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Fintech III and what Financial Services can learn from retailers

As we move towards Fintech III, it is important to appreciate that it doesn’t simply bring greater levels of technical sophistication to the financial services industry. It actually promises a truly personal client experience, perhaps even more so than in those simpler, halcyon days before the advent of the web.

That’s because Fintech III has learned a few tricks of the trade from the retail industry, where the use of digital techniques to understand customers – and therefore anticipate their needs to a quite significant extent – has been part of the landscape for several years.

While Fintech I applied most significantly to financial organisations’ back-office and simple web systems and Fintech II helped mainly to inform customer decisions and facilitate applications, the focus of Fintech III will largely be on the need to improve the User Experience (UX) by both personalising and simplifying services and processes. As Huw Thompson, Managing Director, Equiniti Wealth Solutions recently commented: “Fintech III will be characterised by the rising use of digital personalisation. Websites will learn from our previous activities and present information to the consumer that is both highly personal and entirely relevant.”

Retail is detail – and Fintech III has learnt that lesson

In order to understand the potential impact of Fintech III, it is worth looking at the new skills - and jargon – that online retailers have acquired in recent years.

Retailers take terms like ‘Customer Journey’ and ‘Single Customer View’ very seriously indeed, and with good reason. The first of these terms describes the route taken from the first contact between a retailer and a customer, and the various touchpoints and nurturing processes that help to form a relationship between the two.

While the first will plainly inform Fintech III to a certain extent, the second is perhaps more crucial to the financial services industry, as it describes the comprehensive understanding of a customer’s needs, hopes and aspirations that effective data analysis can provide, and reflect in the online and emailed content that they see.

By using the same data mining and analytical techniques, Fintech III has the potential to provide more accurate assessments of each client’s appetite for risk than have ever been possible before.

In addition to using this information to assess investments that clients already hold, it could also be used to suggest the most suitable future investments. 

Plainly, this could provide significant benefits to clients, with the added bonus of helping wealth managers to prove to the regulators that they have all the understanding and oversight of their clients that is demanded by the Know Your Customer (KYC) regulations.

It’s also time to lighten up about the Cloud

While getting to grips with the finer points of UX development, the financial services industry might as well get used to terms such as ‘seamless user experience’ and ‘frictionless login.’

The fact is that consumers now expect their services as well as their personal information to be easily accessible online, whether they are using their PC at home or their smartphone at the railway station.

Naturally, some financial services firms may be fearful of the security implications of ‘frictionless login’, and rightly so. After all, with the proliferation of increasingly sophisticated cyber-criminals, data hacking is a global problem, and few small firms are able to fully protect the information stored on an internal mainframe against attack, whatever the supplier of your firewall may say.

Perhaps surprisingly to some, the answer is in trusting to the Cloud, where client data can be stored, managed and accessed more easily, and where the greater scale and resilience of leading data farms provides the best security – and enables the most seamless, frictionless, personal  UX – that is currently available.


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