How Fintech is Transforming the Banking Customer Experience?

Banking and financial services industry is the underpinning of a national economy, yet they have got a bad rap when it comes to customer experience. Public trust in banks have been slipping over the years. The digitally native millennial generation expect an unparalleled level of customer experience and this has presented a new challenge for traditional banks. Technology has raised the bar for customer expectations. If banks fail to deliver what their customers have come to expect, they will be falling behind. Quality of customer experience (CX) has become a crucial factor in customer acquisition and ongoing retention. Banks and financial service providers need to make the right investments and offer customer-centric services to compete and thrive. Financial Technology or Fintech is the new buzzword that promises to disrupt the traditional banking and financial sector by providing technology advanced solutions to the dynamic needs of modern-day users. And many Fintech businesses have brought new approaches to customer service by promoting convenience, accessibility, personalized user experience and innovation. Let us check out how financial technology service providers are taking a customer-centric approach to gain a sustainable competitive advantage.

Emergence of self-service tools

Digital self-service solutions such as internet banking and mobile apps have been gaining immense popularity in recent times. Whether it is about checking account balance or transferring money, there are self-service tools available now. Enabling users to complete their banking activities on their own, using smartphones or computers enhances every stage of customer experience. Informative visual interface, automated processes and high security architecture of the self-service tools increases the overall operational efficiency. If customers find it difficult to conduct or complete a transaction, then they can seek the assistance of chatbots or live customer support agents round the clock. That is why customers find it appealing to rely on digital banking tools, as it delivers convenience and flexibility. Furthermore, information gathered during the self-service sessions will be saved to fintech company’s CRM and it can be used by the banking companies to engage with customers on a one-to-one level.

Rise of peer-to-peer (P2P) lending platforms

Start-ups and emerging businesses often struggle to get loans from commercial banks. They have to approach multiple investors and go through increasingly complex process to secure investments. Moreover, the traditional lending process was largely restricted to paper-based processes. Rise of peer-to-peer lending platforms bridged the massive gaps between the stakeholders by simplifying the lending process. Also known as “Marketplace lending or Crowdsourcing”, P2P lending has been gaining immense popularity in recent years. According to the research findings published by Morgan Stanley, P2P lending companies could raise up to $480 billion in loans by 2020. Driven by technology, modern P2P lending is a business innovation that connect borrowers and lenders directly, making the returns effectively much higher. P2P companies operate online and provide a platform to offer identity verification, loan approval, loan servicing and legal compliance. Since these financial technology companies manage the funds coming in from many disparate sources, it cuts out the middleman and overhead fees, thereby improving the economic efficiency of lending and investments.

The applications of peer-to-peer lending goes beyond personal or commercial loans as the specialty markets include crowd-investing (equity crowdfunding) and peer to peer fundraising. When it comes to people with low or no credit, P2P lending offers a better alternative to traditional banking systems. Since individual lenders doesn’t need to follow any regulations or criteria, they may choose to take up the risk by helping out an individual get out from their debt or achieve their lifelong business dream. This new fintech innovation transform the customer experience in lending through the intelligent use of data and analytics.

Increased sophistication in customer communication strategies

Traditional banks used direct mail, print media or face-to-face communication for providing services to customers. However, things have changed for the better with the advent of fintech solutions. Fintech businesses have been using digital channels to reach, engage and retain customers. Reports from Statista reveals that social network penetration is constantly increasing worldwide and as of January 2019 stood at 45 percent and the number of social media users worldwide in 2019 is estimated to be 3.484 billion(Global Digital Report 2019). Digital media channels and social networking platforms have become powerful tools for creating customer awareness and lead generation. Fintech sector have recognized the opportunities social media can bring to the banking industry. And that is why Fintech companies are using social media channels to transform and strengthen banking relationships. Facebook, Instagram, Twitter, YouTube and all other digital channels not only help in customer engagement, but also delivers a better idea of customer perception about banking services and products.

As the world becomes even more digital, implementing an effective omnichannel strategy proves to be the most powerful tool for engaging customers and boosting customer retention. Banks and finance service organizations need to build omnichannel experiences for its customers so that they can boost engagement across digital and physical environments. Real-time data synchronization across the channels helps in meeting scalability, latency, and security requirements.

Final thoughts

The core focus of fintech businesses lies in providing a seamless customer experience through faster, more transparent and secure products and services. Monzo, TransferWise and Moneybox are a few of the FinTech businesses that offer phenomenal customer experiences. Traditional banks and financial service providers must strive to put the customer experience first. And that is why many banks are collaborating with Fintech companies to drive innovation and boost revenue.

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