Over the last 10 years, technology has driven huge amounts of change in the finance sector, redefining the very foundations the industry was built on. This fintech revolution is being powered by a wave of disruptive startups. They are completely reshaping the finance sector, otherwise known as the ‘root and branch reconfiguration’ of the ageing banking and financial services industries.
A new wave of collaboration
Innovative platforms, apps and services are reshaping financial services through a sharing economy model. It’s the same kind of collaboration which is behind the disruption of many industries. Some of the world’s greatest modern consumer tech developments, such as Amazon’s e-commerce business model powered by voice recognition, have thrived through collaboration. This new sharing model between businesses enables data to flow between companies. This creates simple and streamlined processes for the customer.
Xero is part of this revolution through its development of a ‘financial web’. We’ve developed a ‘financial web’ to provide more than a million small business customers with the options they need. Small businesses’ data sits in the financial web. Consequently, Xero is in a unique position to know about its customers’ funding needs. The banks are sitting up and noticing.
Technology is undeniably impacting the banking industry and here are some things that are going to create considerable change.
Millennials demand digital
Almost 10 years ago, digital-only banks began to emerge, with Ally launching in the US back in 2008. Benefits for this new generation of financial institutions include costs saved on brick and mortar, as well as employee salaries. With the added advantage of their fresh footing in the industry, these institutions are a lot more open to change, innovation and moulding around their customers’ wants. However, where the millennial generation pines for this flexibility and ingenuity, digital-only banks struggle to gain the trust of older generations. The older generation wouldn’t consider leaving the safety of their account for something that is completely alien to them. That’s why the best of both worlds is needed.
The customer journey
Banks have lacked innovative competition for years. They’ve offered varying packages, interest rates and deals to customers, but nothing has been truly innovative to challenge the way they operate. Notably, the customer experience has decreased. At every turn a customer is often treated with automated messages and letters through the post. Automation isn’t set to reduce in the future, but when it comes to the customer journey, customers will recieve a more tailored approach. For example, Xero’s Advisor Directory determines the user’s location in order to put them in touch with a small business accountant, bookkeeper, integrator or financial advisor that is a certified trusted Xero partner. This offers next-level consultancy between a customer and their finances. With consumer confidence dwindling as a result of global financial meltdowns, customer relations is now more vital than ever.
Lastly, the future of banking will see them need to become much more social media savvy. Social media connects people in a way that nothing else can. Imagine if customers felt comfortable enough to instantly contact their banker through the likes of Twitter and Facebook. Xero is already building this connectivity into its Facebook chat bots. Our Facebook chats enable users to query their bank balance, cash flow and more. But aside from direct messaging, social media enables banks to build character. If banks developed a toolkit for each of their branches to publicise the community work they do via YouTube, Facebook and Twitter, they would develop a deeper connection with their local area and improve their reputation tenfold. It may sound obvious, but it goes a long way.
All in all, we see banking transforming through the use of technology. They are becoming a much more tailored, personal and accessible service for the customer. If traditional banks can capitalise on the progress made by fintech and establish beneficial partnerships, the future is bright for all banking businesses – and the consumer is the one who will benefit.