Gone are the days when people stick with trusted big name brands in the banking industry. Whether it is a mortgage, a credit card, or investment services, customers in the past loved dealing with companies they were familiar with because it gave them a sense of security. In the digital world, consumers’ tastes, preferences, and habits have changed. Today, customers want the best products at competitive prices. They’re not afraid to deal with new companies they haven’t known historically because they now can find genuine reviews, from expert opinion formers and other trusted sources within their networks, on digital platforms.
In short, FinTech firms have an equal opportunity in today’s world of disruption. They’re beating traditional financial services firms that fail to transform, innovate, and meet changing customer needs.
To avoid being knocked out of the ring, established financial services firms must embrace agile approaches and adopt lean-agile principles and practices. Existing processes, systems, and organizational structures that stand in the way of adoption must be ditched. That’s the only way they’ll survive and thrive in today’s fast-paced, consumer-first, innovative financial landscape in which consumers are increasingly financially and digitally literate.
Consider the case of Quicken Loans and its digital offspring Rocket Mortgage launched in 2016. The new entrant in the home loans market funded $7 billion in closed loans through in its first year to help push up Quicken Loans’ loan book by just over 7% of to a record-breaking $96 billion. If Rocket Mortgage was a lender in its own right, the business it did in 2016 would place it among the top 30 mortgage lenders in the United States. The company’s CEO Jay Farner credits its success to the fact that the entire team works towards the common goal of making life radically simple for clients through innovation and passion. That’s agile in a nutshell.
Agile adopters such as online-only U.S. banks MovenBank and AllyBank are providing more competitive financial products and a better customer experience than traditional brick-and-mortar banking institutions.
FinTech companies AliPay and WeChat Pay have crated massive scale in China and are now expanding outside their home turf. The former, a digital wallet operated by Alibaba-owned Ant Financial has half a billion Chinese customers and represents 51% of the Eastern giant’s $11 trillion internet payment market. Alipay is also slowly finding its way into other markets in Asia. WeChat Pay, the Tencent service that piggy-backed on the wildly successful messaging app WeChat, accounted for 40% of the Chinese payments market in 2016 and has now established itself in Malaysia.
Traditional financial services frontrunners need to take note of these trends if they’re to maintain their leadership positions. To survive, their businesses need to innovate – and do it fast. Their best bet is to embrace agile and make it a competitive advantage.
About the author(s)
Ramana Murthy Magapu
Murthy is a Senior Vice President and Head of Operations for Banking, Financial Services and Insurance (BFSI) platforms at TCS for global markets. In this role, Murthy is responsible to ensure a discipline to draw the best synergies from various TCS Units to deliver digitally enabled transformational platform experience to our customers. Prior to the current role, Murthy was head of Banking and Financial Services (BFS) industry vertical at TCS for North American markets. Murthy has an engineering degree in computer science. He attended several management programs in India and abroad including TGeLS (Tata Group eMerging Leadership Seminar) and AMP (Advance Management Program) from Harvard Business School.