The Next Phase of Disruption in Fintech
By Simon Cole
If user experience defined the first phase of disruption in the Fintech and Financial space, then AI and machine learning will define the second phase.
We’re seeing the advent of a technology offering consumers a new world of opportunity to create better experiences, more relevant products, operational efficiencies, and higher ROIs. So, what lessons should Fintech brands keep in mind as they move into the second phase?
Fintech has rightly been recognized over the last few years for revolutionizing the market through innovation and customer understanding. These disruptive companies and technologies have had positive impacts and forced incumbent players in the market to revaluate their position, products, and offerings.
In short, Fintech brands upping their game has benefitted consumers in every category. Yet, as Fintech brands are on the brink of a new phase of disruption—one driven by technology (AI & Machine Learning)—they should take stock of the insights gleaned during the first phase.
We examine 6 key takeaways from the first phase of disruption and how they will progress as phase two of the Fintech evolution begins.
1. Ease of Doing Business
Never underestimate the importance of ease of doing business. This was an early insight for the likes of Revolut, Starling Bank and Tide who all saw the benefit in giving time back to their busy customers through highly optimized and simplified onboarding processes.
The banking review by Peter Ramsey (The UX of Banking) showed in stark contrast how different the experiences can be from bank to bank. Ramsey’s findings are unanimous: users opening an account with any of the challenger banks rather than traditional banks always win. For example, it took 5x as many clicks to open an account with First Direct than it did with Revolut.
AI and Machine learning will continue to raise the bar to benefit the end user, but only if implemented correctly and with the consumer’s needs in mind. For example, while younger generations tend to be more comfortable with AI than their older counterparts, an eMarketer survey found that Gen-Z and Millennials were still at least three times more likely to give an “extremely valuable” rating to chatting with an agent than with an AI assistant, proving that digital service features should enhance interactions with customer service, rather than replace it entirely.
2. Switch from “Sale” to “Serve” Messaging
Marketing for financial products and services has traditionally centered on selling the features, benefits, and savings. This “sale” messaging draws from what banks perceive as valuable to the customer. By pivoting to “serve” messaging using a customer-centric approach, successful Fintech brands communicate in a way that focuses on consumer needs by amplifying what they gain from using specialty features.
Coinbase is an ideal example of a brand that has found success in customer centricity. In the 1st quarter of 2021, it added 13 million users bringing its total user base to 56 million. That growth came mostly from beginners—consumers looking to invest in crypto for the first time who were welcomed with an easy onboarding process. Coinbase’s UX and comms speaks to the user in a way that is not intimidating for a new user and easy to understand. They focus on serving the user by providing an optimized and accessible platform to take their first steps into a new world of crypto trading.
Using this customer-centric approach builds trust, which is essential for Fintechs whose target demographic and scale up strategy goes beyond decision makers who tend to be early adopters. The traditional banking industry has even noted the value of Fintech’s customer-centric approach, with a survey of more than 100 global banking executives choosing digital customer experience as a top priority by 79%.
AI will allow Fintech brands to deepen customer-centric service strategies and capabilities, with data providing a detailed view of how customers are engaging with their products, thus enabling an opportunity to improve the user experience across platforms.
3. Emotion Over Information
Regardless of the complexity of the technology that’s driving your product or service, your brand must communicate it in a way that engages customers authentically. This means connecting with the consumer through emotion rather than relying only on information and data. You must build your brand or product story around a simple and clear customer proposition while humanizing your product through empathy and emotion.
The recent success that many Fintech companies have had is a result of taking a more modern approach to storytelling and combining it with a comprehensive omnichannel strategy. The Dutch bank Bunq developed an entire communication strategy and brand around the emotional aspects of banking and financial services, starting with their tagline “bank of The Free” and extending toward other issues like banking transparency with their “Truth, Lies and Banking” campaign and the launch of their “green card” which promotes sustainability and reforestation. All these campaigns focus on connecting with the consumer about issues that matters to them in an engaging and emotional way.
The use of AI will continue forging a deeper, more emotional connection with consumers as it uses data and machine-learning to integrate personalization into the user experience. Fintech brands that provide intelligent, omnichannel, and personalized experiences will connect deeper and more authentically with their customers beyond their traditional banking competitors.
4. Solutions, Not Features
Most financial offers look nearly identical, so focusing on delivering solutions at scale rather than fixing specific use cases is essential for Fintech brands to stand out. Transferwise (now known as Wise) understood this challenge and focused on their marketing and value proposition to the customer. Their business model of simplifying international money transfers wasn’t unique, but their approach of having a clear purpose and building a culture around transparency and fairness resonated with consumers.
Klarna, an eCommerce payment platform for merchants and shoppers, is another great example of a solutions-based approach. Instead of focusing on the mechanics and details of how the service works, their key messaging centers on improving the shopping experience and how the brand integrates into consumer’s lifestyles and shopping habits.
AI will continue revolutionizing Fintech’s pursuit of consumer-centric solutions. One example is the increase in assistance with simple banking queries. According to a survey conducted by eMarketer, although only 5.1% of consumers said AI-powered online chat was “extremely valuable,” the number of UK adults who used it is predicted to grow by 36% in the next year, so banks who aren’t implementing this solution are already behind.
5. Maintain Flow
As new technology emerges, it’s tempting for brands to force it into their existing customer journey or experience. After all, if it benefits the customer, what’s the harm? But brands must make very strategic decisions when it comes to integrating new technologies and systems into their existing workflow. If this is not done carefully, it can break the flow of an existing and well-designed process or journey, thus nullifying the benefits of the new feature by creating friction points for the consumer that were previously not there.
Brands should approach new technologies by determining if they are adding to the customer experience—not driving it. If the technology truly improves the customer experience, then the ROI will speak for itself.
This strategic approach to technology will be especially valuable as Fintech brands begin leveraging AI and machine learning. Their focus should be incorporating this technology into their offering while still maintaining the elements that made their brand successful in the first place.
6. Diversity & Inclusion
Designing fully inclusive products and services is not just the right thing to do but can open your brand service to reach a wider audience. Designing your Fintech service with accessibility in mind will promote better engagement and trust across broader demographics.
The 2020 Financial Lives Survey found that during the pandemic 34% of adults helped a digitally excluded friend sign up for digital financial services, and only 42% of adults had confidence in UK financial services. This data signifies that bad design and impersonal communications can limit your brand’s reach to current and prospective users.
New technologies must be enabled with the end-user in mind, including considerations for those who don’t fit the description of the “average” financial services customer. For example, eMarketer found that AI can help make products and experiences more accessible, but it also risks inadvertently causing exclusion and exacerbating inequality and bias if not implemented strategically.
As brands build new services and additional design platforms, taking the time to ensure that they are accessible across audiences will give users a stronger connection with your brand and differentiate it in a complex and busy market.
Onto the Next Phase
The Fintech space is outperforming the traditional financial services industry by innovating, creating efficiencies, introducing new products, and bettering people’s lives at a rapid pace. But there is always room for improvement. It’s essential when Fintech brands implement new technologies or ways of working that they don’t discount the basic lessons from the first wave of disruption.
As Fintech brands embrace new innovations, it’s key that they prioritize the user, and that the technology enhances the human interaction, rather than disrupts it. This approach will be especially valuable as Fintech’s move toward AI and machine-learning, which is quickly accelerating from trend to reality. From personal finance to blockchain to international transfers, AI is fully integrating into the Fintech business model, allowing these brands to amplify accessibility for consumers and communicate in a way that brings the service right to their fingertips.
About Simon Cole
Simon has been connecting brands with like-minded agencies in the UK, USA, and Europe for more than 20 years. He has worked with start-ups to Fortune 500 companies across many verticals, helping them with digital transformation from an insight and human centred approach. Simon is also on the board and helps to run one of London's largest and most influential Fintech industry groups.
