious – it’s now a positive experience for everybody. New business models like platform banking, marketplaces, mobile-first platforms, and Banking-as-a-Service (BaaS) are combining technologies with new ways of working to create epic customer experiences. The financial services industry is being re-invigorated and fast. Here in Florida, it’s on our doorstep. Latin America remains a top growth market for fintech, surpassing China in several deals for the first time. (CB Insights 2019 Q2 Global Fintech Report)
Transformation and growth from customer insight
Enter Modern Marketing: wonderfully complex and now vital in this era of Digital Transformation, for both fintechs and traditional banks. The marketing function is now tied to not only growth and expansion but also adaptability, culture, measured performance, operations, and learning through analytics, all which impact the consumer. Today’s marketing is critically based on a pull strategy where owned, earned and paid media are focused on creating the right conditions for customers to first interact with the brand and find it valuable, before opening an account. Marketing automation and AI are essential elements in today’s marketing arsenal that need to be in place at any financial institution. This ensures an effective and efficient practice throughout the entire sales funnel—from an inbound lead to a closed deal.
To compete, many financial institutions and fintechs still need to build up their marketing strategy, operations, partnerships, and martech. More importantly, they need to understand all modern marketing is capable of delivering – it’s no longer about ‘common sense.’ To start becoming customer-centric, in today’s sense of the term, they need real-time testing of multiple messages, value propositions, interactions, and designs as well as machine learning. Each needs to know how they measure on specific metrics from net promoter score to customer effort score, first response time, average handling time, customer churn rate, and return on investment of each campaign and touchpoint, to name a few. Prioritizing and actioning insights from these is critical as is having a formal voice of the customer strategy across touchpoints based on qualitative and quantitative measurements for different segmentation groups. This informs product development and partnership opportunities.
Partnerships and alliances
From a marketing perspective, fintech partnerships promote differentiation, innovation, revenue streams, and improved customer experience (CX). One reason I bring fintech partnerships to banks is that they help financial institutions experience the transformation they need to win customers over. Not to mention, they are also revenue-generators. The most recent one was the winner of the ‘Best Digital Banking (Online/Mobile/Tablet) Solution’ in BankNews for its rewards-based mobile app and was also recognized as ‘Best Mobile Experience by a Fintech’ at the Bank Customer Experience Summit. This type of alliance fast-tracks a bank’s innovation profile, associates it with a leader in transformation, and brings a new and useful touchpoint to bank customers who perceive new value. These transform into win-win alliances.
Fintechs also need financial institutions. Overcoming specific challenges may be painful, but addressing them can spell out opportunity. From experience, finding the right fit is difficult, and negotiating contracts even more. There are underlying issues for both sides – fintech startups need to build up their credibility in how they mitigate security risk, have all their regulatory certificates and methodology in order, build legitimacy, and differentiate beyond just CX. FIs need to grasp the importance of cultural fit, agile mindset, and adaptable ways of working for startups.
The financial transformation will not wait. Both now compete against non-financial service organizations such as retailers and technology platforms. New game-changing technology adoption such as Voice Banking like the one’s Ally Bank and Capital One offer, means there’s little time to catch up as customers start paying bills with a single voice command. What’s of essence is learning time, high-performance teams, and investment. There’s much to do to win and no silver bullet.