‘Fintech revolution no threat to traditional financial institutions’

Endless hype around fintech companies is overshadowing one crucial fact for the banking sector. Even today, banks and financial services have millions of customers in their fold, a valuable booty that can enable and help these institutions become catalysts for change, says an executive.

The banking industry needs to move beyond viewing fintech firms as competitors and hone in on the increasingly digital consumer, according to S Swaminathan, CEO, Hansa Cequity, a data-driven marketing firm.

Consumers these days are being influenced by a variety of forces and greater availability of choice, he said, adding: “The complex, unpredictable and changing nature of our wallets calls for a new way of thinking about the interrelationship among income, borrowing, savings and spends.”

In a recent research and study on Open Banking that Hansa Cequity conducted, “an astounding 62 per cent of the respondents said they want their banks to manage their finances. In addition, they want the banks to help them monitor their expenses and notify them in case they exceeded their budget,” Swaminathan told BusinessLine .

‘Customer first’

Noting that the opportunity to “innovate and lead thus lies in the hands of the banking and financials services firms,” he said it would however, “require a huge amount of rewiring of their tech infrastructure and having open APIs to build an eco-system with partners and developers to create a meaningful and differentiated customer experience.”

Building an eco-system is important, he said, which would encourage the development of different financial solutions and services. “These firms need to think pretty much like Apple iOS eco-system, which has over 3,80,000 third-party developers and over 1.5 million applications serving millions of customers,” said Swaminathan.

It is also imperative to think about customer experience. “When it comes to building a platform economy eco-system like this, one of the key challenges is not thinking technology, but customer and customer experience first. What is the financial services experience one wants to deliver to their customers? It starts with building the customer value and customer experience proposition first,” he said.

Pointing out that customers who are in the market for financial products, do tend to search for comparison, prices and offers before deciding to buy any financial product, he said “Not all businesses are won only on low prices or low interest rates. Consumers will entrust their financial needs only to a trusted advisor.” Swaminathan said, platform-driven business models are here to stay. “Financial services firms need to reimagine, build and differentiate their open platform value propositions, as more and more consumers get into the platform economy. The road map and path are not easy, but the ones who will succeed tomorrow are firms who put customer and customer experience first on their platforms.”

‘Engaging interactions’

Stating that it was time to reimagine banking and financial services businesses as a platform, which would act as “a great differentiator to the customer experience, as it would encourage customers to have more engaging interactions with financial services firm,” Swaminathan said, banks need to capitalise on “enriching interactions” rather than continue with their existing “transactional interactions.”

“When we look at some fintech firms, the customer experience is not all that great. The access to these fintech platforms requires leaving customer data first, even for any comparison of rates or quotes. However, imagine financial advisory and education platforms with no questions asked, from an existing banking and financial services firm. The resultant customer experience will be phenomenal, due to the enriching conversations and dialogues between the customers and the financial firm,” said Swaminathan.

Though there has been talk that the fintech revolution currently underway is a prelude to the death of traditional financial institutions, the CEO insists the new challenges are not as much threats as they are opportunities.

Since banks continue to build enduring relationships with their customers by improving their financial wellness through ease, value and expertise in every interaction, building a robust eco-system of applications would ensure “a whole host of embedded service offerings that could be offered over their products, which could be differentiated by service levels, advisory support, lifestyle advice etc., all of which provides a world of opportunities to innovate on the existing products of these companies.”

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