Previously we wrote about the importance of the customer experience within the financial sector, and how consumers are increasingly desiring seamless and integrated financial processes in their daily lives.
Despite the benefits of fintech being consistently highlighted by experts in the financial services industry, we are still witnessing a reluctance by major players to implement meaningful tech into their business. This has resulted in the loss of a crucial customer base who are now preferencing brands that have already embraced innovative technology in their daily operations.
But first, what does the term ‘fintech’ really mean, and just how is it changing the industry?
Fintech, short for financial technology, is a type of technology used to “improve and automate the delivery and use of financial services”. In short, it aims to revolutionise individuals and business’ financial operations as digital transformation ripples through companies on a global scale.
Fintech in its concept is quite broad and can encapsulate something as simple as using Apple Pay, to more complex processes, such as a wholly-online mortgage applications.
Who needs a wallet, anyway?
You may have seen fintech mentioned lately in discussions about open banking, or the recent tidal wave of remediation claims in the financial industry sphere, which requires technology integration to sort through mountains of customer data.
And while fintech is particularly beneficial from a business viewpoint, it’s also getting customers excited, too. In consumer opinion, such tech could appeal to consumer desires for open communication and revert banks back to their promises of actually providing meaningful service.
Fintech was necessary to restore public faith in financial organisations. Banks have modernised their offerings, making their services more personal and more accessible through an increased focus on customer service, with regaining trust and transparency proving key components in this- Charlotte Crosswell, Chief executive, Innovate Finance
As millennials move into the housing market (providing they don’t eat too much smashed avo, of course), home loans are increasingly making up the largest proportion of service offerings across all banks, according to IBISWorld.
However, as the distrust in banks rises, the likelihood for neobanks to swoop in and take hold of this new housing market are growing.
Neobanks are another term that have been penetrating the discussion of financial services in the last 12 months. Completely digitised, neobanks mean you couldn’t go in and chat to a teller behind a counter, even if you wanted to. New research shows that online marketplaces like Amazon and Google could soon take advantage of digital banking, while also letting you ‘buy anything you need from A-Z’…
The internationally popularised ‘Volt, Xinja’ and ’86 400’ have recently been granted full banking licenses to operate in the Australian market, and are forecasted to snatch a large proportion of business from the big four banks. This isn’t the first evidence of the popularity of online banking. Online banks have soared in preference over the past years, despite not having a traditional storefront - ING and its success post ‘Barefoot Investor’ craze can attest to that.
These banks hold a unique competitive advantage over their brick-and-mortar counterparts, and not just in the fact that they have zero overheads in property rental. Rather, their advantage comes from digitising every offering in the customer journey, from setting up their credit card, to applying for home loans, to eventually closing an account.
At the crux of it, do people really want face to face communication anymore? The new wave of house hunters window shopping on realestate.com.au probably don’t.
Pepper, Israel’s first fully digitised bank, cited a resistance to implement technology as stemming from top executives believing they would need to completely change their business model. As well as this, Harvard Business Review referenced an “excessive focus on short term results, lack of internal skills and lack of entrepreneurial mindset” as core barriers to achieving fintech success.
However, fintech doesn’t need to encompass complete, radical overhauls of your operations. And, despite common misconceptions, technology is actually there to make your business better, not make things harder.
With Australia now primed and ready for fintech, there could not be a better time to capitalise on this flourishing market.
Sustainable competitive advantage, enhanced customer experience and a reduction in wasteful processes are some of the reasons why you need fintech, and why that time should be now. Don’t fight the fintech revolution, befriend it.
We can help you understand how. Contact us today.