September 27, 2019
In an age of innovation, no sector is immune – especially financial services. Banking giants, many of whom have operated with little competition for years, are finally being challenged – and this can only be a good thing.
Tech companies are branching out into financial products in a bid to expand beyond their original offering and provide a more seamless customer experience. Big Tech brands such as Apple, Grab and Amazon are launching credit and debit cards, as well as insurance policies that integrate with their existing products. For example, the Apple credit card is primarily accessed through the iPhone, although a physical titanium card is also available.
Many of these new services are aimed at underserved consumers, such as those who don’t currently have access to financial services. These brands’ large datasets allow them to price risk using different metrics and thus offer access to traditionally higher-risk customers. These tech giants are able to better satisfy consumer needs via big data-driven personalisation and integration with personal devices, while their strong brand image cuts across sector silos.
By 2020, PWC predicts that whilst consumers will need banking services, they may not turn to banks to get them. The sharing economy may have started with cars, taxis, and hotel rooms, but financial services will follow soon enough. This has already been witnessed with peer-to-peer lending platforms, often in partnership with traditional banks, which exist today in places such as the UK, US and China.
The term “cashless society” will make its mark this year. Invisible payments started last year – the first Amazon Go launched, giving customers a seamless shopping experience with no physical checkouts. Cashless options, from contactless to biometric payments, are becoming more secure, convenient, traceable and ultimately more attractive to consumers. Virtual payments using digital wallets will expand to more sectors in 2019, as banks create the technology for universal acceptance of these payment methods.
In addition, online-first services will continue to be of importance to financial services – particularly in retail banking as digital becomes mainstream. As part of this, there will be an increase in use cases of robotics and AI used in customer journeys to simplify and standardise interactions. As marketers, consider the use of facial recognition, in-car geolocation technology or cloudbased services to streamline the payment process for numerous types of transactions. Consumers who are more comfortable using their phone for everyday tasks are likely to be more open to the idea of invisible payments. Brands are making the point-of-sale pain-free for their customers by enabling virtual checkouts across a variety of transactions or reduce queues and friction across the shopper journey for merchants and consumers alike.
As monetising the side hustle becomes ever more achievable for consumers, and with digital tools enabling just about anyone to set up a business at home, entrepreneurs are demanding financial products that better fit their needs. It can take a long time for traditional banks to set up accounts or approve business loans – which is at odds with the fast-moving nature of new small businesses. New fintech startups are removing pain points associated with conventional business banking. These brands are designed with small businesses in mind, offering easy sign-up processes; advice on how to manage cash flow, and digital invoicing and accounting. More agile than traditional banks, they offer the flexibility and speed that many entrepreneurs need when it comes to securing funding for their emerging businesses. Not just for full-time business owners, these new offerings also appeal to the self-employed, as well as contractors who have to manage their own finances. By understanding the complications that can arise from not being on the payroll – and offering solutions to meet these needs – banks can provide a community to support consumers in pursuing their dreams.
How brands can leverage these trends?
Focus on long-standing expertise. Promote expertise in financial services to build trust among consumers and compete with the convenience that tech brands offer. Position as a trusted expert in areas where consumers want to minimise risk, such savings and insurance policies. As brands further establish their presence across many different areas of consumers’ lives, their understanding of individual customers will grow. The ability to pair e-commerce (or other) data with financial data will allow brands to better tailor their products and communications to each customer.
Offer advice and support to new business owners. Give customers the opportunity to upskill their business acumen and financial know-how. Providing spaces where they can come together and share knowledge will help cement brands as a valued partner throughout the ups and downs of self-employment.