The fintech evolution in banking is very real – and it’s here to stay this time.
I vividly recall the echoes of the early 2000s when tech evangelists said the revolution is upon us, and that everything we know about banking and financial services would be upended. What was supposed to be a tectonic shift that would tear down and rebuild the industry didn’t quite turn out that way – a lot of the new businesses and technologies proved fragile, or simply underperformed, and faded into obscurity.
So, the question is: “is it different this time?”
The answer is that it can be different this time, particularly if we get a few core elements right that would enable a true step change in customer experience and engagement.
What’s different this time around? Three key aspects make this fintech upheaval different than the talk of the 2000s.
Technology is embedded in our society
The early 2000s were still largely a tethered world. If you wanted a rich online experience you probably needed a PC with a wired connection. Mobile devices were largely designed for SMS and the mobile experience was incredibly limited. The evolution of the smartphone revolutionized digital banking, giving customers a data-rich, mobile experience that truly adds value. And channel data shows it. More and more, banking transactions are now conducted online. In Canada, a survey conducted by the Canadian Bankers Association in 2016 revealed almost 70% of Canadians primarily bank online or through their mobile device. That number would be even higher today.
Consumers aren’t scared of the digital experience
In the early 2000s, many people were taking their first steps into digital banking. They didn’t know what to expect and they didn’t know what they should or shouldn’t trust. Combine consumer trepidation with clunky technology and, unsurprisingly in retrospect, what you got was a market that wasn’t ready for bold steps. Fast forward to today. Canadian consumers have witnessed real, meaningful, and safe technological evolution in banking. In polling the Canadian Bankers Association commissioned earlier this year, the top-rated feature respondents identified with today’s state of banking was “convenience through technology.”
Technology complements personal service – it doesn’t replace it
In the early 2000s, the visionaries of the day foresaw an environment where technology fully replaced the physical channel in financial services – branches would disappear, all interaction would be digital, and people would flock to this type of frictionless, available-on-demand, digital-only experience. What we’ve learned since then is that for most consumers, humans matter. Most consumers view the digital platform as one layer in a multi-channel service offering. Some things they want to do digitally, but other things they want to do in-person. The same people in our polling who praised convenience through technology also said they prefer to bank at an institution that had brick-and-mortar branches (69 per cent of survey respondents said they still want branches). That suggests that technological innovations like robo-advisory services and AI are less likely to supplant personal service but rather are more likely to augment it.
These are the foundational elements that will spur the growth of technology and the customer experience in financial services for generations to come. But to take it to the next stage – and to truly lead the world – there’s one, big challenge we must solve: removing the friction between digital and physical environments.