It will be the ‘technology’ not the ‘finance’ that will elicit the biggest changes in the financial sector in 2020.
We can expect to see a greater emphasis on the customer experience (delivered through technology), rather than focusing on the more traditional ‘build it and they will come’ model of financial products and services.
Next year promises more big changes in how we manage, spend and access our money, as the following emerging trends will continue to evolve the way consumers make financial decisions and manage their money.
1. Fully integrated financial services
From instant insights to real-time global money transfers, fintech has the potential to revolutionise how consumers handle financial transactions. Neobanks or ‘digital-only’ banks are growing in number and popularity all over the world.
Brands such as Monzo, Revolut, NuBank and Chime have led the charge internationally, and in Australia, Up is one of several new market entrants.
Neobanks are making a significant impact to the way customers understand and engage with their money. Many customers are making the switch, simply because fintechs have reimagined the way people relate to their finances and financial service providers.
Around the world, we’ve seen companies such as Apple, Google, Amazon, Airbnb and Uber all capitalise on the same trend: using technology to provide utilities that integrate seamlessly into our lives. In 2020, the scene is set for financial services to follow suit. Fintechs have the opportunity and a responsibility to embed their services into the lives of their customers and to make it work effortlessly for them.
For more traditional financial institutions, the model has been to create new products all in one go, and then try selling them to customers as finished products — only to discover they are not what the customer wants or needs. A new customer-first and iterative approach will require quite a shift in mindset, much more dynamic products, and tighter customer feedback loops.
2. Rebuilding trust
The second key trend that will shape the fintech sector in 2020 builds on the shift in technology to rebuild (or develop) trust.
Fintechs that lean into the technology and customer experience aspects of their businesses will narrow the chasm between customers and institutions, and people will develop a new kind of trust in fintechs.
From personalised streaming entertainment delivered through data insights to riding in cars with strangers and invisible payment experiences, we are increasingly trusting technology.
Beyond this, people trust the brands that deliver these services. The foundation of this trust lies in the actions and behaviours of the technology brands. Customers expect brands to act in good faith, and they will hold brands accountable for their actions.
Where we used to believe in governments or large institutions such as the media, the relatively higher trust in business is a function of our appreciation and respect for technology. Trust in technology — and therefore trust in fintechs and the brands they are building — is a critical shift that will shape the industry dramatically in 2020.
Savvy customers will continue to see through traditional marketing campaigns that don’t match the actions of the service providers. Word of mouth, referrals and brand advocacy will be key growth and success measures for fintechs (and all sectors).
There’s a terrific opportunity in the financial services space for fintechs, as customers have more of a say in their relationship with and the way they engage with financial services. Customers will simply judge banks and fintechs by their actions (past and present) — and those that can add true value to their customers’ lives, the environment, and the communities they live in will come out ahead.
3. Financial fitness in vogue
Finally, the younger generations are taking back control of their financial futures. There’s a renewed push by millennials and gen Z’s to have a greater understanding and greater control of their finances — and fintechs have been their allies in this pursuit.
We’ve seen it with neobanks, micro-investing apps and the launch of specialist superannuation funds, for example, catering specifically to different demographics such as women, ethical alignments or gen Z. What each of these fintech propositions has in common is a distinct understanding of the specific needs that drive their customers and how technology can provide better experiences and outcomes for them.
Technology and transparency can go hand and hand, and in financial services, greater transparency means having immediate, real-time access to data. In banking, knowledge is power and the desire for financial acumen is on the rise.
It’s an exciting time.
By investing in the long-term success of customers, fintechs are striving to build trusting and long-lasting relationships. Fintechs are making financial health a priority for their customers and designing products that deliver better returns to individuals, not institutions.
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