Financial Services Companies Focus on Delivering a Better Customer Experience

As I conduct more interviews with IT professionals, it’s clear financial services companies (banks, brokers and insurance) are investing a lot of money and resources into leveraging data to provide a better customer experience.

As I conduct more interviews with IT professionals, it’s clear financial services companies (banks, brokers and insurance) are investing a lot of money and resources into leveraging data to provide a better customer experience.

Better late than never. Banks have long had a plethora of information about clients; whereby, they should have been able to suggest products and anticipate needs based on life events (college, first job, marriage, home, children, job change, retirement, etc.). Unfortunately, the data was in silos and they were not taking a holistic view of their customers.

Slowly but surely, this is changing as:

  • Rocket Mortgage enables customers to get approval for a mortgage or an equity line of credit in minutes.
  • Square enables sellers to process credit card transactions via smartphones or tablets.
  • Mint provides free, web-based financial management software.
  • Robinhood provides zero-fee stock trading.
  • Personal Capital provides online financial advice, personal wealth management and algorithmic trading, for much less than a traditional broker.

These companies are providing a seamless user experience (UX) across a multi-platform and multi-device landscape. They’re providing real-time information of value to educate customers and prospects. In a recent study, Oracle found that 80% of consumers are accessing their financial institution digitally.

Several banks have automated their loan processing so they are able to get more accurate and complete information upfront and provide loan approval the same day, rather than in 30 or 45 days. The process is better for the financial institution, as well as the customer.

But Are Traditional Financial Institutions Too Late?

After having moved half of my investment portfolio to the algorithmic trading arm of Edward Jones, I decided to move it all to Personal Capital, the algorithmic trading arm of Pershing.

As with most things, I believe we will see a range of activity and acceptance based on the people I interview in the big data, artificial intelligence (AI), and machine learning (ML) space.

I’m still waiting for the first FinTech, using AI/ML, to guarantee the security of my personally identifiable information (PII) and my money. The first FinTech to do this will quickly become a market leader for more conservative consumers and investors.

We will continue to have FinTechs using AI/ML to make customers’ lives simpler, easier, saving them money and giving them incentives to share their information. Consumers who are less concerned with the security of PII and more concerned with “deals” and CX will be attracted to these FinTechs.

It will be fun to watch it shake out over the next couple of decades. I believe companies that remove friction, eliminate pain, make customers’ lives simpler and easier, and do so securely will ultimately win share of wallet.

What do you think?

The FinTech Revolution That Wasn’t: How Financial Institutions Co-Opted Their Disruptors

It’s the disruption that wasn’t. According to a World Economic Forum report released this month, FinTech firms have not found the traction to overthrow incumbent large financial services institutions. In fact, these technologies have actually strengthened them. Here’s how.

How Financial Institutions Co-Opted FinTech

It’s the disruption that wasn’t. According to a World Economic Forum report released this month, FinTech firms have not found the traction to overthrow incumbent large financial services institutions. In fact, these technologies have actually strengthened them. Here’s how.

Too Big to Disrupt?

We often think of start-up companies as the most dangerous things to existing institutions. You only have to look as far as Amazon and Uber to see the impact lean, tech-centirc entrepreneurs can have on legacy industries. But the new report “Beyond Fintech: A Pragmatic Assessment of Disruptive Potential in Financial Services,” finds this has not been the case in financial services.

The research team, — lead by World Economic Forum’s project lead on disruptive innovation in financial services, R. Jesse McWaters — examined the technologies that could potentially impact the financial services industry as we know it.

Their findings point to a financial services environment in which the large institutional players have so much customer inertia that the smaller FinTechs have had a hard time capturing market share. Meanwhile, the report says, “The rapid growth of the fintech ecosystem allows firms to externalize parts of their innovation function,” and, “The proliferation of fintechs provides financial institutions with a ‘supermarket’ for capabilities, allowing them to use acquisitions and partnerships to rapidly deploy new offerings.”

Where FinTech Succeeds and Fails

In summary, the report finds that FinTechs have succeeded and failed in different ways.

FinTechs have succeeded in:

  • Setting the pace, shape and direction of innovation.
  • Reshaping consumer expectations for service and the customer experience.

FinTechs have failed to:

  • Convince customers to switch away from their incumbent financial services providers.
  • Establish a new financial services ecosystem or lay the infrastructure that could support them in the future.

The net effect of FinTech thus far has not been to show consumers new ways they’d rather do things, but to show the existing institutions how they can provide new services for their clients. That’s a huge difference from how similar movements have impacted other industries. Looking market to market, you have to give financial services firms credit for getting on the bus before it runs them over.

Big Tech May Succeed Where FinTech Falls Short

While adding FinTech capabilities makes existing firms stronger, the report does not let them off the hook yet. In fact, it identifies ight major factors that could lead to disruption in the future.

Chief among those threats is the commoditizing impact of large tech companies taking over the plumbing work of financial institutions. While this will drive down overhead and improve the customer experience, thus enhancing customer loyalty, the report sees the shift as something that could eliminate market advantage and differentiation created by companies that do those things well already.

As data and processes become commoditized by “Big Tech,” and customers become more accustomed to the Amazon-like customer experience that could offer, financial services institutions could become more vulnerable to smaller companies and alternative platforms that allow for customized services and higher customer satisfaction.

In other words, the easier it becomes for customers to access equivalent or better services across a variety of platforms, the closer large financial institutions come to the book stores and taxi companies of yesterday.

Free Dinner and Intelligent Discussion? Sign Me Up!

We all know networking events are either spot on, or well, you get cornered by some dude who wants to tell you his life story. What if I told you Target Marketing was hosting something that’s a solid leap above your typical networking event, pairing an insightful panel discussion from some of the brightest in the industry with a mega-classy happy hour and delicious sit-down dinner?

We all know networking events are either spot on, or well, you get cornered by some dude who wants to tell you his life story.

networking_napdynoWhat if I told you Target Marketing was hosting something that’s a solid leap above your typical networking event, pairing an insightful panel discussion from some of the brightest in the industry with a mega-classy happy hour (trust me, I’ve attended) and delicious sit-down dinner?

You’d start asking me for dates, times, locations … and how much.

Well, if you’re in the world of financial services and insurance, then you’re in luck! On Feb. 7, we’re hosting our first roundtable event of 2017. These exclusive industry events are designed with marketing executives in a specific vertical in mind.

Oh, and they’re free to attend for qualified marketers. Because we’re cool like that.

We understand that when it comes to customer engagement, finserv marketers have access to more pertinent customer data than their counterparts in most businesses, yet also face more regulations on using that data. And when it comes to technology, fintech is exploding; but selecting the right tools and staff to oversee them can be not only overwhelming, but also a source of conflict between marketing and IT.

So what are you waiting for? Click on over and get registered for this VIP event now while we still have seats left. I’ll even be there!