Fintech 2.0 is shaping up to resolve the fragmented customer experience of fintech 1.0
The definition of fintech is fluid. In this context, as further developments happen in the fintech space, the initial pioneering efforts in fintech can be termed as Fintech 1.0. While Fintech 1.0 opened a window into what was possible, let’s take a look at the broader canvas in the fintech space. Contemporary fintech organizations have varied success levels owing to differences in their approach, size, and impact. The binding mesh for the assortment of these fintech organizations is that they co-exist to resolve key problem areas such stock trading, savings, mobile, small amount cash advances, and peer to peer payments among others.
So, why the need for fintech 2.0 you ask?
A pertinent problem still exists that fintech 1.0 cannot quite resolve: A customer experience that is largely fragmented due to myriad apps that are only specialized in limited areas and lead to a convoluted experience. An evolution in fintech 2.0 would entail a more holistic and seamless experience. Based on insights from Forbes, let’s take a closer look at fintech 2.0 and the key developments shaping the fintech space today.
What makes fintech 2.0 different?
The Fintech 2.0 strategy focuses on “rebundling,” which is the seamless integration of everything a client needs to manage their financial life in one location. Combining services that were previously dispersed across numerous applications into one should save users time, worry, and money if done successfully. According to a 2020 Deloitte assessment, whoever can find out a means to deliver on this promise would have a leg up in a sector that is both massive and ripe for disruption. Digitally native and able to swiftly iterate on product features based on consumer demands, new finance businesses have arisen to stake their claims. Working against them is their inability to seamlessly integrate multiple financial products and effectively manage the risks associated with a broad offering of banking and lending products.
According to a 2020 Deloitte assessment, whoever can find out a means to deliver on this promise would have a leg up in a sector that is both massive and ripe for disruption. Digitally native and able to swiftly iterate on product features based on consumer demands, new finance businesses have arisen to stake their claims. Their failure to smoothly integrate numerous financial products and properly manage the risks associated with a wide range of banking and lending products is working against them. Legacy banks are the only exception to the rule as they built relationships with customers and consequentially trust over a significant period of time. Further, another advantage that legacy banks have is the fact that they have varied product and service offerings coupled with their broad regulatory knowledge. The challenge for legacy banks is to make up for the headstart that fintech firms have with regard to a digital ecosystem and technological adoption.
Achieving success with fintech 2.0
Thinking with the customer in mind. This is likely the essence of Fintech 2.0 philosophy: understanding all of a customer’s demands and inventing ways to address them holistically, rather than merely finding a solution to a single pain point. When working with customers who are living paycheck to paycheck, for example, the overarching objective is to assist them to gain more financial control, stability, and resilience.
Fintech 2.0’s rebundling of services is different from what’s come before in that it makes it easier for consumers to completely achieve what’s most essential to them. This necessitates a thorough understanding and empathy for the clients being treated. Companies that engage in fintech will also become software companies to a degree as the emphasis would be on creating a seamless digital ecosystem that caters to diverse customers and their myriad financial needs.
Ostensibly, the finest Fintech 2.0 platforms, theoretically speaking, would be those that efficiently use data to learn and adapt to a customer’s changing demands. Fintech firms may have an advantage in this sector, since they are able to design more innovative solutions based on contemporary technology stacks. Several banks have been able to bridge the gap by purchasing startups, although this tendency has lately shifted, with some role reversals.
The sophistication of fintech 2.0 is set to increase over time as the nature of financial products and services become more comprehensive. Striking a balance between ecosystems, an intuitive experience, and low transactional costs would be the key to the success of fintech 2.0.