The rise of mobile connectivity, digital communication channels and the app economy means that banks and fintechs must now focus on selling experiences.
The successful future bank must master the balancing of the benefits of technology and data, particularly with regards to the improving of customer experience, against the fundamental need to ensure the highest standards of customer service and integrity in the financial system are maintained. That was the message of a report published earlier this week by HSBC, a summary of which can be found here.
It's no secret that the evolution of consumer behaviour and a heightened focus on user experience is driving change in multiple industries, not least banking. We are, says HSBC, in the digital age of convenience - an environment in which nine in every 10 people in developed countries own at least one smartphone or smart device. As a result, digital access, digital availability and an 'anywhere at anytime' mentality must be the mantra of any organisation looking at its customer journey.
In the financial industry, which has been slower to adapt to this way of thinking than some other sectors, the rise of mobile connectivity, digital communication channels and the app economy means that banks and fintechs must now focus on selling experiences rather than products. Says HSBC: "As future banks move to more service-based models, they will not be bound to specific customer propositions such as mortgages, loans, savings and investment. Requirements will be more tailored to individual customers depending on their dynamic needs at any one time – the so-called ‘segment of one’."
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Central to achieving this, says the report, will be data and advanced analytical innovations such as AI, IT and 5G. For incumbents, such developments pose a question: what will happen to cash and card - or 'plastic money'? According to HSBC, neither will disappear over the next decade, with physical money having a "significantly reduced" role to play largely due to the fact that the global infrastructure and asset base to support it cannot be replaced overnight and the myriad new technologies and payment innovations will need to be proven before entering the market.
Two key areas highlighted by HSBC in relation to customer experience are identity and trust. The former is based on the industry-wide assumption that personal ownership over data by consumers is likely to grow exponentially over the decade or so.
Trust is nothing new in finance. It drives every interaction that customers have with financial services providers, after all. However, in this instance, says HSBC, in line with the growth in personal ownership over identity will come an expectation on banks and financial service providers to become "bastions of their customers' digital identities - helping them to maintain, nurture and grow them over time".
Looking to the future, HSBC set our several possibilities for banks with regards to customer experience, including that banks’ service to customers will become much more personalised to particular needs and situations, the selling of transactions will come closer to the transactions and interactions that matter to customers, and the 'chatification' of money through digital voice activation may become the default channel for customer communication.