How Bank CIOs Can Get Ahead of Fintech’s Disruptions

“Nonbanks Are Changing the Rules of Digital Banking” – Gartner 2015

After the healthcare industry, the banking industry is currently the second biggest target for disruption. This disruption is by Fintech – technology that has moved transactions online. “Golden Sachs estimates that upstarts could steal up to $4.7 trillion in annual revenue and $470 billion in profit, from established financial services companies.”

The era of banking and investment services offered only in branch outlets is certainly well behind us. Most traditional banks have over the recent years come to appreciate the potent threat that nonbanks pose to their future profitability. Unlike them, these upstarts are widely acclaimed for offering simplified and need oriented financial services that are characterized by aggressive pricing.

Traditional banking establishments are increasingly finding newer methods of engaging and completing monetary transactions with their clients. Banks must embrace digital banking in order to effectually thwart this worrying trend. Banks ought to fast track failsafe digital initiatives to stay afloat in this industry.

First and foremost, banks need to identify client pain points, and ultimately determine the most feasible means of addressing them using Fintech. Here are a few ways for banks to address common pain points to stop nonbanks from getting a greater and greater section of your market share.

1. Create Digital Service Channels

The most important thing that banks can do to protect their market share is to broaden their channels of customer engagement to leverage Fintech with online banking and even mobile banking services. Digital banking is meant to be convenient and frictionless by integrating innovations that make it possible to conduct banking transactions anytime, anywhere. An example of one such innovation is e-signatures and customers are coming to expect them. According to a Gartner analyst, “the banking and credit union attendees I spoke to at this week’s Digital Banking Summit all agreed that e-signatures are a critical part of improving the customer experience and ensuring the banking industry keeps up with customer expectations for intuitive, convenient and easy to use banking experiences.”

2. Streamline Payment Processes

Some of the newest innovations in banking and investment services innovations offer streamlined payment options. These innovations increase transaction speed and make it easier for consumers and retailers to conduct business. Companies such as Squire, Dwolla and Peri all offer new and innovative methods. Square Inc. produces software and devices that allow individuals to accept debit card payments using a smartphone or tablet. Dwolla is a company offering online payment services for individuals and companies that is a similar concept to PayPal but with less bottlenecks and lower transaction fees. Peri combines the functions of a payment gateway with advanced image and audio recognition software to enable users to quickly buy the things they see and hear in print, TV and on the radio.

3. Provide Automated 24/7 Customer Service

As Fintech pushes transactions online, a lot of your customers are going to get confused when interacting with your online interface. How do they transfer funds between accounts? How do they order a new checkbook? You need to be able to provide automated 24/7 customer service so that you’re there to hold their hands at any hour, on any day. The most sophisticated way to do this is to use an online guidance platform that, when overlaid onto your website interface, guides users though common processes. These platforms use onscreen contextual guidance to guide users step-by-step through processes using walkthroughs, until they’ve completed specific tasks. For example, if a user has to transfer funds between accounts, you can create a walkthrough to explain to him/her step-by-step exactly how to do it.

Nonbanks are a threat to banks because they deliver needs-based solutions at an aggressive price point. Make sure that you remain competitive by accelerating digital business initiatives and improving customer experience by tailoring your services to customer need.

Mark is the Lead Author & Editor of Spectechular Blog. Mark established the Spectechular blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to Product Management.