Fintech as a barometer of consumer need and aspiration

This has been a year of startling growth for fintech driven by record investment of £1 billion into the sector in less than 11 months. Understanding how this fledgling industry is scaling and in turn the implications for financial services led last week to our fourth panel session with The Financial Services Forum to debate whether fintech can be considered proxy for consumer need.

The experienced panel included Romi Savova, CEO of PensionBee, Mihai Ivascu, CEO of Moneymailme, Jason Maude, Head of Customer Analytics at Starling Bank and, representing the institutional perspective, Anthony Craufurd, Director of Venture and Startup Engagement at Visa.

They opened by considering how the origin of many fintechs, that launched to remove a point of friction in an existing process, led to a more intimate relationship with consumers. This was because, by establishing an operating model with a single purpose, fintechs held deep insight into individual consumer behaviour and were using this to redefine consumer expectations of the relationships they have with financial brands. It was a trend everyone expected to accelerate into 2018 with the introduction of Open Banking and PSD2.

Mihai explained how Moneymailme was based around ‘inserting’ social value to payment transactions, replicating how families and networks of friends gave according to emotional connections. The micropayment platform met consumers’ social needs by enabling money to be transferred during chat or video calls.

This ability to design around an individuals’ needs was an attribute that Visa has increasingly turned to fintech to understand, particularly in local markets where, as explained by Anthony, applying a global, mass scale perspective could affect take up.

For Romi at Pensionbee, the ability to develop around individual consumer behaviour was down to fintechs’ ability to build operating models unencumbered by legacy systems and manage customer data, delivering a responsive, personalised experience. PensionBee, which gets 60% of its customers from Facebook and Instagram, uses these channels to listen closely to consumer feedback and, in a recent example, was able to respond to a request by incorporating a new feature within 24 hours.

This immediacy results in an entirely different customer relationship, which in the life and pensions space is particularly transformative. Interestingly, for both Romi at PensionBee and Jason at Starling Bank, it also pivots on fintechs delivering on a commitment to consumers that stretched beyond providing products into improving consumer engagement and understanding of financial management. By using customer data to deliver targeted notifications and modelling of financial outcomes, both Starling Bank and PensionBee are directly addressing financial inertia and building brand loyalty at the same time.

This in turn reflects a broader trend that is particularly pronounced amongst Generation Z and Millennials: the rise of ‘conscious’ consumerism. Using this to forecast consumer need had led Mihai at Moneymailme to introduce a real-time charity micro donation feature that enabled customers to react to global appeals by donating as little as $1 and then publicise the cause (and their donation) on social media. Connecting to such trends provided an important route to growth and one that fintechs provided a useful means of forecasting.

While the opportunity to reset customer relationships presents a huge opportunity to build trust, all of the panellists agreed that with forthcoming GDPR legislation, more had to be done to empower consumers to take control of their data. Failing to do so could result in consumers opting out of sharing data with third parties, leaving fintechs at risk of failing to deliver on their initial promise.

In wrapping up our session, the panel agreed that at the heart of these challenges is the ability to create then sustain excellent customer experience, which requires partnership between fintech and heritage providers. This in turn requires a collaboration that can only be successful if there can a meeting of culture and shared purpose (echoing our white paper from earlier this year).

It was an excellent session and brought our The Financial Services Forum to an end for 2017. We very much look forward to our 2018 sessions and in meantime, thank you to all the panellists.