Duologi's top five ways businesses can offer effective POS finance
Michael Bevan is the CEO at consumer finance specialist, Duologi. Duologi is the fastest-growing point-of-sale payment solutions provider in the UK market. Today, the team is drawn from money specialists, technologists, digital marketing experts and data analysts from a wide variety of backgrounds with a shared passion to help move forward a finance industry that has grown slightly stale. Here, he shares his top five ways in which businesses can offer effective POS finance.
Once upon a time, point-of-sale (POS) finance was associated with big-ticket items for the home such as sofas and electrical goods, but little else. But times are changing. More and more retailers – both online and bricks-and-mortar – are realising that the right POS finance solution can turn browsers into buyers and attract whole new sets of customers.
After all, POS finance done right is all about offering greater flexibility for customers – something which, in an era of mobile payment apps and challenger banks, more and more customers are expecting. A lack of payment options has been suggested to reduce online sales by up to 30%, whilst our own research suggests that 34% of shoppers would be more likely to spend with an organisation offering POS finance options. Yet nearly a third – 27% - of the people we surveyed had never used such a solution to buy anything.
What, then, can business do to offer the most effective POS finance solution possible, and build up this potentially lucrative new source of sales? What does an effective POS finance offering look like? Here are five key factors that underpin the best POS solutions.
In order to take up a POS finance offer in the first place, customers need to know it exists. An obvious point, perhaps. And yet our research also showed that almost all – 94% in total – of people wouldn’t think to actively ask a retailer if POS finance was an option.
This means that awareness needs to be built without the customer having to make extra effort – which means clear messaging instore and online. How that messaging should be framed will, of course, vary between sectors. Some retailers are better suited to a loud and proud ‘buy now, pay later’ line, whereas others require something more discreet. The POS offer should be in line with the overall brand.
The most important information for shoppers when it comes to deciding whether or not to apply for POS finance is the same as for direct purchase – how much will it cost? Shoppers need to know precisely what payments they will be making, when they will be making them and for how long. They also need to know what the payments will add up to – in other words, whether the POS option is interest-free or not.
Whilst the precise figures associated with a POS finance solution will depend, of course, on the size of the loan taken, it is still possible for retailers to offer ballpark figures upfront. ‘Interest-free finance available from £50 a month’, for example, gives a much clearer indication of what the purchase will ultimately look like and whether it is affordable than simply stating ‘Finance available’. And as ever, upfront information improves transparency and helps to build an image of trustworthiness and straightforwardness – essential attributes when selling financial solutions.
Another crucial aspect of clarity lies in moving away from jargonistic financial language and overcomplicated descriptions of how a POS solution works. Whilst it is, of course, crucial to have full terms and conditions available and visible, it is also important to be able to answer core questions simply and clearly. On a website, this probably means having an FAQ page; in-store, it means ensuring that staff are properly trained in the nuances of POS finance, and perhaps having literature available also.
Informing customers as to why POS finance could be a powerful option for them, and encouraging them to apply for it is only the first part of the customer journey. That application process then needs to be painless – meaning it needs to be quick, simple and straightforward, with the lowest possible referral rates.
This is where the POS provider becomes particularly important. Their application form must be simple and their refer rate must be low. For online retailers, the POS solution should avoid requiring a customer to duplicate the information they may have already entered in the online checkout process – this can be achieved by pulling through information from the retailer’s checkout form automatically. Should a manual check have to take place, this should be completed as quickly as possible, and the customer should be absolutely aware of what is happening.
POS finance should always be offered affordably and ethically, in line with Financial Conduct Authority (FCA) regulations – and this compliance should be made clear to customers. There is a big difference between a customer using an interest-free POS loan to spread the cost of a large item in a flexible way, and a shopper relying on high-interest credit to make a purchase they don’t really need or can’t afford, but have felt pressured into making. Retailers need to understand the difference, and place customer care and ethics front and centre when choosing and marketing their POS solutions.
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5. A bespoke approach
With POS finance solutions gaining prominence and popularity, there is an increasingly wide range of options on the market and no need for retailers to go for a one-size-fits-all approach. Bespoke personalisation is essential to ensure that retailers offer the model and the marketing which suits their products, their prices and above all their customers best. And in turn, POS finance can help drive more conversions, more sales and an improved reputation for customer-centric retail.
FIVE things fintechs must do to keep investors onboard
New investors flocked to the stock market during the COVID-19 pandemic. Thirty-eight percent of investors said they had never had a brokerage or similar account before opening one in 2020.
Low or no-fee trading options have helped accelerate the trend – nearly half of new investors said they accessed their account primarily through a mobile app. As FinTechs, how do we create the trust needed to keep new investors in the market and create a fruitful customer experience for them?
The financial industry does a disservice to individual investors if we merely offer tools that focus on making money quickly, an approach that usually backfires. Instead, the surge of interest presents an enormous opportunity for those who want to help more consumers use financial technology to educate them on responsible spending, saving, and investing in order to achieve financial wellness current fintech tools have welcomed individual investors in the door.
Now, it’s time to focus on education and improving their experience going forward. There are several ways those of us in fintech can step up to shape the future of retail investing so that it works better for everyone, starting with the following areas.
Equal access to financial wellness education
Financial health should be available to everyone — but today, not everyone has the educational resources to achieve it. One study shows that only 3.9% of students from low-income schools were required to take a personal finance class. What they aren’t learning in school or from family members, fintech companies can provide on their platforms.
The companies should move from solely offering financial services to a more responsible model of education, advice, and prescriptive choices to help consumers develop better habits and make wiser financial decisions. Not only can they empower consumers and bridge historical wealth divides, but they can also stimulate growth by opening up new consumer segments.
Just as we’ve come to expect that our fitness routines are tailored to our individual bodies, we’re also ready for finance tools that go beyond one-size-fits-all solutions. But only six percent of financial institutions say they’re using the kind of technology that allows them to deliver a deeply personalized experience. Fintech tools need to reflect that financial success looks different for each of us.
For one consumer, it may mean providing guidance on how to pay off student loans early; for another, it may mean prescriptive actions that enable them to stick to a budget for the first time; for a third, it could look like prioritizing environmental, social and governance (ESG) investments, so that her portfolio aligns with her political beliefs.
Now, we are seeing financial technology beginning to meet the demands of personalized finance in a substantial and meaningful way.
The rise of AI-Powered Advice
Big-picture advice and predictive guidance used to be a feature of high-end financial advisory firms — a perk only available to those who could afford it. But thanks to rapid advancements in data analytics and artificial intelligence (AI), that kind of holistic advice is now more accessible than ever. AI-driven robo-advisors can parse many different streams of financial information, delivering customized answers to key questions: Is it time to buy a home, or is it smarter to keep renting? Can I afford to take out another student loan?
Intelligent connectivity powered by AI can anticipate consumers’ needs and next steps, making proactive suggestions that guide them along the path to financial wellbeing. Fintech companies can also help consumers identify when their financial picture becomes too complex for a robo-advisor, and help them find a human financial advisor to meet their needs.
Focus on financial mental health
New investors are quickly finding that the market can be overwhelming. That’s not surprising, financial anxiety is common and studies show that financial stress can have an impact on mental health for some.
It’s not enough for fintech companies to give retail investors access; they also must provide the guidance and support that help consumers manage their financial well-being. Educational tools can ensure that consumers are well informed about their options.
Predictive analytics can anticipate consumers’ questions, serving them key information and insights before they ask. Features that emphasize a comprehensive notion of financial well-being, rather than short-term wins and losses, can also help ensure that consumers are keeping their eyes on the bigger picture.
Gamification for good
The surge of gamification apps has done an impressive job making investing as engaging as playing a video game or joining a social media platform.
Much of the current use of gamification emphasizes short-term thinking, but there’s also an opportunity to help consumers think more broadly about their overall financial picture. One example is peer benchmarking, a feature that enables help consumers to see how their financial habits compare to those of friends and fellow consumers.
Gamification can also be used to incentivize making smaller, smarter choices — for example, rewarding saving over making an impulse buy.
The future of fintech is about more than just broadening access to the markets. It’s about making sure more individuals have access to the tools that can help improve their financial well-being—in the ways that suit their own circumstances and needs. The potential to act within their own set of individual priorities, with their long-term financial wellness in mind is much more empowering to a consumer than simply relying on short-term, high-risk investments.