The Consumerization of Financial Services Technology

Financial services’ customers demand consumer-grade technology. Here’s how to respond.

Consumerization of Fintech
Half of all smartphone users check their phones less than five minutes before going to sleep at night. Almost two-thirds check again within five minutes of getting up the next morning.1

Consumers have become dependent on their personal IT. And they expect the same ease of technology use and access from their bank, insurance company or advisory firm.

But many financial services companies struggle to deliver the consumer-grade technology their customers demand. While 90 percent say digital technologies are disrupting the industry, less than half believe their companies are adequately preparing.2

Figure 1: Digital-Enabled Services
What consumers want isn’t slick technology for its own sake. Rather, they’re looking for value-added services, from in-context financial advice to real-time help finding discounted merchandise. (See Figure 1.) Increasingly, these capabilities will be enabled by innovative IT.

Finance to Go

Bank, insurance and advisory-firm customers have gone mobile. One-third of consumers with a bank account — and more than half of millennials — interact with financial services companies through mobile websites and apps.4

But companies that simply mobile-optimize their website aren’t scratching the surface when it comes to mobile opportunities. And that leaves them vulnerable to fintech rivals offering more innovative solutions.

One fintech app links to bank accounts to promote saving. It monitors the consumer’s spending and then automatically moves small amounts to a savings account without breaking the budget. The consumer is automatically protected against overdraft and can move money back out of savings with a text message.

Another app lets kids (and their parents) track allowances and gift money to help them budget and set monetary goals. In fact, many fintech apps help customers monitor spending, improve budgeting and track credit scores.

Other apps compare credit-card features, help with mortgage research and enable loan applications. At a minimum, financial services companies should leverage apps to maintain contact with consumers — providing real-time transaction updates, monitoring potentially fraudulent activity, and cross-selling targeted products and services.

I, Chatbot

Another emerging way to connect with consumers is through chatbots and robo-advisers. In fact, roughly three-quarters of consumers are willing to accept automated financial advice without human input. (See Figure 2.)

Figure 2: Computer Generated Advice
A growing number of companies are automating live chat for customer support to reduce costs and deliver a better experience. Chatbots can provide contextual responses to customer questions, recognize when a customer is having trouble and seamlessly hand off the conversation to a customer service representative. One financial services company is using the approach to handle 27,000 calls daily — and save $32 million a year.6

Robo-advisers take automated customer contact a step further, offering consumers personalized financial guidance. The information they provide can cover portfolio planning, asset allocation, risk assessment and more. Because they’re significantly cheaper than financial professionals, robo-advisers can save costs over time — savings that can be passed to consumers, opening investment opportunities to a broader base.

Some financial services companies are combining human and automated wealth advice for a “hybrid robo” approach. In fact, these hybrid robo-services will manage more than 10 percent of all investable wealth by 2025.7

Financial Technology Is the New Black

As IT becomes the new fashion accessory — wearables makers will sell 323 million devices, including 67 million smart watches, in 20178 — companies can leverage the technology to deliver new value. Wearables essentially extend smartphone functionality to a more persistent and convenient device.

One promising application is payments, allowing users to purchase products or services with a gesture. Consumers can also use wearables to receive personalized promotions, view account balances, locate nearby ATMs and branches, and get real-time alerts of spending-limit thresholds. Other potential uses include biometric authentication for ATM access and banking by voice command.

Wearables aren’t the only new financial services touch point. As cars become more connected, companies are developing solutions to let drivers and passengers make in-car payments, completing transactions using card data stored in their e-wallets.

Getting to Know You

Yet the greatest consumerization of financial technology will involve IT that consumers experience without necessarily seeing: actionable analytics and cognitive computing. The ability of banks to provide real-time mortgage advice or in-context help with car buying depends on up-to-date customer information, location sensors, and other big data and Internet of Things (IoT) innovations.

Nearly half of financial services customers want relevant information and advice as they go about their daily lives. But in return for sharing their data, they expect a personalized experience.9

Companies will need to take everything they know about customers, from transaction history to mobile data to social media sentiments, and combine it with cognitive computing to automate the analysis of thousands of data points in near real time. Instead of segment marketing, they can do true one-to-one marketing. Instead of simply offering a service, they can deliver the right service in the right place at the right time. That’s the kind of consumerization of IT that financial services customers want.

1 “2016 Global Mobile Users Survey,” Deloitte, 2016
2 “Digital Transformation in Financial Services,” Deloitte University Press, November 2016
3 “2016 North America Consumer Digital Banking Survey,” Accenture, 2016
4 “Consumer Attitudes Toward FinTech,” Mintel, May 2016
5 “2016 North America Consumer Digital Banking Survey,” Accenture, 2016
6 “Conversational AI: It’s a Bot Time for a New Conversation on Customer Engagement,” Frost & Sullivan, April 2016
7 “Hybrid Robos Will Manage 10% of Investable Assets by 2025,” My Private Banking, 2016
8 “Gartner Says Worldwide Wearables Devices Sales to Grow 18.4 Percent in 2016,” Gartner, February 2016
9 “2016 North America Consumer Digital Banking Survey,” Accenture, 2016

Accenture® is a registered trademark of Accenture Global Services Ltd. Deloitte® is a registered trademark of Deloitte Touche Tohmatsu. Frost & Sullivan® is a registered trademark of Frost & Sullivan Corporation. Gartner® is a registered trademark of Gartner, Inc. Mintel® is a registered trademark of Mintel Group Ltd. My Private Banking® is a registered trademark of Avescon AG.

All data cited in this article is used by permission.

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