Can financial services brands leverage the platform economy?
CONSUMERS today are more connected and have better access to products and services via the internet — which means there’s more trust and transparency in the market.
As a result, consumers want to get the most value from their purchases and are often not concerned about switching brands — this is especially true in the financial services space.
In a study by McKinsey, only 10 percent of purchases in the financial services category were loyalty driven. The remaining 90 percent opted to shop around for the best deal before making a purchase.
This mentality has given rise to the online platform model which leverages technology to connect users with the various providers in the market.
The success of this model is already visible in the retail world where technology giants such as Amazon are leading the market. However, we are also beginning to see this shift in the financial services industry.
According to Deloitte, platforms that offer the ability to engage with different financial institutions from a single channel may become the dominant model for the delivery of financial services.
“By collaborating with platforms, financial brands can reach out to new customers and also retain existing customer,” BankBazaar International CEO Vipin Kalra told Tech Wire Asia.
The fast-track to CX success
Financial services institutions typically struggle to improve the customer experience (CX) they offer because of the way their systems are designed.
Over time, they’ve invested heavily in improving the efficiency and security of their technology, however, the focus has primarily been their middle-ware and back-end solutions.
Their recent focus on CX demands a major overhaul of their front-end systems, which is not only expensive but also time-consuming.
Leveraging online platforms that have been built in the digital-first era to specifically address the pain-points of customers in mind, on the other hand, provides a quick and cost-effective solution.
“Working with these platforms provide a great value proposition for banks as they do not have to invest a huge of time and resources to build solutions from scratch,” emphasized Kalra, who will be speaking about the topic at the Cloud Expo Asia 2018 event in Singapore next month.
However, it’s a common concern that some financial brands may see the shift to platforms as a threat, as they have historically owned the customer relationship and they are not used to catering to customers outside their domain.
However, in order to leverage the many benefits of collaborating with platforms, financial brands need to keep an open mind and invest in building open systems that allow third-party integrations.
Given consumer and technology trends, the shift to digital platforms is inevitable. In fact, it seems as though collaborations between platforms and financial institutions can disrupt the market and win the trust of customers seeking transparency and clarity.