Fintech and Customer experience
Disruptive Digital Technology
Technological trends continue to force all sectors to open up to constructive developments with their destructive power. The financial sector has also taken its share of this flow. Financial technology architectures, which were previously more closed and elitist, are now emerging in the new era in start-up mode. Thanks to the democratization of data, financial services that were not possible before are growing rapidly and reaching our fingertips. Of course, financial data is definitely sensitive data that must be protected, therefore, there are many rules and standards that FinTech companies must follow. The widespread adoption of microservices will accelerate with the full implementation of personal data protection and security measures determined by governments or regulatory bodies. Trade innovations, cloud technologies, the Internet of Things, blockchain, big data, biometrics, APIs, and artificial intelligence are all actually intertwined and shaping the world of the future right now. Technology is changing the game again, and the success of FinTechs has also become a wake-up call for large companies, which are now much more open to collaboration. The technologies mentioned above have never been so accessible fort he humanity
Long-term banks and large financial spending technologies were generally offered by developers who produced them for a wide range of customers and for a limited number of customers. While the financial technology architecture was protected with high security, it was developed to be closed to the outside in terms of structure.
As we entered the 2000s, Napster shook the music industry to its core. Initially established as a file-sharing network, Napster quickly became a platform for the rapid exchange of mp3 music files. Although Napster was forced to shut down its services in its original form within two years due to legal troubles, it left an indelible mark on the music industry. A technology company had unleashed a disruptive force, and people began to demand different services that would make it easier to access music.
The fintech industry is facing similar challenges and opportunities today. Traditional insurance companies are being disrupted by new technologies and business models. For example, Fintech startups are using artificial intelligence (AI) and machine learning to develop new fintech products and services that are more efficient and affordable. These new players are also challenging the traditional distribution channels of the fintech industry, reaching customers directly through online and mobile platforms.
Startups in Fintech Mode
Similar to the dynamics of the music industry, the driving force in Fintech did not come from within the financial industry, but rather from outside, again with technology.
The 2000s, especially the widespread adoption of smartphones by the masses, created a new and ever-demanding market every year. Technology companies have responded to this demand with more and more advanced phone models with new features. Users, who are slowly getting used to mobile life and everything being at their fingertips, are now expecting new functionalities with each new purchase. Banks and financial institutions have also tried to keep up with this change, but this has not always been easy or products have not been launched on time.
The 2008 crisis can be seen as a turning point in this regard. This crisis has undoubtedly had a negative impact on the financial sector and has increased the search for alternatives. In light of all these developments, for the first time in history, the Fintech movement began in startup mode. Startup companies, formed by just a few people, created a very strong synergy by interacting with each other. Users found these new and dynamic services very attractive, and finally they started to find the alternatives they were looking for. The services and products offered grew rapidly. Now, the term Fintech refers not only to the technology in a field, but also to the startup companies operating in that field.
Introduction to Technological Trends in Financial Services
The Financial Services Sector has never been so open to innovation and dynamic as it is today. You may also have startup ideas in financial technologies, or you may be working in such a startup or financial institution right now.
One of the leading regulators in many different fields, not just Fintech, in the world is the European Union. The European Union has published and continues to update many directives on the democratization of all institutions, the prevention of monopolies, the increase of diversity and accessibility, and the protection of personal rights and data.
The European Union has issued many directives on the protection of personal data. The most important of these directives is the General Data Protection Regulation (GDPR), which came into effect in 2018. The GDPR imposes strict rules on how companies can collect, store, and use personal data. Companies that violate the GDPR can face hefty fines.
In addition to the GDPR, there are many other regulations that FinTech companies must comply with. These regulations vary depending on the type of financial services that the company provides. For example, companies that provide payment services must comply with the Payment Services Directive (PSD2).
Compliance with data security and privacy regulations is essential for FinTech companies. Companies that fail to comply with these regulations can face serious consequences, including financial penalties, reputational damage, and even loss of their operating licenses.
Data security and privacy are major concerns for consumers. FinTech companies that can demonstrate their commitment to protecting customer data will be at a competitive advantage.
The Turkish financial sector is expected to be significantly impacted by PSD2. The Turkish government has already taken steps to implement PSD2, and a number of Turkish banks have already begun to offer open banking services.PSD2 is expected to have a positive impact on the Turkish economy by promoting competition, innovation, and financial inclusion.
The financial sector is undergoing a major transformation driven by innovative technologies like artificial intelligence, big data, and blockchain. These technologies are enabling a new generation of financial technology (fintech) startups to emerge and disrupt traditional financial institutions.
Fintech startups are focused on making financial services more accessible and affordable for everyone. They are developing new products and services that are easier to use, more convenient, and often cheaper than traditional options. For example, some fintech startups offer mobile banking apps that allow users to manage their finances anytime, anywhere. Others offer online lending platforms that make it easier for people to borrow money.
The rise of fintech is also having a positive impact on the financial system as a whole. By increasing competition and innovation, fintech is helping to make the financial system more efficient and inclusive.
Benefits of Fintech:
· Increased access to financial services: Fintech is making it easier for people to access financial services, even those who have been traditionally excluded from the financial system.
· Lower costs: Fintech startups are often able to offer financial services at lower costs than traditional institutions. This is because they have lower overhead costs and can leverage technology to automate tasks.
· Greater convenience: Fintech products and services are often more convenient to use than traditional options. For example, mobile banking apps allow users to bank anytime, anywhere.
· Improved financial literacy: Fintech startups are also playing a role in improving financial literacy. They are developing educational tools and resources that can help people make better financial decisions.
The Future of Fintech:
Fintech is still a relatively young industry, but it has the potential to revolutionize the way we manage our finances. As fintech technologies continue to develop, we can expect to see even more innovative products and services emerge.
Fintech companies place their products in cloud technologies. Fintech companies can access large API data via the cloud as if it were in their own database. Many APIs are already available. WALLET API offered by Google provides access to Google wallets. Technology giant APPLE payment, touchId, FaceId, Apple Pay etc. offers API and SDK to developers.Whether there is innovation in every field. Facebook does not produce content, top hotel service provider Airbnb owns no products, and transportation provider Uber has no vehicles.
Essentially it's all about customer trust. A customer experience enriched on the basis of customer focus is important in every field, and it is also of critical importance for Fintech companies to follow the needs of customers and take them into account at all stages, including the development of products or the provision of financial services.
Much has been said about how Fintech can transform people's jobs with different high-tech approaches such as artificial intelligence. Fintech is actually all about relationships with customers. Ultimately, this industry is a consumer-centric reaction to banking that does not innovate and does not put the customer first. Providing a customer-specific and seamless business scenario can be a great advantage for both service providers and customers in the long run.
Banks may be late in adapting to the needs and expectations of young populations. This is because traditional companies fail to see the use of a technological revolution early or adapt to it too late. Fintech companies are aware that there is a great opportunity for them in places where banks are weak, as long as they can offer customers what they are looking for in a banking service.
The role of ARTIFICIAL INTELLIGENCE and MACHİNE LEARNING in customer experience
The use of artificial intelligence and machine learning is also increasing in the financial market, thanks to its extraordinary benefits such as more efficient processes, better financial analysis and customer engagement. AI tools and machine learning also present tremendous opportunities.
Artificial intelligence-based financial solutions focus on the important needs of the modern financial industry, such as better customer experience, cost efficiency, real-time data integration and advanced security. The adoption of AI and the integrity of its applications also enable the Fintech industry to create a better and more engaging environment for its customers. According to a study by research group Forrester, around 50% of financial services and insurance companies are already using AI globally. Automation also helps the Fintech industry deliver better customer service and experience. Financial customer-facing systems such as AI interfaces and chatbots can provide useful advice while reducing staff costs. Industries that use AI and MI can also have many opportunities to reduce human errors and improve customer support. Fintech companies and financial institutions are investing heavily in artificial intelligence and machine learning to detect and prevent fraudulent transactions. Fintech companies can be said to be one of the most accurate sectors where artificial intelligence and machine learning innovations have a great future due to their enormous number of transactions. AI and machine learning are increasingly used in the Fintech industry. Smart wallets can learn and monitor user behavior and activities, thus providing appropriate information for spending. In the developing world, Fintech companies use AI tools to profile their customers based on risk analysis or categorize them through data analysis and similar behavioral patterns. Predictive analytics is another competitive advantage of using AI tools in the financial industry.
Fintechs and Customer experiences
Many fintech organizations have emerged to make financial services more user-friendly. These fintechs, which emphasize convenience and accessibility, have reached millions of users and their market shares are growing every day.
· Monzo : Makes everyday financial transactions easier to manage
Monzo is a popular UK-based banking app founded in 2015. It reached 1 million customers in just 3 years. It eliminates many of the hassles of application processes that must be used to manage clients' traditional finances. The application also informs you about your payments from each account. So you can always track any direct debit or fraudulent charges. It provides a summary of the entire payment and separates expenses by purchase type. Transfers to Monzo accounts can be made with a few taps. The Manzo team adds new features and updates almost weekly that make account management more flexible and convenient.
· Transferwise : Fast, Easy and Transparent international money transfers
Transferwise started the app with the aim of being the go-to solution for international money transfers. It offers services that are up to eight times cheaper than a traditional bank, thanks to its technique of using two local transfer agents instead of a single international transaction. Unlike many other money transfer solutions, TransferWise'ib fees are completely open and announced in advance. For example, when transferring from British Pound to Euro, the fee is only £0.80 and 0.35% of the transfer amount. dIf you want to transfer a thousand pounds to euros via bank transfer, you will pay £4.29 for this.
· Moneybox :New Investment Area
For many people, investing seems like an inaccessible field of practice that only works for knowledgeable people. Moneybox is a micro-investment application that encourages people to save money by automatically rounding up their card purchases and investing their savings into stocks. Users can also deposit additional money to their accounts regularly or all at once. Moneyybox can be used within 10 minutes. By creating an easy-to-use and mobile-first investment platform, the Moneybox team has designed an almost flawless digital customer experience.
· RobinHood : Robinhood is a commission-free stock and cryptocurrency trading platform.
Users appreciate the ease of use and the ability to trade without traditional brokerage fees. However, Robinhood has faced scrutiny for its business practices and communication during market volatility. Robinhood is a commission-free investing app that offers personalized investment recommendations based on user preferences and risk profiles. Robinhood uses machine learning algorithms to recommend stocks and other investment products based on users’ investment history and portfolio. Additionally, Robinhood offers personalized notifications and alerts to keep users informed about market news and investment opportunities.
· Square: Square provides various financial services, including payment processing, business loans, and the Cash App for personal finance.
Small businesses and individuals appreciate the simplicity of Square's payment solutions. Cash App users value features like peer-to-peer payments and Bitcoin trading.
· Revolut : Revolut offers a range of financial services, including currency exchange, global spending, and cryptocurrency trading.
Users like the ability to spend and transfer money globally at competitive exchange rates. Some customers have praised the user-friendly app and the option to hold multiple currencies.
· Stripe : Stripe is a payment processing platform that enables businesses to accept online payments.
Businesses appreciate Stripe's developer-friendly approach, seamless integration, and robust security features. Users often highlight the platform's reliability and efficiency. Stripe uses data analytics and machine learning to deliver highly targeted and personalized marketing messages to customers based on their transaction history, spending behavior, and preferences. This approach enables Stripe to provide customized offers and promotions that increase the likelihood of conversion and boost customer engagement, loyalty, and revenue. At Engage, we have an integration partnership with Stripe and this means you can keep track of your customer billing data and use it to power your marketing campaigns on our platform.
· Adyen : Adyen provides payment solutions for businesses, including online, in-app, and in-store payments.
Merchants value Adyen for its omnichannel payment capabilities, global reach, and the ability to accept various payment methods. The platform is known for its reliability and speed.
· Plaid : Plaid offers APIs that connect fintech applications with users' bank accounts to enable features like account verification and transactions.
Fintech companies appreciate Plaid's ability to streamline user authentication and transactions. Users benefit from the convenience of connecting their financial accounts to various apps securely.
· Paystack : Pay stack is a payment gateway that enables businesses to accept payments from customers using various payment channels. They take personalized marketing to the next level by segmenting their customers based on their payment behavior, shopping history, and other factors, and using this data to create personalized offers and campaigns
· Credit Karma : Credit Karma is a free credit monitoring and financial management app that offers personalized recommendations and insights to help users improve their credit scores and manage their finances. Credit Karma uses personalized marketing to encourage users to take action to improve their financial health. For example, Credit Karma offers personalized credit score and credit report monitoring, as well as personalized recommendations for credit cards and loans based on users’ credit profiles.
· NerdWallet : NerdWallet is a free financial advice website that offers personalized recommendations for credit cards, loans, and other financial products. NerdWallet uses personalized marketing to help users make informed financial decisions and save money. For example, NerdWallet offers personalized recommendations for credit cards and loans based on the consumer data obtained from their customers and this in turn builds trust in their relationship, increasing conversion in the process.
The experience extends beyond a PC or mobile phone screen. Customer experience is the sum of a person's interaction with all the small touch points the product or company has. Companies get too attached to the product or service they offer and lose sight of people. Routinely reviewing and discussing the customer journey, sharing tools and insights about customers, involving people from other departments in the user research process, and informing customer testimonials and accolades internally to help maintain the real thing. Customer feedback should be allowed to lead the way. The company definitely has an idea about what customers want. However, if he has never received their feedback, there may be needs, impulses, and challenges that he has not taken into account. Financial institutions can now provide better financial services to their customers with excellence.
Resources
Raj ,Ved(2020) How AI &Machine Learning is infiltrating the fintech Industry ? Customer Think https://customerthink.com/how-ai-machinelearning-is- infiltrating-the-fintech-industry
Forrester( 2020) The New normal for Customer Experinece
IDC(2019) IDCFutureScape : WorldWide Artficial İntelligence (AI) Predictions
Blue Turtle Technologies (2020) Digital Customer experince in banking . 2020 Outlook
Aquino ,judith (2018) fintech’s Next Obstacle : Mastering the Customer Experience https://www.1to1media.com/technology/fintech-s-next-obstacle-mastering-customer-experience
