The Future of Financial Services is Seamless
Artificial intelligence (AI) driven fintech solutions, such as those which operate via an app on the customer’s smartphone, are uniquely positioned to process customer behaviour and engagement, what lies behind their decision-making, their main priorities, and the kinds of benefits that may drive their brand loyalty. Here’s a strategic look at the direction in which the financial services industry is moving.
The authors of a research paper appearing in the Journal of Business and Psychology, “The technology effect: how perceptions of technology drive excessive optimism”, advise readers that “because technological successes often produce dramatic and memorable results, such as revolutionising industries, such events are highly salient. People develop a non-conscious or implicit association between technology and success.”
A Forbes.com article explores the concept in a bit more detail, revealing how “the potential of digital financial services in providing secure, low-cost, and contactless financial tools has become even more apparent during the crisis”, with many users enjoying – even becoming reliant on – the convenience that digital finance is able to provide. It appears, then, that the prospects for fintech start-ups and service providers has never looked brighter, particularly for those with banks and insurance companies as their clients where significant digital transformation in these industries is expected and a heightened customer experience, leading to loyalty to the brand(s), has become key.
A look at the trends in this global market, via a Mastercard report “Five Global Trends To Watch”, reveals that fintechs are enabling any company to become a fintech company. How this works is that companies across banking and insurance verticals are cottoning on to the importance of bundling fintech into their platforms to provide a suite of automated services and automated programming interfaces (APIs) which allow companies to become payment facilitators.
“This means businesses can own, manage and monetise their entire payments experience without building an in-house system from scratch,” the report reveals. A range of white-label insurance tech tools, being developed for retailers and insurance partners, is increasingly being embedded into websites and apps to great effect.
Closer to home, the MasterCard report continues by citing World Bank data to the effect that fintech start-ups are leapfrogging legacy architecture and building mobile-first payments applications for over 340 million unbanked adults in sub-Saharan Africa. Mobile money-transfer and financing services are now widely accepted as a catalyst for financial inclusion across markets in the region – where transactions can be made via any mobile device, without requiring a credit card, bank account, credit history or minimum balance.
Of interest in the region, and beyond, is the fact that, while mobile devices are continuing to drive fintech innovation, legacy banking institutions that “cater to the continent’s wealthiest” are realising that they – too – must evolve to provide an upwardly mobile young population with on-demand, subscription-based and seamless services for a life lived on the go.
With these factors in mind, a survey on TechCrunch showed spending on subscription services more than tripled over the period of March to November 2020, with one in three respondents admitting that they had bought an online subscription while in lockdown. While two-thirds of these purchases were related to movie streaming, the banks and insurers are sitting up and seeing the benefits of potentially going the same route, according to Bradley Leimer of financial consulting firm Unconventional Ventures.
It’s all about transparency, he says, and being upfront about their fees and benefits. “When we talk about subscriptions, the more clear and transparent we are, the better,” Leimer enthuses. This is a prime example of an industry that can generate income and provide value in one unique package.
So how can a service provider facilitate the need for consumers to be smart with their cash – and time – in this burgeoning new niche? Chris Steyn, head of MiWay Blink, reveals that consumers have evolved away from paperwork and towards smart technology in their insurance products. As drivers, they want cover for a range of potential blink-of-an-eye hazards, such as accidents, theft and hijacking, weather damage and more, and to be able to manage their cover on the move.
“Customisation is also important to this restless, mostly youthful generation, which is more likely at this juncture in their lives to own a car than a home,” he advises. “A particularly popular benefit that we offer is a monthly *cashback for those who drive fewer than 2,500km. As we saw over lockdown, driving less means reduced risk to the insurer. During this time, for example, MiWay offered customers an automatic reduction in their premiums, to the tune of around a R40 million saving for them across the board. Such decisions turn customer heads.”
To avoid confusion, a reminder from the app sees MiWay Blink customers checking their odometer and adding the reading into the app, so no Über trips – for example – are added erroneously into their total monthly mileage. In the financial services space, a well-thought-out and efficient product, with personalised incentives that align with customer priorities is clearly what’s going to be driving loyalty and brand affiliation going forward.
*Cashback forms part of the product at no additional cost. To qualify for cashback, a self-inspection must be done and your premium paid.
MiWay Blink is a division of MiWay Insurance Limited, a licensed non-life insurer and FSP (FSP 33970). Ts & Cs apply.
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