Can banks react quickly enough to the next phase of the fintech revolution?

I have blogged recently about the changing banking and financial services industry, particularly the need for large incumbent traditional banks to offer more innovative services that can rival those designed by the new Fintech (Financial Technology) solution providers. The issue at the heart of this debate is that the new players can design services from the ground up, ensuring that the customer is at the heart of the product. That’s difficult for the large companies to challenge, but this is a question of survival.

One major advantage the big banks have always had is that their customer base has been built up over many years. Banks are traditionally seen as the providers of financial services and they are trusted to do so because regulators control how they behave - most of the time. Banks have a large legacy of branding and trust and with millions of existing customers it is difficult for the Fintechs to break in despite offering a better service and price in many cases.

But I saw a survey from the US this week that highlights how this traditional resistance to change might be breaking down. 60% of American customers said that they would be willing to try a financial product from a technology company they already use. That doesn’t help the small startup with a great idea, but it does create a major concern for the banks because this means that customers trust Apple, Amazon, and Google enough to take out a loan or get a credit card from one of these companies.

In theory there is nothing to stop Amazon hunting down a small, but exciting and innovative online bank, purchasing the company and rebranding their services as Amazon. With an enormous loyalty club globally (Amazon Prime) they could market financial services to millions of potential customers very easily.

This breaks down the traditional defence of the banks, that you can’t trust small unknown startup companies with your finances. The next wave of competition for the banks may in fact be the Silicon Valley tech giants - a path that Apple has already started on with their Apple Pay system.

With a growing acceptance of Blockchain technologies and virtual currencies such as Bitcoin, perhaps there is even a challenge to currencies themselves? With billions of users, what would happen to traditional banking if Facebook created a virtual currency - Facebook Dollars - and a banking system that allowed free, instant transfers between Facebook users, and small loans and other credit facilities?

The growth of Fintech has been talked about for several years and the focus on customer-centric design was always the big advantage of the new companies, but if they start connecting to major international tech giants then we could see a banking revolution inside the next five years.

What do you think will happen next and can the banks react in time? Let me know what you think by leaving a comment here, or get in touch on LinkedIn.


Customers are driving new trends in the lending market

One very interesting change in customer behaviour in recent years is that a positive experience in one industry very quickly creates expectation in another. For instance, innovation in the insurance market can easily lead to customers asking why retailers cannot deploy similar ideas to improve their own service.

Recent research by PwC found that this trend applies in the cards and loans function of most financial brands. The trends being introduced to this area are very likely to have originated outside of the banking sector. This is an extremely interesting development from the customer perspective as it means there is a constant focus on innovation and improvement, but for the banks it means they can no longer just watch what their immediate rivals are doing - the next innovation may come from an entirely different industry. The success of a product like Apple Pay is a good example - why didn’t a major bank launch that service?

PwC found four key trends driving change in the consumer lending area of financial services:

  1. Online all the way: it’s mandatory to put the process online. The vast majority of customers expect to now be able to complete the entire process of arranging a loan online. Although human interaction may be essential in some cases, as much of the process as possible should be online.
  2. Keep things quick and simple: forget the long detailed forms and consider how you can simplify the process. If you are asking for a loan from a company where you already have an account then don’t ask the customer to enter their address again - be smart about making the process faster. The decision process in particular needs to be fast - automated if possible.
  3. Reach out to younger borrowers: loans to younger borrowers are often for much smaller amounts and are often paid off early. Be more flexible about amounts and repayment options. Younger borrowers are rarely looking for 30-year fixed rate loans.
  4. Cross-selling works: customers are highly likely to purchase new products if they are advised about the new product as a response to a question - so the interaction is natural and the agent response is advisory. If the customer is guided to a new product as a solution then it doesn’t feel like a sales process.

It’s interesting to note that PwC is saying these are the four key trends in the loans market, yet none of these trends could be described as specifically related to the financial services industry. All these trends relate to changing customer expectations, changing customer behaviour, and changes in the way that customers communicate. Ignore these changes in customer behaviour at your peril.

Are these lending trends really all being driven by customers today? Let me know what you think about the PwC observations by leaving a comment here, or get in touch on LinkedIn.


Only CX can save banks from the rise of the fintechs

Every bank is aware of the rapid growth of the Fintechs (Financial Technology companies). These innovative startups have been carving out slices of individual financial services for a few years now, focusing on products such as loans and financial transfers and remittances, but according to new research from EY the threat from the innovators is increasing.

This contrast between the agile mobile-friendly Fintechs and the lumbering banks is leading to a belief that financial services are increasingly commoditised. In short, customers believe more than ever that all the banks are the same. Banks need to personalise and streamline customer experience to ensure they can differentiate their service.

The Fintechs are also creating a different type of competition. When one bank competed with another on products like loans the focus was on interest rates. Now there is a focus on the superior experience. A Fintech loan provider will typically offer a completely online experience, usually on a mobile device, with an extremely fast decision on the application. If banks cannot adapt and compete on customer experience then they will start losing significant market share to entirely new market entrants.

The answer, according to the EY research, is for the traditional banks to think and act like Fintechs. But how can big companies with legacy technology and enormous branch networks behave like scrappy startups? EY created a checklist of the most important areas where banks can start emulating startups:

  • Radical simplification of the customer journey
  • Truly end-to-end customer engagement, with fully integrated and coherent channels
  • Simpler products that are easier to understand, rationalised product portfolios and more transparent pricing
  • Banking ubiquity, where core services are embedded within digital personal assistants (e.g., Apple’s Siri or Amazon’s Alexa) or via other platforms
  • Serving narrower segments of the market (e.g., teenagers, seniors, expatriates or frequent travelers)
  • Entirely new lines of business, partnerships and joint ventures that explore new product territories

There are some key threads in this advice - areas that are relevant to every industry, but that are essential if banks want to realistically challenge new market entrants:

  1. Simplification: services need to be simpler, faster, and easier to access and manage.
  2. Personalisation: I want to know about products and services relevant to me and nothing else - don’t try selling me a loan for a car unless your data analysis tells you I’m looking for a car.
  3. Channels: be mobile-friendly, be voice-friendly, be everywhere that the customer wants you to be. Don’t ask the customer to come to you, go to them.

EY concludes that Fintech innovation could be an existential threat to some banks. The most profitable customers are already being tempted by the better rates and better service available from new brands. It is possible that only the least-profitable customers will remain at some major banks as all the active customers will leave. The focus on how to prevent this is clearly the customer experience. A decade from now, I’m sure some major banking brands will have vanished and some new brands will be enjoying great success, but not every bank will fail - those who can redefine their purpose and become customer-centric in their thinking will be able to retain - and even attract - customers.

What do you think about the EY research? How dangerous is the Fintech threat to banks and in particular, individual services such as loans? Let me know what you think by leaving a comment here, or get in touch on LinkedIn.


Britain’s Favourite Credit Lenders Revealed

Spanish banking giant Santander tops the list of lenders UK customers would be most likely to take out a loan or credit card with, according to the most recent consumer research conducted by global customer experience expert, Webhelp.

Overall 18% of the 500 consumers surveyed said they would be most likely to take out a credit card or loan with the Madrid-based bank. In second place, with 16% of the vote was Halifax/Bank of Scotland and a further two points behind, at 14%, was RBS/Natwest. Joint fourth, with 10% of the vote were HSBC and Tesco Bank.

However, men are much more likely to favour the European bank than women, with 20% of men opting for Santander as opposed to 15% of women. In fact, Santander was the third choice for women, behind Halifax/Bank of Scotland and RBS/Natwest, who tied for first place with 16% of the female vote.

David Turner, CEO of Webhelp UK, SA and India, said: “The people in our survey stated that trust and an excellent customer experience were crucially important to them in their choice of lender. These results indicate that perhaps UK banks are still struggling to regain trust lost during the financial crisis – especially with men.

“While the reputation of a brand takes time to recover when trust has been lost, putting in place market leading customer experience solutions can help to bring customers back or keep them loyal.

“It is crucial for companies to take a close look at their customer experience solutions and ask themselves if they are really delivering what their customers want.”

 

The Top 10 credit lenders, as identified by the Webhelp survey, are as follows:

 

  1. Santander - 18%
  2. HBoS - 16%
  3. RBS/Natwest - 14%
  4. HSBC -10%
  5. Tesco - 10%
  6. Sainsbury’s - 7%
  7. M&S - 5%
  8. Virgin - 4%
  9. Nationwide - 3%
  10. Lloyds - 2%

A trusted brand and CX are critical for British credit card and loan decisions

Webhelp recently carried out research on attitude of British people to credit in 2017. This was a detailed study and we found some really interesting insight in the responses. In this article, I’m going to highlight some of the key findings.

First though, who uses credit in the UK? We found that 80% of our respondents had a credit card, loan, or both. The least likely to be using any credit are those earning less than £10k p.a. (39%) and those aged 18-24 (37%). 83% of those earning over £40k say that they have a credit card or loan. Clearly an increase in income creates the opportunity to access credit.

Once people have access to credit they tend to use it. We found that 82% of our respondents have some form of balance on a credit card or outstanding loan and only 17% of those have managed to decrease the amount owed in the past year. 30% of people say that they owe more at present than they did a year ago. This feeds into the attitude towards taking on increased credit where just 26% said that they would actively be planning to take out a new loan or credit card in the next six months.

It’s concerning to see how many people are using credit for basic living expenses, such as food. Our research found that 35% of people needed credit for these basic necessities and a quite staggering 65% of 18-24s use credit for these basic needs.

Attitudes to Brexit were also interesting. Although the British government and many in industry are fixated on the effect that Brexit will have on the British economy, it doesn’t seem to have changed attitudes to credit. 73% of people said that Brexit had no impact at all on their credit decisions. With regards to the future, perhaps even a post-Brexit future, a third (33%) said that they were concerned about the rising cost of living although 44% of the over 65s said that they were fine and saw no reason why anything would change for them in future.

It was clear that brand remains important. When applying for credit, trust in the brand of the lender was the single biggest influencer in the choice of who to use for credit. 64% of people expressed a preference in applying online rather than in person and amongst those earning over £40k this rises to 82%. Clearly a trusted brand and a simple online application process are important.

In addition to brand, the customer experience received is also very influential. 87% said that they expect excellent customer service either as an important or extremely important part of the brand interaction. That figure rises to 94% of women, 95% of 25-34s and 92% of those earning between £20-40k p.a.

What is your attitude to credit in 2017? Is it important for you to receive an excellent customer experience from your lender? Let me know your thoughts by leaving a comment here, or get in touch on LinkedIn.


Is Goldman Sachs redefining how online loans work?

The CEO of Goldman Sachs, Lloyd Blankfein, is something of a Wall St Veteran and legend in the American banking industry. You wouldn’t expect him to be making personal calls to customers approaching the bank and asking for a small loan to buy a car or take a holiday.

Yet, this is exactly what Blankfein has been doing because of ‘Marcus’, the new online-only loan service from Goldman Sachs. Most customers of the new Marcus service will only ever interact with the online system or a contact centre agent, but the fact that the CEO has been so hands-on with the product - genuinely calling random customers and asking them how they liked the service - shows how important this company thinks the online-only loan sector can be for them.

Goldman Sachs predicts that by offering customers an online-only loan option that offers an easy to use interface - easy to apply and easy to get a decision and payment - they can generate an additional $1bn in revenue in just three years. This is just from small consumer loans of $3,500 to $30,000.

Consumer loans is a different focus for Goldman Sachs, but there is a solid customer-focused strategy behind their decision to launch Marcus. They have taken a typical Fintech (financial technologies) approach by building the service entirely around the customer - making the service as slick and easy to use as possible. So there are no branches and no legacy systems - Marcus is effectively a startup that is bankrolled by a Wall St giant.

And there is one huge benefit. The problem for new lending clubs and other Fintechs is that they need to spend heavily on marketing and branding just to become recognised and trusted. With Marcus being backed up by one of the most recognisable brands on Wall St, they have already leaped the hurdle of how to be trusted by customers. Marcus is on track to lend over $2bn in small loans this year.

If Marcus makes a serious charge into the online banking space dominated by Fintechs then it could indicate the future for many other banks. Perhaps they cannot just take their existing processes and put them on a website. Launching a new brand that is completely redesigned around how loans can operate in the Fintech environment might be what many more established banks consider doing. Marcus might be the future for loans.

Do you think Marcus can be the future of loans? Let me know your thoughts by leaving a comment here, or get in touch on LinkedIn.


Which Factors Influence Your Choice of Lender?

With credit playing such an important role in our daily lives the number of businesses lending to the public is increasing. Once the playground solely of traditional financial institutions, lending is now seen as a significant contributor to the bottom line for a variety of different types of company. In an increasingly crowded and competitive market, how can lenders stand out from the crowd and secure customers? Leading global customer experience expert, Webhelp, conducted a survey of 500 UK adults to discover which factors influenced their choice of lender.

Overall the most important factor for borrowers was trust, with 34% stating the biggest influence on their choice of lender was whether or not the company was a trusted brand. And perhaps this is one of the reasons companies outside of the traditional banking world are gaining such a foothold in the lending space. With the ramifications of the 2008 financial crisis still being dealt with, companies with a reputation for trust in other spheres could be capitalising on the loss of trust the traditional banking industry has suffered.

But perhaps there is also another reason for the growth of the non-traditional lenders. Webhelp’s survey indicates that almost one third of people (30%) would choose their lender based on them offering a good customer experience. In fact, when you look more closely at the data, several groups rated good customer experience as the top factor that would influence their choice of lender. 36% of 18-24s and 35% of people earning £10-20k pa, chose customer experience as the number one factor in their choice of lender.

When you consider that these groups value customer experience more highly than factors such as the APR or monthly payment rates, that has to be food for thought for lenders.

David Turner, CEO of Webhelp UK, India and SA, said: “Increasingly we are seeing customer experience gaining ground as a way of businesses differentiating themselves with their customers - and this is happening across a range of industries. When margins are tight and markets are competitive offering customers reduced prices can be difficult to achieve. But as our survey shows customers do not necessarily view price as the deciding factor.

“Engaging with customers via their choice of channel and demonstrating the capability to treat them as individuals is increasingly becoming how brands are setting themselves apart and winning the all-important battle for customers. Outsourcing this vital part of the customer acquisition and retention process to an expert firm, such as Webhelp, could be what makes the difference to a business.”

 

Click here to see our infographic on consumer attitudes to credit in 2017


MÜŞTERİNİZİ TANIYIN – REGTECH (DÜZENLEYİCİ TEKNOLOJİLER) NEDEN SEYAHAT SEKTÖRÜNDE UYGULANABİLİR?

 

Müşteri tanımlama veya daha önce bahsettiğimiz “Müşterinizi Tanıyın” (KYC – Know Your Customer), sadece bankacılık ve sigortacılık alanları için düzenlenmiş sektörel bir konu mudur? Webhelp’in GreenPoint’i satın alması ve Webhelp KYC Hizmetleri'nin (WKS) kurulmasının ardından, seyahat sektörü ile ilgili bu makalemizde yeni KYC alanlarına ilişkin genel görüşlere değineceğiz.

Seyahat sektöründe çalışan uzmanların çoğu “Müşterinizi Tanıyın” (KYC – Know Your Customer) ve RegTech (düzenleyici teknolojiler, düzenleyici yönetim teknolojileri) gibi terimleri anlamakta zorluk çekmeyeceklerdir. Webhelp Seyahat ve Tatil İş Birimleri Yöneticisi Carole Rousseau, "Bu yeni terimler yeni çalışma yöntemlerinin habercisi. Öncüleri seyahat sektöründe çok iyi bildiğimiz Easyjet ve Airbnb olmasına rağmen bu yöntemler aslında tüm seyahat sektörünü ilgilendirmektedir" açıklamasında bulundu.

Düzenleyici teknolojiler (regtechs) ve Müşterinizi Tanıyın (KYC) ile yaş doğrulama, ulusal kimlik numarası, beyan eden kişinin bilgilerinin doğrulanması (isim, adres, e-posta vb) gibi birçok very hızlı bir şekilde elde edilebilir.

Seyahat sektöründe 4 regtech uygulama alanı:

Carole Rousse "Bu teknolojiler, bir dosyanın daha hızlı ve daha güvenli bir şekilde işlenmesini mümkün kılmaktadır. Seyahat eden müşteriler daha iyi tanıma imkanı sunarak, müşeri deneyimini iyileştirmeye yardımcı olur.” Günümüzde düzenleyici teknolojilerin uygulandığı 4 alan bulunmaktadır.

1 – APIS bilgisi toplama ve doğrulanması: APIS (Gelişmiş Yolcu Bilgisi: bazı ülkelere seyahat edebilmek için havayolları tarafından istenen kişisel veriler)

2 - Kredi kartı dolandırıcılığı ve borç ödememe durumunun azaltılması: Çalınan banka kartlarının %10'unun seyahat ve turizm sektöründeki harcamalar için kullanıldığını unutmayın.

3 – Churn oranının azaltılması: Özellikle mobil cihazlarda daha hızlı bir müşteri deneyimine sahip olunması nedeniyle

4 - Tedarikçilerin tanımlanması: Yine bazı ülkeler tarafından istenildiği gibi. (KYS – Know Your Supplier - Tedarikçinizi Tanıyın).

Carole Rousseau sonuç olarak şunları eklemektedir: "Bir yandan uluslararası düzenlemeler çoğalacağı ve daha karmaşık hale geleceği, öte yandan, web ve mobil uygulamalar için birçok hizmetin icat edileceği 2 trend bulunmaktadır. Bu nedenle, seyahat şirketlerinin çıkarları rekabet avantajı elde etmek için düzenleyici teknolojileri entegre etmek üzerine olmalıdır! Bu durum stratejik hale gelen dijital teknolojilerin ve insan tanımlama süreçlerinin seçimi ya da birleşmesidir”.


[INFOGRAPHIC] Attitude of UK financial consumers to Credit in 2017

How do borrowers feel about their financial future? What are their attitudes to credit in 2017?

Is it important for them to receive an excellent customer experience from their lender?

 

Webhelp recently carried out some research on the attitude of financial consumers within the Credit and Loans Industry. Five hundred UK consumers were surveyed and we’ve shared the results of this research here in multiple formats.

Our research demonstrates that 33% were concerned about their financial future because of the rising cost of living. 35% of people looking to take out new credit would use it to pay for general living expenses and 80% of people have a credit card, loan or both.

Explore our research in our handy new infographic which outlines our findings in a bit more detail.

CLICK ON IMAGE TO ENLARGE


Will This Black Friday Be The Biggest Yet?

Leading global customer experience expert, Webhelp, which provides customer contact solutions for one of the UK’s largest online retailers, says Black Friday 2017 could be bigger than last year.

Love it or hate it Black Friday has become a fixture on the UK retail scene in recent years and the survey data collected by Webhelp indicates it is still incredibly popular with consumers.

The survey of 500 UK adults revealed that almost two thirds (63%) are planning to shop on Black Friday, Cyber Monday or both this year. The groups most likely to be shopping for a bargain on Black Friday weekend this year are the 18-24s (78%), 25-34s (77%) and 35-44s (71%).

Overall 49% of people surveyed said they didn’t shop on either Black Friday or Cyber Monday last year. With 63% saying they are planning to shop on one or both of the days this year, it looks like this Black Friday event could be bigger than ever.

Once again online looks set to be the big winner with 94% of people surveyed planning to do some shopping online. Women are more likely to shop online than men with 97% saying they would either shop both online and instore or only online. The figure is 91% for men.

54% of people surveyed said they thought they would get a better deal on Black Friday weekend. Since 63% of people said they were planning to shop this Black Friday weekend, this indicates the event itself has become something people want to participate in.

The most cynical about Black Friday bargains are the over 65s, 80% of whom think the bargains to be had throughout the year are just as good. 36% of them are still planning to shop on either Black Friday or Cyber Monday though.

The biggest believers in Black Friday bargains are the 25-34s, 69% of whom said they had grabbed some good bargains on Black Friday weekend. They are closely followed by those earning £40k+. 65% of this group said they had bagged a Black Friday bargain before.

 

David Turner, CEO of Webhelp UK, India and SA, said: “With almost two thirds of people surveyed planning to shop over Black Friday weekend this year, retailers need to be gearing themselves up for a bumper season. While website stability, product availability and confidence in on-time deliveries are important for online retailers, the ability to effectively deal with customer queries will be essential. Ensuring properly trained professionals deal swiftly and effectively with the onslaught of customer contact that is sure to take place will secure online brands the loyalty of customers for their Black Friday sales and much more.”