Written by FintechOS - April 22, 2020

6 minute read

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Why Diversify and Offer Financial Services?

There is a multitude of reasons why companies from outside of the traditional banking sector should offer financial services.

The obvious ones are increasing customer loyalty, protecting and increasing revenues and reducing customer churn. However, add to these the ability to improve relevance in an increasingly digital age, reduce operational cost while improving efficiencies and the question quickly becomes one of not “why”, but “when”?

FintechOS recently hosted a webinar titled “How do businesses provide financial services to build new revenue streams, decrease costs and increase customer loyalty without breaking the bank?”.

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Watch webinar on-demand – How do businesses provide financial services to build new revenue streams, decrease costs and increase customer loyalty without breaking the bank?

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This was co-hosted by Lee McCready and Steve Collins and focused on highlighting some of the challenges emerging contenders face when deploying financial services.

The majority of FintechOS’s customers are within the banking and insurance sector and are starting to experience similar challenges in terms of leveraging digital technologies maintain relevance with their customers. “All the banks we are working with the state the same thing: they see the next wave of competition coming from data-intensive organisations that sit outside the traditional banking community. These include large tech organisations such as Google, Amazon, Alibaba and so on”, said FintechOS Emerging FSI Lead, Lee McCready. 

“Another point to note is that the banking sector traditionally lacks the sheer scale of customer interaction and management capabilities displayed by both retailers and telco’s alike” stated Lee. “If you can combine banking services with deep and meaningful customer engagement as part of a diverse ecosystem, everyone wins”

Dramatic changes

To stave off competition from both challengers and emerging FSI, some banks have built completely new “digital banks”, offering an end to end service that appeals to the new breed of customer.

For example, Kakaobank was formed as an internet-only bank and succeeded in onboarding in excess of 1 million new customers in the five days following its launch.

Others are leveraging Open Banking models and API interfaces to make their services widely available to 3rd parties. Traditionally, this has been focused on attracting new applications and services from the development community. 

Increasingly this is now targeted at enabling new routes to market through what are seen to be Emerging FSI players, including Telco and Retail.

But the disruption is worldwide, and in virtually every industry – from media and tourism to health. “In parallel, we see telecoms and retail businesses investing heavily in adapting their approach to customer engagement and management, they’ve also become adept at packaging and combining multiple products and services such as media and communications. Why shouldn’t financial services be next”?, McCready noted.

For example, Orange Bank wanted to leverage their existing user base and rapidly grow market share within financial services. “The solution was to build and deploy cloud-based, data-driven banking as a service platform that enabled Orange to simply deploy services that were tailored to their customers. These were made available with the same experience across multiple channels and included digital onboarding, end-to-end loan origination, and wallet services.  Orange Bank now processes in the region of 200,000 micro-loans per month with an average time to cash of just 15 minutes.  This was achieved through combining data from multiple, legacy systems with a cloud-based core banking engine, automating the entire process from end to end and presenting the journey via the channel of choice for the customer”.

Another example of Emerging FSI adoption is the Romanian retailer, Flanco, who already had an existing financial services capability but was unable to manage their customer experience due to the direct engagement with their chosen financial partner.

Using FintechOS, Flanco launched a financial services marketplace, aligned to higher-value goods. “Customer data is captured via a single orchestration interface linked to multiple structured and unstructured data sources. Every request for finance is automatically sent to multiple financial partners, enabling Flanco’s customer to choose the optimal financial package.  The result was that sales increased by 25% with 75% of those sales coming via their mobile channel”, McCready said.

A key takeaway

The key learning of the two examples mentioned above is simple: partnering with the financial services fraternity will no doubt increase revenue, but if you want to improve customer loyalty then orchestrating the customer experience is key.

So, the traditional reasons for offering financial services are apparent:

However, the evolving needs of the digitally savvy consumer need to be recognised and addressed as they are driving the change in digital financial services: 

View the webinar to understand how consumers are redefining the status-quo with:

> 85% banking transactions happening via digital channels

> 33% millennials believe they will not need a bank in the future

> 73%  preferring to source get financial services from alternative sources including digital start-ups

(Source: Arthur D. Little analysis)

It’s also interesting to understand the digital threat to traditional banking organisations from “non-bank banks” providing a wide range of financial services:

What’s the solution? “Putting the customer experience first and combining it with data and automation to deliver frictionless customer journeys such as digital onboarding, micro-loan origination, savings and insurance is key to success in emerging FSI” concluded, Lee McCready. 

Beyond people, data is the most valuable asset existing within today’s business. If you can democratize that data and surface it to multiple digital tools and assets, you can automate what were traditionally manual processes, speeding up delivery, minimizing operational cost and effectively maintaining user experience regardless of the channel that THEY choose to engage via”. 

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Listen to the Webinar to gain further insight or alternatively contact Lee McCready (lee.mccready@fintechos.com) or Steve Collins (steve.collins@fintechos.com) and they’ll be glad to help.

Do you want to learn more on this topic? You have these options:

  1. Book a demo with one of our consultants: https://bit.ly/2HYi0Y4
  2. Send us an email with your questions: webinar [at] fintechos.com, or

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Watch webinar on-demand – How do businesses provide financial services to build new revenue streams, decrease costs and increase customer loyalty without breaking the bank?

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On the same topic:

Retail – The Three Golden Rules for Wannabe Winners

Telcos’ Magic Formula for Growth

 

 

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