By Nick Sellers
Back in the good old days, whenever they were, if you needed to make a financial transaction you went to your bank. It was a rather formal place and, despite banks’ attempts to be welcoming and friendly, rather intimidating.
But your bricks-and-mortar bank was also reassuring. Its very solidity suggested not only integrity but the guarantee that your money was safe.
And then came the internet and the digital age. You no longer needed to make that tiresome journey to the bank. It could all be done online at the click of a mouse.
That change in consumer behaviour has meant that banks have had to adapt their business plans accordingly. For example, last year, one UK High Street bank announced plans to shut 164 branches with the loss of 900 jobs. Figures from the last five-and-a-half years suggest the sector has already lost an average of 55 outlets a month. It’s raised concerns about the impact on vulnerable people, small businesses, and the viability of the cash system.
Caroline Abrahams, the charity director at Age UK, said: “Thanks to the pandemic, we are now hurtling towards becoming a cashless society.” This is bad news, especially for older demographics who rely on their local bank. Whereas younger generations, who have grown up with technology, see physical banking as old-fashioned and irrelevant.
But wherever there is a void, for example with bank closures, there are always disruptive new entrants to shake up the market. While that’s true in any market, with new technologies developing at a faster and faster rate, it’s nowhere more pronounced than in the financial sector.
Or as it’s now called, FinTech!
The thinking behind it is simple. With secure and innovative systems, FinTech allows financial providers to deliver banking services but without the need for physical buildings. All a customer needs is a computer or smartphone.
It’s a approach to banking that it is being adopted by both the established High Street banks, as they seek to cut costs and engage with new generations of tech-savvy customer, and by start-ups who see this new kind of banking as the future of financial services.
Essentially, FinTech applies technology to improve financial activity. It replaces the old-fashioned with the new, using digital technology to provide an end-to-end service that replicates what existing banks have always done.
FinTech first emerged to better manage back-end systems that could be automated to deliver faster and robust processes. But, as technologies developed, as well as secure systems, FinTech quickly began to provide user-oriented services, including consumer and commercial banking.
It is now therefore an integral part of financial activity, whether that’s for money transfers, depositing a cheque via your smartphone, applying for credit, or raising money. As a disruptive force, FinTech is upending the traditional banking system by being innovative, nimble, providing a faster service, but without the need for a physical presence.
For example, one FinTech cuts credit card companies out of the online shopping loop by offering consumers an immediate, short-term loan for purchases. Another offers consumers in the developing world microloans by conducting a deep data dig on their smartphones for their transaction history, including what mobile games they play.
While these might be extreme examples, they underline how digital technologies are reshaping every aspect of our lives, including banking.
Until now, traditional banks offered their services under a single umbrella, from day-to-day banking to mortgage applications.
FinTech companies deconstruct those services into individual product offerings, which allow them greater efficiency and lower costs per transaction. But, whenever there is disruption, existing companies fight back. They too recognise that digital technologies offer business and consumer advantage, and are reshaping their business models
In the age of FinTech does customer service still matter?
FinTech companies have been quick to leverage new technologies such as machine learning and artificial intelligence, using chatbots to assist customers with basic transactions. But customer service still needs the human touch, sometimes to chat or speak with an actual person, either via the app or through traditional channels.
Also, as we shift to remote working and the need to establish a collaborative digital workplace, we move even further away from face to face contact. Today, social media interaction and online communication has become our way of life. That has created a foundation for digital transformation in banking and financial services. We no longer talk to a person, but to a screen.
Whether you’re a traditional bank with years of history, or a start-up disrupting the market, your customers keep you in business. How each transaction happens may have moved from standing at a teller window to the screen of a smartphone, but consumer expectations haven’t changed. Therefore, providing excellent customer service still very much matters.
That’s where working with a Customer Experience Management (CXM) partner comes in because the best outsourcers have secure systems to meet banking and other regulations, and the expertise to offer customers the advice they need, regardless of the channel used to make contact. They understand that traditional banks, with years of history, may have views and technology that prevent them from adapting quickly. And they understand that a new company may not want to build internal capacity or desire to own real estate to house hundreds of people.