FinTechs are continuously stimulating the financial sector and deepening their impact, according to the World FinTech Report 2018 released by Capgemini, LinkedIn and Efma, which focused on examining how FinTechs are transforming the financial services customer journey through better customer centricity and use of emerging technologies.
However, as FinTechs grow and continue to stamp their mark on customer experience, they still face a challenge of meeting increased customer demands like making their systems more convenient and personalised.
“FinTechs, innovating with emerging technologies, are revitalizing the customer journey through financial services. Competition and rising customer expectations are driving demands for more convenience and personalization,” says the report. “FinTech firms are leveraging both customer data to drive personalized offerings, and providing fast, 24/7 online services that can be accessed from any device.”
Despite their ability to reach customers easily and giving clients more authority on their transactions, FinTechs are still grappling with winning trust, as the report found out that traditional financial systems are still more trusted.
“… financial services customers have greater trust in the brands of traditional firms versus those of FinTechs,” says the report. And because of this, start-ups have been advised to “look to continue aligning with customer goals, maintaining trust, and delivering digital, agile, and efficient processes.”
Speaking on the same, Penry Price, the vice president of Global Marketing Solutions at LinkedIn, said: “FinTech firms are finding success with a customer-centric focus that fills in gaps left by traditional firms. These gaps opened the doors to FinTechs, but trust in traditional firms remains important to customers.”
To be able to grow at a faster rate and gain competitive advantage, more than 90 percent of FinTech firms told researchers that it was because of their ability to make their services more agile and providing an enhanced customer experience.
More than 76 percent, according to the report, cited their ability to develop new products and improve existing products and services as critical to success.
Since 2009, the report says, FinTechs have raised nearly US$110 billion but they still have to deal with scaling up and creating financially-viable business models.
Collaborate or fail
Researchers found out that if start-ups don’t make effective partnerships, they are most likely to fail. Of recent, we have seen traditional financial institutions adopt many FinTech customer service enhancements, while retaining strengths including risk management, infrastructure, regulatory expertise, customer trust, access to capital, and more.
Both traditional and FinTech firms stand to gain from a symbiotic, collaborative relationship, the report observed. “With more than 75 percent of FinTech firms identifying their primary business objective as collaborating with traditional firms, it is essential that both FinTechs and traditional firms transform their business models by collaborating to drive innovation while retaining customer trust,” said Anirban Bose, Head of Capgemini’s Financial Services Global Strategic Business Unit and Member of the Group Executive Board. “Without an agile and committed collaboration partner, both traditional and FinTech firms risk failure.”
The report further suggested that for FinTechs to succeed in partnerships, they need to develop the best partner and engagement model. According to the World FinTech Report 2018, more than 70 percent of FinTech executives said their top challenges to collaborating with traditional financial firms was their lack of agility, while traditional firms perceive negative impacts on customer trust, brand, and changing the internal culture as their top challenges.
“For a successful collaboration, both sets of firms will need to remain open-minded and keep a dedicated focus on collaboration. Financial institutions need to respect the FinTechs’ culture to avoid losing their agility, which is one of the major assets that they bring to projects. The next challenge will be to select the best fit FinTech with whom to collaborate,” said Vincent Bastid, Secretary General at Efma.
The World FinTech Report 2018 was based on a global survey encompassing responses from traditional financial services firms and FinTech firms including banking and lending, payments and transfers, investment management, and insurance.
According to an official statement, the survey sought to yield perspectives from both FinTech and traditional financial services firms—exploring various aspects of the customer journey, and key success factors for customer journey enhancement. From this, they hope to shed light on the evolving relationship between incumbents and new-age players with a focus on the FinTech viewpoint, and an analysis that may help both entities achieve business success.
Insights from the 2017 report