New digital paradigms and use cases are transforming global financial services on a scale never witnessed. The last two years have seen a radical change in what consumers expect and how they interact with their financial services providers in areas ranging from wealth management and banking to payments, lending, and e-commerce. The meteoric rise in digital financial transactions driven by the Covid-19 pandemic has compelled fintechs and financial institutions (FIs) to redefine how they design and deliver solutions and services to their customers.
This demand is resulting in new alliances and consortia of collaboration between fintechs and FIs. With innovation at the core of delivering smooth and seamless omnichannel digital experiences, a more stable, secure, and inclusive financial services landscape is fast emerging.
Here are the top five trends:
- Immersive customer experiences: Significant proportions of tech investment today are going into transforming customer experiences to be more differentiated, immersive, secure, and highly personalized. Fintechs are designing solutions to delight every customer, regardless of how digitally naïve or digitally native they are. These solutions can sustain hyper-personalized journeys that combine demographic and psychographic data with past behaviors and preferences while taking into account consumers’ current context and location. In the past, most solutions were designed to offer systemic and consistent responses. Today, solutions are being architected to provide flexibility to accommodate real-time customer preferences and to allow them to rearrange user interfaces intuitively and dynamically for a personalized look and feel.
- Faster implementations: The success of a financial service provider often depends on how exceptional, smooth, and secure digital experiences are for their customers. A ‘customer-first’ mindset has become the guiding beacon for creating sustainable fintech solutions at scale. Faster implementations, speedy deployments, and seamless integration of new features are the need of the hour. This is especially significant for the implementation of financial services tailor made for unserved and underserved markets, which can not only meet consumer needs, but also offer quicker, more convenient, and digital-first solutions.
- Interoperability of solutions and services: Seamless integration of solutions is high on many FIs’ list of priorities. Interoperable systems of record and systems of engagement translate into the delivery of superior value by technology firms and FIs. One can think of it as a matrix of solutions that work with each other effortlessly, via microservices and open APIs. This increases efficiency, usage, and saves costs through shared infrastructure. With solutions that integrate well, fintechs and FIs get a 360-degree view of consumer preferences and can innovate to bring to market solutions and services that meet constantly evolving customer demands.
- Real-time insights: Real ROI is driven when fintechs help FIs derive meaningful insights from the vast amounts of enterprise data they already hold. Without the right use of technology, this can feel like finding that proverbial ‘needle in the haystack’. More importantly, acting swiftly on those insights, fintechs can help FIs monetize into accretive revenue streams and ultimately enhance end-consumer journeys. Advanced data analytics and other emerging technologies such as event-based architectures, allow dynamic routing of customer events for faster delivery of goods. Powered by Artificial Intelligence, new age products offer near real-time fraud detection while reducing false positives. Enabled by in-memory calculations, fintechs offer dynamic price discovery and faster transaction reconciliations. The availability of 5G in combination with augmented and virtual reality means streaming data is broadly available. The beauty of streaming data, by definition, is that you are responding to customer choices in real-time.
- Cloud-native products: Businesses are actively migrating enterprise applications onto the Cloud while building new applications as Cloud native. Being cloud-native is crucial for fintechs because of the always-on, fast-paced, real-time nature of transactions. Cloud-native applications are designed to drive business benefits including the ability to scale quickly and pay per use while delivering new features faster. All infrastructure will eventually be software-defined, containerized, virtualized and hosted securely either on-premise or in a hybrid or public Cloud.
Driven by the rise of digitally native consumers, increased digital adoption and relentless demand for immersive experiences, fintechs and FIs have the perfect opportunity to collaborate across the global financial ecosystem. On the one hand, this sector has seen unprecedented effort towards building a hub of financial innovation, while on the other, there is immense potential to resolve operational friction, reduce technology debt, re-imagine legacy processes, and mitigate high operating costs. It’s the perfect storm of innovation where ultimately the consumer will win.
Sachin Kulkarni, Senior Vice President, Fiserv