FinTech’s Coming-Out Party — What Consumers Can Expect Next
Consumer FinTech Trends in Asia for 2017
Over the past few months, we’ve been scouring Asia Pacific for high-potential early stage FinTech startups that will make their mark in 2017. By the time 3 February rolls around and applications close for our upcoming 2017 FinTech accelerator in Singapore, we’ll have been to 17 cities across Asia Pacific.
We’re looking for ideas that shift paradigms, and execution that will have a significant impact on financial services across multiple jurisdictions. In short, we’re looking for the next big things in FinTech; the companies that will push the genre forward in 2017.
2016 saw the emergence of regulatory sandboxes to assist with FinTech development, the cautious pilot adoption of blockchain by sections of the financial services community, and for many, the advent of InsurTech as a force to be taken seriously. Thanks to November’s FinTech Festival in Singapore — which promises to return bigger and better for 2017 — FinTech has now truly been brought to the mainstream, with the majority of recalcitrant banks now recognising both the threat of FinTech upstarts, and the opportunities offered to them by new, innovative and developing technologies.
But what about 2017?
The last month has seen many excellent assessments of where FinTech is heading this year hit our newsfeeds. Predicted trends include:
- continued growth of InsurTech
- increased standardisation of cashless payments
- enhancements to mobile payments security
- further adoption of blockchain to serve multiple functions
- boundary pushing in Asia (and Africa), thanks to friendly regulatory environments
- social media becoming a go-to platform for FinTech
- potential downturn in competitiveness of US FinTechs, should Trump limit regulatory restrictions
- aggressive competition among global financial centres for FinTech talent
I agree with many of the points above, but want to focus particularly on the impact of FinTech in 2017 on consumers.
My own analysis is shaped by the recent discussions I’ve had with entrepreneurs, banks, regulators, investors and corporates across Asia. There are three trends in particular that I see coming together to offer real value for consumers. In short, 2017 will bring…
Improved customer experience as a result of increasingly sophisticated AI, underpinned by open banking platforms and data access, and compelled by contemporary consumer demands and expectations.
Open banking
The scourge of innovation in the financial sector has long been the legacy technology on which banking systems are built. Whether back, middle or front office, inefficient and uncompromising systems have hindered improvements to customer service, and a sclerotic appetite for change has left consumers frustrated with service that is anachronistic when set against contemporary consumer expectations.
Open banking platforms have the potential to eradicate (or lessen) many of these problems. They support development through collaboration and growth through competition. Greater adoption by the incumbents will dramatically increase the impact that FinTechs can have, and the speed at which they can do so. For the consumer, this will manifest in more enjoyable customer experiences and greater visibility regarding their financial options and wealth management.
The impact of access to data
Banks (and banking collaborators) in many cases have a wealth of data, however efforts to do anything with it that delivers quality and/or efficiency improvements for customers have until now been either limited or relatively isolated. Data opens the door wide for personalised service, more focused advice and customised product provision.
As the impetus in this area grows, customers will increasingly demand that they are treated on an individual basis rather than lumped in with other similarly profiled consumers. The true value to the consumer will come when data is democratised and made available for third party contributors to better present and distribute information, and linked strategies, to their consumers.
2017 promises to be the year when open data has the biggest impact yet in solving this problem.
The opportunity is there for banks and FinTechs to use customer data to offer bespoke investment opportunities, advanced analytics and individualised (and automated) advice. Collaboration on data will above all else benefit consumer experiences, and the first step to doing so is a widespread commitment and development of open APIs.
Open APIs
Access to banks’ APIs allows for improved solutions to be outsourced, and banded together to bring about significant improvements in the ways consumers build and interact with their financial portfolio. Partnerships between banks and FinTechs will doubtless continue to blossom in 2017, as the sector’s collective trust in open platforms continues to grow.
With OCBC leading the way in Asia, banks are slowly come round to the idea of opening up their APIs. For European banks, there’s no choice in the matter, as EU Directive PSD2 will obligate banks to operate open platforms. Upon announcing open access to 12 of its own APIs at November’s FinTech Festival, the MAS’ Managing Director Ravi Menon recognised the speed, cost and efficiency improvements that open APIs can bring, and noted that APIs “are likely to be one of the most important building blocks for innovation in the future economy.” In its own words, MAS is “actively pushing FIs to develop and adopt APIs, and to offer as many of them as possible to the broader community.”
Once these doors are opened, it paves the way for focused, bespoke analytics, and consumer apps that allow consumers greater insight and independence as to their financial wellness, spending, and future security. It will also give consumers more visibility as to relative market performance, and empower them by providing tools to hold banks accountable for their performance, relative to cost.
The role of AI
As institutional confidence in developing AI continues to grow, the banking sector will increasingly recognise the role that the technology can play across both back and front office functions. Whether used to achieve quicker and more helpful resolution of customer queries, to achieve better investment outcomes or to more effectively and beneficially assess risk, AI promises to play a huge role in the development of financial services in 2017.
2016 saw the early adopters in the banking sector, where pilots typically focused on customer support and front-door interactions. Doubtless most people would agree that if AI helps to remove some of the pain of dealing with customer service teams, it can only be a good thing.
However, the next step is to use AI to provide customers with more insightful access to their own data, to create more intuitive user interfaces, and to develop more impactful forecasting. Beyond that there is scope for AI to give rise to more nuanced risk assessment, and hopefully, to fundamentally improve their investment returns.
When combined with open platforms and better access to data, we should expect to see a quicker movement to more sophisticated AI for a range of use cases. In turn, this will lead to better outcomes for the consumer.
Levelling up customer service
On the consumer side, one fundamental benefit of FinTech has been to grease the wheels of change with respect to consumer interfaces and customer service. Effective digital banking rids customers of queues and frustrating phone calls; innovative KYC/AML, biometric authentication and social payments reduce logistical friction; and third-party remittance platforms have stolen market share thanks to their ease of use and the perennial consumer magnet, reduced cost.
For the many end-users that see FinTech only as a front-end, what will determine success in their eyes are speed, cost, and ease of use. And so increasingly, a key FinTech battleground will be UX.
One significant factor for customer dissatisfaction with banks has been their frustration with hearing the same tired refrains — “focusing on providing the best customer service”, “personal, individualised interactions with customers” — being trotted out by executives and in marketing campaigns, but without ever seeing the service to match the sentiments.
Frankly, for many customers these words and expressions of intent ring hollow, accustomed as they are to poor service, confused and siloed customer service teams, and multiple avenues of complaint that rarely result in actual recourse. Banks have historically been strengthened by the hassle (and potential cost) of switching, but FinTech promises to cut much of that platform out from under them. Thankfully, the time has come to deliver for customers.
Increasing speed and reducing the ‘front-door friction’ that blights customer interactions with their banks will be achieved by effective digital/mobile experiences across the full range of consumer products (open APIs, AI, AR), by remote onboarding (AML/KYC via big data and blockchain), biometric authentication, and effective use of AI to deliver personalised and efficient mobile customer service. Beyond that, the way to deliver is to provide increasingly personalised financial services — case and profile-specific product menus that speak to the needs of individuals, rather than banding everyone together. From these menus, customers will be able to select product-packages that work for them, as and when they are needed.
This improved customer experience will also play out in the growth of micro-offerings, particularly in insurance, and a move to digital access that goes beyond current and savings accounts, to also include mortgages, loans, and sophisticated wealth management applications linked to customers’ income streams, typical (and required) spending, and personal aspirations.
Digital banking solutions will remain at the forefront of improved customer experience, both for dissatisfied existing customers and for those unbanked customers that until now have fallen outside of traditional risk-checking models.
Entrepreneurial culture often places significant focus on obtaining and using frequent customer feedback, in order to ultimately achieve the best possible outcome for their customers. Hence the term ‘customer success’ — ubiquitous in startup circles but lesser spotted among corporates and the incumbent financial behemoths. Thankfully, the fact that the rigid structures and one-size-fits-all customer experience of yesteryear don’t achieve success for customers means that banks and FinTechs will finally raise the UX bar.
There are clearly multiple points of crossover among the key themes of open banking platforms and APIs, AI and contemporary consumer demands. What brings them all together is the impact that they will collectively have on the customer experience.
The typical consumer is primarily driven by cost, speed and ease of use/experience. In finance, that consumer is ultimately no different. So in FinTech, those who win big in 2017 will be those who harness all three, whilst focusing on the needs and wants of the big C.
Startupbootcamp FinTech is currently taking applications for its 2017 accelerator program in Singapore. Offering $25,000, office space at FinTech hub Lattice80, access to and collaboration with CIMB, DBS, RHB, Mastercard and PwC, and up to 425 EUR in platform benefits, Startupbootcamp’s program is the leading global FinTech accelerator. Applications are open until 3 February — apply here.
