The financial crash of 2007-2009 saw a massive increase in the regulation of the financial industry, allowing space for agile and responsive financial technology (FinTech) firms to disrupt the market, showcasing themselves as serious competitors within the financial industry.
The need for quick technological advancement within the financial sector saw lots of the major banks developing their own technology departments. At the same time, many smaller financial firms have found that the most economically viable solution is to collaborate closely with existing FinTech firms. This involves combining their own traditional financial services with the forward planning and emerging technology of the FinTechs.[i]
Indeed, it appears that FinTechs and traditional companies have lots to offer one another, with the salient aspects of both organisation types being integral when it comes to what consumers want.
What do traditional financial services have to offer?
When customers are placing their money with a financial institution, they tend to prefer working with an established, traditional financial service. This lack of a trusted, traditional brand holds the FinTechs back from being able to gain control over the market. The FinTechs are finding that collaborating with long established companies is a mutually beneficial arrangement. In fact a report from LinkedIn found that 75% of FinTech firms indicate that their primary goal is for collaboration with current traditional financial service organisations.[ii] The same report concluded that most FinTechs were destined to fail without the increased trust, visibility and scale afforded by this type of collaboration.[iii]
Speed vs. a personal service – are both important?
More and more, customers want the immediacy that can only be provided by technology; immediate decisions on loans, immediate responses to queries, immediate transfers of cash. However, at the same time, they still require the one-to-one customer services provided by traditional firms.
A study was done into the “engagement” that a customer felt when partaking of a transaction in a bank. Swift and efficient service from the cashier made a customer six times more likely to feel that they were “highly engaged”. While this is a large increase, when served by a helpful and relatable cashier, this level of engagement saw an even greater leap, with customers then nine times more likely to feel highly engaged.[iv]
Clearly customers require the immediacy that can be provided by FinTechs, but don’t want to be deprived of the personal nature of more traditional financial services. Collaborations need to be striving to continue to offer both.
Improving the customer centric approach
Though the personal nature of traditional firms has great customer appeal, there are also ways that FinTechs can improve customer service above and beyond the offerings of traditional financial services. While the traditional organisations already hold the trust of their customers, in a disruptive market of emerging technology, collaboration with FinTechs will help them to retain their customers’ trust by utilising technology to ensure efficient, customer centric care. More than 90% of FinTechs suggest that their ability to provide a better experience for customers, along with their agility in responding to changing markets, is what makes them so successful. [v] Targeted marketing and a swift reliable service ensures the ongoing approval of current clients, increasing customer retention.
Targeted and convenient marketing
Consumers are tired of junk mail and irrelevant sales calls. Any offers they get need to be highly relevant to their circumstances. 92% of bank executives consider that data analysis being used to inform practical responses is important. [vi] Highly targeted marketing relevant to the moment can only be achieved through complex data analysis and automated systems. For most traditional financial services, the only way to achieve such a sophisticated level of data analysis is through collaborating with FinTechs that have already developed these kinds of systems.
97% of chief executives have concluded that innovation is key to their business growth. [vii] Tech firms, with their forward thinking, strategic, technology oriented staff, are constantly evolving. With a handle on emerging technologies, FinTechs survive by ensuring that they’re not left behind by their competitors. Collaboration between a FinTech and a traditional firm can leave the traditional company the time and space to focus on financial strategies, customer care and business infrastructure; while the FinTech ensures a constantly up-to-date platform for the sale, marketing and oversight of the service.
The future of financial services
It is clear that the future of the financial sector will continue to see lots of collaboration between agile FinTechs and traditional financial brands in order for both to thrive and grow. Both traditional companies and FinTechs need forward thinking, innovative individuals, dedicated to pushing the company forward. Specialist recruitment agency, Aston Charles has applications from highly experienced, specialised candidates with a wide range of backgrounds in financial services, insurance, technology and customer services. Call our skilled team of recruitment agents today, to discuss your career vacancies and candidate requirements.
[i]Lucas Mearian. 2017. What is FinTech (and how has it evolved)? | Computerworld. [ONLINE] Available at: https://www.computerworld.com/article/3225515/financial-it/what-is-fintech-and-how-has-it-evolved.html. [Accessed 13 March 2018].
[ii] Tim Evershed. 2018. Fintechs need traditional firms to survive | Peer2Peer Finance News. [ONLINE] Available at: http://www.p2pfinancenews.co.uk/2018/02/27/fintech-financial-services-gemini/. [Accessed 15 March 2018].
[iii] Tim Evershed. 2018. Fintechs need traditional firms to survive | Peer2Peer Finance News. [ONLINE] Available at: http://www.p2pfinancenews.co.uk/2018/02/27/fintech-financial-services-gemini/. [Accessed 15 March 2018].
[iv] Len Markidan. 2017. 22 Customer Support Statistics That You Absolutely Need to Know. [ONLINE] Available at: https://www.groovehq.com/support/customer-support-statistics. [Accessed 15 March 2018].
[v] www.ftseglobalmarkets.com. 2018. Capgemini report highlights fintech’s dependence on traditional financial firms [ONLINE] Available at: http://www.ftseglobalmarkets.com/news/capgemini-report-highlights-fintechs-dependence-on-traditional-financial-firms.html. [Accessed 15 March 2018].