When compared to traditional banks, fintechs have been more successful in engaging with the always on consumer of today. Unencumbered by legacy infrastructure, agile fintech firms are more able to innovate and experiment to meet the evolving needs of customers. They are also better at meeting the emotional needs of this consumer, such as feeling cared for, making it easy, and being empowered.
Last year, TCS conducted a research project titled Decoding Millennials’ Digital Banking Needs that provided interesting insights about the expectations of millennials/Gen Y regarding the banking and financial services industry. In particular, it explored how fintechs appear to be more adept at meeting the underlying, perhaps unspoken, emotional needs of this group.
Heres one of the most insightful comments that I found in the study from a millennial when asked about how they picture the future of banking There is no bank. IoT has spread to an extent where my identity itself makes me a valid currency. This offers a perfect glimpse into the future that banks should be preparing for. The era of brand-loyal customers is long over. Instead, banks will compete in the future by providing relevant and innovative customer experiences that meet their emotional needs.
In this way, banks will come up-to-date with their peers in retail, car sharing and other industries that are providing real-time, instant gratification. Today, Gen Y thinks of current banking services as limited to money, savings, transfer, and investment. What banks need is a distinct strategy to engage with digital native customers and redefine services that align with their mental make-up and expectations.
For example, recently, Amazon made news by creating a physical grocery store, Amazon Go, where customers can experience a completely frictionless shopping experience, using their identity as currency.
Capital One’s partnership with Alexa is another step in that direction. Amazons virtual assistant Alexa can be your banking assistant too. Capital One introduced a new functionality for Alexa-powered devices that allows consumers to do their banking by voice, including checking balances, reviewing transactions, making payments, and more.
Another example is that of the fintech player Qapital and its use of gamifying the savings experience. Qapital’s savings service enables customers to save money toward specific goals in a secure manner. By setting up rules to trigger transfer of small amounts for big goals, Qapital turns routine activities into an occasion to save. The service also offers a gaming feature If This, Then That (IFTTT) which allows users to reward themselves with a save every time they reach a goal.
In the future, a customer might be able to connect fitness goals from their wearable to a savings goal without any manual intervention. IoT and their identity works in tandem to create this experience. If this customer wears IoT enabledNike running shoes during their workout, it is conceivable that Nike may even contribute to the customer’s savings account to encourage their efforts and build brand loyalty, without any effort on the part of the customer.
The future of banking that meets the needs of millennials will fundamentally alter the rules of engagement. It will no longer be about just the efficiency of the transaction but about the emotional value created by the bank, such as creating the feeling of being in power, accomplishing goals, fulfilling dreams or being a part of a cause they care about.