The way we access and connect with the world has transformed in the last 20 years.
Financial services are no exception and consumers naturally expect the same standards of digital experiences from their banking providers that they get from their social media platforms or delivery apps. For the old guard of banks, the presence of digital disruptors has sped up their own digital transformations and this increase in competition has come at a time when traditional revenue streams are being squeezed by regulatory changes. Incumbent banks are awakening to the need to deliver innovative service offerings that go far beyond traditional checking, saving and lending to protect their market position and generate new revenues.
Given the diversity of products that can be delivered through a digital finance platform, the prize for being a consumers centralised financial hub has never been higher. Incumbents and challengers alike are aiming to exceed consumer expectations by providing experiences that increase engagement. In this blog we highlight some of these innovations, coming to a finance app near you …
The subscription economy has more than tripled over the past seven years (Zuora) and there is substantial value in providing consumers with a centralised hub to assess and manage regular financial commitments. Integrated subscription management helps consumers assess forgotten and underutilised monthly charges and is currently being offered by Swedbank, Danske and ING.
Pensions and investing
According to the FCA, there are only 11m retail investors in the UK with over £1.2tn invested. Banks and challengers are aiming to bring many more consumers into the fold by offering digital investing experiences that may have been cost prohibitive to offer previously. Revolut offers trading in US stocks whilst Starling has a pension product that focuses on helping the self-employed save for retirement. There is a ton of value to be uncovered by allowing more consumers to receive appropriate advice and access investment products to help them reach their financial objectives.
Even before COVID, there was a strong movement building to provide consumers with access to more information about their transactions without wasting paper on receipts. Barclays and Monzo are currently trialling this on transactions with a host of high street retailers including Itsu and KFC. This has exciting applications in the rewards space as well as making settling your dinner tab easier and COVID-safe.
Comparison & switching
Youtility has been at the forefront of the move to give consumers the ability to action changes to utility spending (energy/broadband/mobile) within financial platforms. Given the rich data available to streamline the process and give consumers more personalised recommendations, efforts to date have shown marked improvements on industry conversion rates and results in meaningful savings for households. Barclays saw the potential for this partnership by investing in Youtility in late 2019 and we continue to work toward integrations with several high street banks and a wider range of other platforms.
As the race continues to heat up to deliver the future of financial services, incumbents that partner with faster moving, agile innovators create a wider moat around their digital platforms. They have the existing benefit of scale but if they fail to meet the increased consumer expectations around digital experiences, they risk being left behind. Highlighting this growing need, several of the UK’s largest banks recently signed a government-backed fintech pledge to provide further clarity on the onboarding process to prospective partners.
Challenger banks and fintech apps have tapped into market demand with slick user experiences and seamless design. To maintain their market positioning, partnerships with faster moving fintechs is proving to be the perfect accelerator for industry incumbents.