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Four ways techfins are redefining digital CX

Mobile phone and bank card with an interface overlay to conceptualize mobile finance

Tech-savvy fintech start-ups have long been seen as the arbiters of change for the financial services industry, and have a collective market value of more than $1 trillion to show for it.

Their hard-won popularity is inspiring a new genus of financial technology companies: techfins, aka big tech firms like Google, Amazon and Alibaba that are introducing their own financial products. These heavyweights are using their own marketplace momentum and digital ubiquity to gain a foothold in the fast-growing financial sector.

Their entrance comes at a critical juncture for digital financial services. According to Forrester’s The State Of Digital Banking 2021 report, bank branch use is on the decline while mobile and online banking is surging. The growth of new digital payment methods is causing consumers to move away from ATMs. It’s a radical shift in consumer behaviors and expectations, and it was expedited by the pandemic, says the report: “Many consumers have accessed their financial accounts via their desktop or smartphone, opened a new financial product online, or made digital payments for the first time amid the pandemic. These new digital behaviors are here to stay.”

Techfins already enjoy a high degree of consumer trust and usage. And now that financial technology is more widely accepted, it makes sense for these big firms to use their insight, expertise and current tech platforms to deliver financial products.

Consumers are enjoying the spoils of these new platforms, which include a new style of customer experience different from traditional banking and fintech experiences. This is what we can learn from the techfin customer experience.

Don’t respond to consumer expectations, drive them

Consumers already use services from tech companies like Google, Amazon and Alibaba in their day-to-day lives. They know what to expect, and that familiarity can make them more comfortable than learning a whole ‘new-to-them’ company and user interface.

It’s the data, though, that is the key differentiator. Techfins use the insight they’ve collected to improve their customers’ spending experience. Digital wallet innovators like Alipay and WeChat Pay in China, for example, offer augmented reality coupons and build loyalty programs right into spending. They link users with valuable insights about their spending habits in real time.

By adopting a similar approach and leveraging customer data, traditional financial services firms can promote loyalty by helping their customers make better spending decisions while guiding them through investments and long-term financial planning.

Bundle to give your customers an effortless experience

Part of creating a great customer experience means making interactions seamless for users. Google Pay has been riding the wave of digital wallet adoption, becoming a force in the world of mobile payments. But its plan to include a branded merchant button right within the app that allows users to purchase products they find online without having to leave Google is a prime example of the kind of stickiness the brand is developing with its financial service offerings.

Traditionally, the financial services sector keeps things like financial planning, daily banking, investing and lending as separate lines of their business. Techfins take a “central financial hub approach,” according to the Forrester report. Google Pay, for example, allows users to make payments, but it also functions as a spending and savings tracker and allows for built-in couponing with brands like Burger King, REI Co-op and Target. The brand is also in the midst of launching the Google Plex account in partnership with major American banks.

Digital banks like Starling in the U.K. have embraced a similar model, partnering with a group of fintech companies to offer services: customers can get life insurance from Anorak, see their digital receipts via Flux, tap into Penfold for self-employed pension plans and invest using Wealthsimple.

Establish partnerships to ensure ongoing innovation

Techfins have the ability to move faster than financial services incumbents by virtue of their disruptive power — but, they don’t hold a monopoly over innovation.

Part of their ability to continually improve customer experience stems from their internal culture of innovation. Techfins don’t have traditional channels like bank branches or the other overheads that come with an in-person industry, so they have very little to overhaul in order to be a moving force in the industry.

Still, traditional financial service firms can adapt by establishing priorities for a digital banking future and partnering to achieve those goals. As outlined in the Forrester report: “Future banking will be invisible, connected, insights-driven, and purposeful…. From connected customer experiences that are blending human and digital together to connected products and constellation architectures, new business models will only succeed if collaboration networks and partnerships are strong.”

Establishing partnerships that bring new offerings to customers, while positioning the brand as a financial hub will be key to finding innovative ways to deliver financial services.

Automate to innovate and scale

For technology companies, robotic process automation (RPA) — that is, using machines to tackle repetitive processes normally reserved for humans — is already a part of the business’s infrastructure. Techfins use the efficiencies of RPA to “undercut incumbents’ fees while offering customers speed and convenience,” according to The State Of Digital Banking 2021 report. All financial services companies have the opportunity to use RPA in a similar way to free their teams up to focus on human interactions that engage customers and boost the overall customer experience.

Techfin as catalyst, not catastrophe

The narrative of disruption has a tendency to divide between those that can keep pace and those that can’t. However, as a heavily regulated industry, the law will always play a deciding role in financial services innovation. That factor gives traditional financial service providers an edge, especially because they still have a legacy of adoption and adaptation that isn’t easily usurped by newcomers.

Regardless, everyone on the playing field — fintechs, techfins and traditional financial services providers — should be acutely mindful of customer experiences evolving alongside the industry’s own evolution. All financial services companies need to be sensitive to the changes they’re introducing, and ensure that adaptation is a two-way street. Balancing new technologies with consumers’ needs and demands is the best way to drive customer experience innovation — and ultimately, the best way to remain competitive.

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