The future of financial technology part 5: Age of self-service
Submitted by Paul Sullivan via Modedaweb
The Internet has not only opened the global marketplace to business, but it has also increased choice for consumers. With the whole world just a mouse click away, customers are no longer bound by the limited options available on their high street.
And although many online self-service channels were originally created to allow brands to reduce their own workforce and operating costs, consumers have embraced the change. There is now an expectation that they will control more of the pre-purchase process, along with many basic account management functions.
Some estimates suggest that shoppers complete two-thirds (66%) of the pre-sales process unaided, before they ever reach out to a sales team. From pre-sales product research, to the final checkout after purchase, customers demand greater control of the buying process – and financial technology is evolving to meet those needs.
Crowdfunding is a clear example of customers driving the agenda. Rather than allowing established brands to tell them which products to buy, customers are getting involved much earlier in the design process, investing their own money in products that best suit their interests or needs.
Financial technology plays a large part in successful crowdfunding platforms, allowing brands to secure pledges from customers, before providing the method by which money is collected at the appropriate point in time. Systems of the future could allow for variable funding options, from pledges held in escrow, to providing limited access to cash according to customer-defined milestones, the flexible principles of FinTech will help the crowdfunding industry mature and deliver the control demanded by users.
The global financial crisis of 2008 has had long-term consequences for consumers. Record low interest rates means that investors are unable to realise any kind of above-inflation return on bank deposits. Similarly, borrowers have been unable to access loans at reasonable rates, spurring the growth of the payday loan industry.
Like so many other aspects of the financial services industry, FinTech providers have been developing platforms capable of disrupting the lending sector. Peer to peer (P2P) services like Zopa and Funding Circle help to meet the needs of investors and borrowers alike, providing a return on deposits and lowering interest rates on loans.
These hybrid savings mechanisms cut out the incumbent banks, and give every party involved in the lending-borrowing process greater control of their finances and how they are used. Expect to see the options increase again as more granular options are built to cater to specific niches – a topic we’ll cover in the final article in this series.
Shifting customer preferences
The Internet has made it easier for customers to access a range of products and services, but it has also been instrumental in reducing brand loyalty; customers can go wherever and whenever they want to get the right product, at the right price, delivered in the most convenient way. As a result, customers really are in the driving seat when it comes to purchasing.
The one constant in customer purchasing decisions – simplicity – offers FinTech businesses ample opportunities to further increase reach in the online economy. Many online providers rely on smartphone apps to connect customers with local agents (think Uber or Airbnb). As well as the technology required to link customers with available resources, each app also needs to be able to accept payments seamlessly to maintain the appearance of convenience for users.
Rather than developing dedicated solutions for each app, FinTech providers will instead offer generic platforms and APIs. This will help service providers integrate flexible, reliable and secure payment processing into any app or platform and offer customer greater choice in how they pay for goods and services. The use of simplified APIs will also help reduce the time to market for these new services, further driving growth of the on-demand economy.
Further empowerment ahead
As brands fight for the attention of a finite pool of customers, it is the customers who will ultimately wield the power. Businesses will continue to develop platforms that meet needs, and as technology evolves, increase personalisation to reach niche markets – the subject of the final article in this series.
Paul is DOM at Modedaweb a finance andfintechspecialist inbound marketing agency and a keynote speaker on marketing automation.
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