There’s a lot of innovation in the FinTech space right now, and that’s for good reason. Constantly evolving customer behaviour patterns are disrupting the traditional way of buying financial products and managing money.
Payments leaders are becoming increasingly competitive with their mobile wallet offerings – LG is the latest tech company to announce it will be entering the app payment space this summer – while challenger banks are bringing agile, digital-first experiences to shake the stronghold of the big financial institutions. At the operational end, new authentication technologies such as biometrics and distributed ledgers like Blockchain are revolutionising how customer data is secured.
All this digital innovation, front and back end, can be traced by to fundamental shifts in the way customers research, buy and use financial services products. To understand this in greater detail, Black Pepper Software conducted an original survey of 1,000 UK adults on their attitudes towards the procurement and management.
There is a really strong appeal among UK consumers to conduct their financial service activities online. When it comes to taking out a new finance product like a loan, mortgage or credit card agreement, 50% of those we surveyed will complete the whole research and purchase process over the web.
A further 36% will use a combination of digital and physical channels, but online will still feature heavily – whether at research stage, to validate their decision, or when they come to buy, as they can compare product information and pricing easily. In fact, only 14% of customers will buy a financial services product without touching online in some way.
However, web-based experiences are not always living up to customers’ expectations. A fifth (19%) find financial services website un-user-friendly, while a further 18% have trouble finding the information they need to make a decision.
Frustrations are most prominently felt by Generation Z, with a quarter (22%) of this group claiming they are put off signing up for new products by complex sign up processes.
Let me lead the decision
One reason for the heavy dependence on digital channels, other than convenience, is customers’ clear need to remain independent. More than a third (36%) of those we spoke to said they wanted to conduct their entire purchasing journey independently – without consulting an advisor.
This attitude was more prevalent among older consumers, perhaps with more experience and confidence in this area; a quarter of those aged 44 and under admit to still wanting a quick conversation with a professional expert on their route to purchase.
Keeping a closer eye
Although there are some concerns among customers with their current online experiences, our research identified a real opportunity for financial service providers to engage with digital-first consumers. More than a third (37%) say they keep a closer eye on their finances since downloading apps to manage their banking and other financial products – and 30% feel these apps provide a good user experience.
However, there is still work ahead for many financial services companies, as a further 25% believe their current app experiences are poor.
Getting closer to customers through digital transformation
If our research highlights one thing, it is that business operating in the financial services industry need to prioritise their digital offering. Optimising websites for mobile devices or launching new applications are not just ‘nice to haves’; these are the primary touch points with prospective and existing customers.
The friction many customers feel in their current experiences is potentially damaging the relationship they have with that financial service provider. And with new, digital-first competitors coming into the finance market all the time, it’s easy to see how customers are courted away from household brands, or institutions they have banked with since they were a child.
Rather than be caught napping, financial services companies need to embrace the innovative capabilities that FinTech investment offers – and get closer to the customer’s needs, quickly.