We have entered an interesting phase of progression as the world shifts towards a new digital reality. The COVID-19 pandemic has seen the demand for digital financial services reach an all-time high. Businesses and consumers increasingly rely on technology to manage financial transactions because traditional banking is less accessible than the growing range of digital finance options.
39% of consumers report that the current pandemic has made them more likely to trust fintech companies for banking services. (MX Technologies, 2020)
Innovative financial technology with its intuitive features and data analytics has propelled the financial services industry to re-consider the customer’s digital experience — from banking and mortgages to insurance and investments.
Up to 28% of banking and payment services, and up to 22% of companies in the insurance, asset, and wealth management sector will be at risk of disruption due to new business models brought about by fintech. (PwC, 2020)
Developments in the payments sector are being largely driven by the requests of digital-savvy customers. Consequently, a focus on the CX transactions process is fundamental — as companies look for ways to adopt simple, yet seamless experiences.
Financial services and fintech realise the value in developing mutually beneficial partnerships. In order for fintech to develop trust within the banking sector, risk management controls are necessary to avoid threatening the safety and reliability of the bank, or financial service. As fintechs venture further into the area of banking, they face increased regulatory scrutiny, and an expectation to develop solid, streamlined compliance processes that meet EU and international regulatory requirements.
Consequently, the opportunity for growth in regulated markets increases when fintechs collaborate with regulators to develop solutions around their offerings — based on a stringent regulatory risk and compliance model. It is anticipated that the growth of the fintech sector will see more regulations and controls over services, data, and security in line with the provision of banking functions like payments, money transfers, and digital wallets.
Furthermore, the outcomes of relationships built on credibility are significant. Banks and credit unions can leverage the fintech ecosystem and fast-track the implementation of innovative technology, and fintechs can gain access to an established customer audience.
Let’s consider some of the focus areas that can improve trust, scalability and efficiency in fintech.
A Compliance Culture
Fintech companies are constantly challenged by regulations. Notably, these regulations open doors to funding, growth, and trust. Depending on the level of risk, effective anti-money laundering (AML) measures and Know Your Customer (KYC) processes can help to manage the risk. A greater level of scrutiny may be required for certain customer risk profiles with Enhanced Due Diligence (EDD).
So, a clear understanding of how regulatory processes relate to each other, and effective measures to manage risks are essential to improving compliance performance. Communicating the magnitude of ethics and compliance to managers and employees from the start, along with policies and workforce training on potential risks — can help to safeguard fintechs. The provision of essential systems and tools for compliance activities helps to empower employees and streamline compliance processes.
The emphasis on talent management couldn’t be greater. Financial services and technology expertise is highly sought after for current and future skills. The ability to access top talent to drive fintech forward is essential, as well as being a key growth driver in the current times.
This includes hiring, training, promoting, and retaining talent, as well as providing the tools and support to enable high-performance remote working. Technology and processes are vital to developing a solid strategy, however, to keep up with the pace of change — the capacity to attract and retain employees with the right capabilities is crucial. Key talent will drive growth and protect the customer base internationally.
Balance Innovation with Customer Experience
With technology innovation, the focus on the product may outshine the focus on people. However, without good quality relationships spanning employees, clients, partners, and customers, the engine that drives growth will stall. On the contrary, the right prioritisation supports an in-depth understanding of people motivations.
For example, a Voice of the Customer (VoC) programme allows businesses to understand how customers prefer to interact with their products and services, as well as highlighting the security concerns and resistance to change that digitalisation brings. Essentially, VoC is a tool that can be used to inform, educate and support customers to make better choices. In turn, it helps strengthen relationships, and continually improve service levels to meet customers’ evolving needs.
Research from UK bank, CYBG (now Virgin Money UK plc) indicates that the vast majority of customers want to interact with a human when handling their finances. 81% of respondents said they would still want to speak to someone, or visit a branch, regardless of how advanced technology gets. This shows how important it is to include the human element, and ensure that in addition to ticketing systems, chatbots, and email — customers can call Customer Support anytime.
Capability, empathy, and speed within service delivery have a positive impact on customer attraction and retention. The capacity to increase total output and achieve performance results amid spikes in demand, high-traffic, or peak activity periods — will be recognised by those who matter — stakeholders and customers.
Compliance, Talent and CX are important investments for fintechs, and vital to developing trust, efficiency, and scalability.
Covalen design and deliver agile, innovative outsourcing solutions across technology and financial services with a proactive approach to risk identification and safety. Regulated by the Central Bank of Ireland, we provide compliant banking solutions from Ireland to over 140 countries. Operating in an EU environment, we ensure full compliance with all legal and regulatory standards using established systems and best practices to manage complex compliance needs.
Our goal is to provide a safe harbour for our client’s services and protect our client’s brand.