FSI Report by ContentSquare

F I G H T I N G

F I N A N C I A L

S E RV I C E S

D I S R U P T I O N

SHOULD DIGITAL TEAMS BE WORRIED?

The financial services industry is big, rich and has customer relationships that other sectors would be insanely j e a l o u s o f. B u t “ i n n o v a t i v e ”, “ e a r l y adopter” or “revolutionary” are rarely words we’d use to describe them. The question is why? And if disruption is coming, where will we see it first?

ContentSquare and Mezzo labs hosted a roundtable gathering some of the most innovative digital leaders in finance discussing the threats and challenges in the industry, and how finance brands can counter the inevitable disruption that’s set to reshape the financial services environment.

Who was at the table

The rise of the Fintech disruptors Fintechs are the big disruptors in the market who are light, nimble and scaling fast.

Revolut is one brand held in particularly high esteem. Revolut is a digital banking alternative that includes a pre-paid debit card, currency exchange, cryptocurrency exchange

and

peer-to-peer

payments

with

free

international money transfers, fee-free global spending, always at the interbank exchange rate. They’ve benefited from being late movers and have managed to have leap frogged regulatory challenges. They’re able to be hugely agile, and interestingly there’s a strong argument that in this sector, the ability to start from scratch is actually a huge advantage.

Curve is another example of a hugely touted fintech brand, gobbling up market share in their niche. Their proposition is a real card which houses all cards and accounts in one central point, and customers are rewarded for usage. Their growth has been absolutely phenomenal, scaling dramatically with no marketing spend.

Brands

Monzo , are incredibly popular with

millennials, they see huge advantages with being able to interact and resolve issues all in their own interface on their mobile phones. However their challenge is whether their customers will trust them enough to make Monzo their primary account and not just a handy-top up card.

“ T i m e a n d e n e r g y m a r ke t i n g i s synonymous with start-ups. Brands l i ke Monzo and Re v o l u t have scaled enormously whilst letting their fiercely loyal customer base evangelize their product on their b e h a l f. T h e i r g r o w t h h a s b e e n nothing short of mind-blowing, and i t ’s l a r g e l y d o w n t o t h e f a c t t h e i r p r o p o s i t i o n i s a m a z i n g .”

“Monzo is great, but trust and scalability is their biggest challenge. Yo u ’ d t r u s t M o n z o w i t h £ 5 0, b u t n o t y o u r l i f e s a v i n g s .”

The challenge for legacy retail banks is: how do they play in that space? There’s a line of thought which is, quite simply, if you’re a bank, you don’t. Traditional retail banks have two choices in entering the race of these new disruptive companies, they either buy in, up their own game and scale rapidly utilising their vast financial clout and internal resources, or choose not to play, focusing on their own core areas of strengths. If you’re a bank, people bank with you because they trust you. Safety and trust are huge advantages. The prime responsibility is to take care of people’s money so banks must think carefully when deciding how best to diversify their portfolios.

“ Yo u c a n’ t p u t p r e s s u r e o n a c h a t b o t , a n d t e l l t h e m ‘ I ’ m l e a v i n g i f y o u d o n’ t r e s o l v e t h i s’. T h e r e ’s a l o t o f v a l u e o n the ability to be able to speak with a n a c t u a l h u m a n b e i n g .” The advantages with bricks and mortar stores is that if something goes wrong, consumers know where to go. The human element is crucial here and whilst we’re seeing a decline in many areas of the high street, having a physical presence adds to reinforcing trust amongst consumers, especially the older generations who will not trust an app, a website or a live chat agent to resolve their issues.

“The danger to banks is maintaining trust, customers still trust the e s t a b l i s h m e n t . B a n k s c a n’ t a f f o r d t o ke e p m e s s i n g u p , t h e y n e e d t o d e l i v e r a b e t t e r s e r v i c e .” “ Tr u s t

can be commoditized t u r n e d i n t o a p r o d u c t .”

and

Having said that, one brands which regularly tops out on the best customer service and trust awards is First

Direct , who have a purely digital proposition. Clearly experience matters, and getting the online experience right is crucial to reinforce trust, providing a seamless user experience.

“The biggest single threat to traditional banks is a trusted player that comes in to the market with a reputation of excellent customer experience. That will be what will blow a lot of banks out of t h e w a t e r.”

When talking about the biggest threats, FSI brands should not just look at the smaller fintech disrupting the space. The elephant in the room is the behemoths of Amazon and Apple . These are hugely trusted brands, whose awareness is huge, this is where trust lies. They combine brand power and a huge customer base with severely advanced technology offerings. It’s not an ‘if’ it’s a ‘when’ for Amazon getting into financial services it’s going to happen and it’s going to be potentially the biggest shakeup in the industry we’ve seen for a long long time.

In asset management, blockchain is undoubtedly poised to be the biggest disrupter. It has the ability to refine process by speeding them up dramatically as well as hugely bring down costs. Blockchain is still unproven, and hugely marmite specially in this sector, but it’s potential to transform authentication and distribution are vast. It’s likely to earn it’s stripes in completely different sectors however before adoption in the FSI market.

“Intelligent use of big data is the n ex t h u g e o p p o r t u n i t y ” The biggest opportunity for FSI brands is utilising 2014’s and this year’s buzzwords. Big data and Artificial

Intelligence . Real AI is not there yet. Adoption of AI will require equal parts of a large internal cultural willingness to embrace and a robust data quality set to allow it to operate to the extent of its potential. This sector is still a long way from getting the data right for AI’s value to be maximised. AI needs to ask the right questions. Most large banks know they massively need to clean up their data, this isn’t a sudden penny drop moment. It’s not just banks either, one online grocery store kept on offering flash sales with meat products to one member of our roundtable, despite her purchases being only vegetarian produce for the last 10 years. Banks should not beat themselves up so much, it’s almost reassuring to when retailers get it wrong, it’s not just a retail bank problem. The trust issue is important. If AI plays up who is accountable? Is it the company, the head of department, the person who wrote the code or the AI bot itself? The questions arises...

“Do we need a robot jail?”

Is brand dead? For some, brand loyalty is dead or at least certainly dying. Others still see ‘the brand’ as a huge USP. The argument for the latter is that in an environment of may fragmented services all competing for the same customer, how do they keep them coming back? Brand can trigger an emotional override over function and act as a way to differentiate and help a customer decide to go back to that brand rather than a competing brand. Many believe the brands who’ll win are simply those who are going to give customers the best deal. To them, proposition + ease = loyalty. Amazon has absolutely nailed all three, a convincing argument could be made that proposition loyalty is purely function and ease of use, not trust has been absolutely phenomenal, scaling dramatically with no marketing spend.

“Most people just want simple and e a s y, t h e n l o y a l t y ’s o u t t h e w i n d o w.”

“Proposition eats customer ex p e r i e n c e f o r b r e a k f a s t ”

There’s also an intermediary brand in the middle which is your phone / watch or chosen item of hardware. So it raises the question, who owns the customer? If we’re making a payment transaction over Siri or Alexa to transfer money to a friend, does the user care what bank is used?

In terms of channels, for many young people, there are no channels. They’re more accepting of being marketed to wherever their attention happens to be. Whether it’s on a computer game or on their social channels. The world our kids have grown up in, the older generation are trying to design their world, there’s an inherent mismatch here. The younger generation are better prepared and more willing to take risks, they have a very different relationship with data.

“ K i d s d o n’ t t h i n k a b o u t c h a n n e l ”

“ I d o n’ t s e e t h r e a t , I s e e s h i n y n e w t h i n g s”

Brands should be more concerned and focused on how they disrupt themselves rather than what brands will potentially disrupt them. Brands need to realise that robots are there to enhance teams and individuals not just to gobble up jobs. The brands who win are those who embrace new technologies, experiment, iterate and utilise it to meet specifics goals or objectives. Experimenting and adopting technology for technology’s sake is an all-together too frequent occurrence. Instead brands should focus on what the problem they’re trying to solve is and then asses whether it’s technology, process or people or a combination of all three which can help solve or address the issue.

Online ex p e r i e n c e is crucial, and market-leading UX analytics company ContentSquare are working with leading financial services brands to revolutionize t h e i r o n l i n e ex p e r i e n c e . Tu r n t o t h e n ex t p a g e t o f o u n d o u t h o w.

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Mezzo Labs is the UK’s largest independent digital analytics agency. We help brands unlock the value of their marketing data. With over 12 years of experience, we serve clients around the globe via our offices in London and Hong Kong, and our local country affiliate network. We currently provide the full spectrum of analytics services: from strategy and delivery through to training and resourcing. With our help, our clients move up the analytics maturity curve, from basic reporting, to datadriven optimisation, marketing automation and beyond…. The future is exciting. Stay tuned for news of an innovative machine learning tool to unlock even more value from your data. We have significant expertise in FSI, with clients such as Barclaycard, HSBC, Cigna Insurance, Metro Bank, TSB, Schroder Investment and Old Mutual Global Investors.