What do Blockbuster, Vine, and Compaq have in common? The answer lies at the heart of every business decision ever made—the need to evolve and stay relevant or cease to exist.
Some years ago, one savvy business person said it best, “What’s most dangerous in business is to not evolve.” Today, that same person has a net worth of over $200 billion US dollars and has revolutionized the retail industry as we know it. So maybe he got a few things right and, yes, I’m talking about the one and only Jeff Bezos.
But what does all this have to do with the banking industry? Well, aside from 74% of surveyed banking executives believing that tech firms, such as Bezos’ creation Amazon and Google pose a significant risk to the financial industry status quo. It’s a lesson that even household names aren’t safe from the evolutionary curve. So, what can financial firms do to stay relevant and even ahead of the market? Let’s look at some of the industry’s evolvers’ strategies and best practices.
Fintech evolvers and how they are changing the industry as we know it
In 2022, over 82% of financial companies state they are planning to focus intensively on their fintech partnerships, showing an overwhelming level of confidence in technology as the future of finance. Meanwhile, 67% would go as far as to say that failure to invest in a digital future means that there won’t be a future to consider.
Yet, despite this positive sentiment, it’s essential to remember that 53% report failures in keeping up with digital expectations and missing targets, while 73% aren’t making a return on investment. The question remains—how to evolve and succeed? Let’s take a look at some of the success stories.
Card goes cardless. When the world’s two best-known card providers added fintech firms to their portfolios in deals that totaled in the billions, the world took notice and not just because of the sheer value. This act of confidence indicated that fintech solutions are the future, and smart investments could be the making or breaking of a company.
Out-of-branch and onto mobile. Without a doubt, the coronavirus pandemic accelerated the movement of bank branch closures. However, savvy companies didn’t just place their funds into web services. Instead, they looked to mobile, a format that counts over 2.3 billion users today and provides access to even more users, expanding its market influence exponentially.
Seamless automation. Alongside self-service checkouts, consumer demand for self-service financial products is rising too. People are seeking information and answers faster than ever before. Integrating digital tools can help automate processes and develop increased customer satisfaction, which, for example, explains the appeal of digital-only banks that often deliver services quicker than their brick-and-mortar counterparts.
What do the evolvers have that others don’t?
If we were to take a glance over the last 200-300 years of banking, we’d see a lot of similar characteristics and services that we currently see today—safekeeping of valuables, money management, loans, investments, etc. But does that mean the evolution of the banking sector has been stagnant, far from it? Conversely, in my practice, I’ve noticed that companies that display certain traits tend to be able to capitalize more on market needs and adapt to suit them.
Keep it simple. Complicated solutions are just that, complicated. Instead, when it comes to fintech, the more straightforward and understandable for the end-user a solution is, the better. Take PayPal, for example. It was originally intended as just a way to transfer money. Now, it’s a firm with a value of over $216 billion.
Focus on keeping it in line with the overall strategy. While the old adage is true, and you shouldn’t keep all your eggs in one basket when it comes to digital transformation, there’s a lot to be said of focusing your energy on one solution that fits neatly within your company’s objectives. Having an integrated plan cuts down on costs and ensures a consistent approach across the company.
Remember, in 2022, data is king. That’s why it’s essential to integrate data analysis and to learn across your business. By understanding your market fit, and customer needs, you can better adapt your strategy to evolve to market demand. For example, by leveraging the data of borrowers, you can better adapt your business profile and offering to suit actual market needs at the moment.
Impersonalized service is out. Tailored is in. From the first moment you set foot inside a branch all the way to opening the company’s app, the modern consumer expects a tailored customer-service experience that acknowledges them as an individual. Long gone are the days of stuffy suits and lines waiting to be served. The modern experience is quick, tailored, and ensures the user is treated like a human at every part of the process.
Ensuring automation where possible. Fast and functional in the future. Unfortunately, this doesn’t always go hand-in-hand with a human-to-human experience. That’s why many companies are choosing to make the compromise and automate what can be automated in the most human way possible. For example, some firms choose to scan and process documents automatically to leave more time for customer service or more intensive investment management requirements.
Pearls of wisdom—what comes next?
The message—evolve or cease to exist—is clear. But what does this mean for companies in practice, and more importantly, where should they start? When it comes to digital transformation, this is an inside-out procedure, which means transformation has to start at the heart of the company. Once it’s established there, solutions can be more easily rolled out and done so effectively.
At the same time, it’s essential to remember that one should not develop for development’s sake alone. Instead, like any business decision, it should be based on actual market need. For those moving forward in the evolution process, my advice is to explore your value proposition against the backdrop of the market and explore just how it can be adapted to meet consumer demand now and in the future.