Only a few years ago, if you thought about personal finance, you thought banks – the go-to for everyday banking, insurance, mortgages and more. But cut to 2021, and the financial spotlight has quickly been taken over by fintech. Now it seems like it is Banks vs fintech.
The rise of fintech it seems is only just beginning. According to a study by Google, the worldwide digital financial services market is set to hit $786 billion in 2021, and in Singapore alone is set to hit $130 billion. Should such exponential growth be reason enough for banks to be worried?
The truth is that while fintech may not yet be a competent challenger for banks now, it is indisputably a quickly growing category. But instead of viewing fintech as a threat, banks should view fintech as an opportunity to learn from them – and maybe even beat them at their own tech game.
Forbes in a recent article claimed that one solution banks should adopt is CRMs. But as we’ve repeatedly said, and as any modern marketer should already know – CRMs are a near-relic of the digital age. With data integration capabilities that have fallen far short of the growth of customer touchpoints and other shortcomings that we’ve expounded on, CRMs would only serve as a quick and ineffective fix. What may be more prudent, would be a more modern solution such as a CDP, that could lead banks into the world of data-driven strategy and give them a chance to compete.
But before we delve into strategies, let’s gain insight into why fintech is on the rise to better know the battlefield.
1. An increase in adoption of mobile & internet
The first and most obvious reason for fintech’s surge is simply the increased adoption of smartphones and the internet. Studies show that in 2019 alone, 91 million smartphones were purchased in Southeast Asia (for perspective: think of it as the entire populations of Malaysia and Thailand getting new smartphones).
As the internet and smartphone usage has evolved, so has the way we interact with money. With online wallets, investment portals and more, fintech has allowed people access to more utilities simply from a screen – with almost no paperwork and without ever having to visit a physical location. Banks have not kept up with innovation as well as fintech businesses that were born in a mobile-first generation, and utilise key concepts like data and customer experience.
3. More Involved Customer Experience
As fintech businesses operate online, they are able to access data and design customer experiences that are more customised and convenient. Banks, on the other hand, levy a one-size-fits-all approach to every customer.
How can banks grab the tech opportunity?
If banks are to take an early advantage they must begin and quickly master a data-led digital transformation and begin to deliver more personalised and valuable experiences to their customers. Fortunately for banks though, their very purpose of existing makes them veritable treasure houses of their customer data. A priceless resource, and a huge lead for them over fintech players.
But data isn’t useful by itself, unless well utilised – with the right tools to analyse and activate it. CRMs that are based on technology that’s at least decades old cannot possibly be up to this task.
Instead of simply recording and collating transactional data as CRMs do, banks must maximise their advantage over fintech, by activating their massive databases, in conjunction with new behavioural data from their multiple touchpoints.
A CDP can help banks unleash their potential by connecting and activating their data effectively. Which could give them a leading edge in several areas, such as vastly improving banks time-to-action in implementing insights derived from data. Not to mention, a world of other possibilities that a CDP could realise.
Turn the Customer Journey into a Better Customer Experience
Another advantage that banks already possess is a whole suite of solutions under one roof, as opposed to fintech businesses that operate as specialised vendors. While this is a potential strength and a massive game-changer – it remains under-utilised as departments work in silos in banks. Banking wouldn’t usually share data with insurance which wouldn’t share with investments, nor to brand marketing and so on. With a CDP, data can be tracked across various touchpoints – automatically linking multiple identities across departments such as mortgages, insurance, investments – to build a single customer profile.
Customers today expect a richer, more customised experience – driven by the popularity of super apps in Asia like Grab, Gojek and Alipay – that provide a smoother and more comprehensive ecosystem. For banks to be able to match up to this expectation, they must be able to build a single customer view from all the data sources available.
A single customer profile can allow a customer to be offered solutions that are tailored to their finances and their behavioural data, or even to afford valuable experiences that track along the customer journey. Take for example possibilities like if a customer was recommended a bank account upon graduation, or suggesting a family insurance plan when they get married or starting a retirement plan five years into his career. Creating a single customer view could help banks realise a more involved usage in their customers’ lives through customer service interaction, ads, email marketing or direct mailers even before the customers realise the need.
Safe & Secure Flow of data
Banks are infamous for departmentalisation of information – but they justify it as a method to keep sensitive information secure. By utilizing a CDP, banks could overcome this hindrance to let data flow more safely and securely between departments, and afford a more seamless customer experience.
Imagine if a customer were to apply for a credit card – how relevant data could instantly be pulled, instead of furnishing details that banks already possess. Or if loans could be approved or rejected within minutes instead of days or weeks, based on the customer’s assets and behavioural history.
How does this work? A CDP allows data to be seamlessly collected from touchpoints like website, apps, etc. and automatically cleansed and sent to wherever it is needed – from other teams or to other integrations. And what about data privacy concerns? Utilising a CDP would allow banks to flexibly adapt all data governance and security rules, to store sensitive information based on those regulations.
All this with complete control over access or data visibility and sharing – so it’s possible to undertake every task a modern marketer might need without risking losing control or raising concerns of your security team.
Banking on a CDP
Banks choosing to upgrade with a CDP could amp up the innovation needed to stay well ahead of fintech – in addition to being a solution for winning the trust of customers, as well as bumping up their bottom line.
The first step is choosing the right CDP and the right partners to accelerate their digital transformation journey with – and always stay ahead in the race for the future of finance.
Interested in pursuing an opportunity worth $786 billion or want a demo of how Meiro CDP can help your banking or finance-related business? Give us a ping. We’ll be happy to chat with you soon!