A strategy for competing in the age of fintech

Credit unions are fully aware that there is a new kid in town and he isn’t playing by the traditional rules. His name is fintech. In the last five years, the global investment community has been ramping up investments in technology start-ups that are targeting the financial services industry with extremely disruptive offerings.

There are many different forms of fintech innovation aimed at a number of traditional banking functions, including payments, lending and personal financial management. Regardless of the service targeted, there are two key weapons fintech start-ups typically have in common in their arsenal—simplicity and agility.

• Simplicity. Many fintechs focus on democratizing complex services by offering an extremely easy-to-use online service at market-beating rates. Unlike traditional financial institutions, fintechs tend to focus on one specific product or service.

• Agility. Another differentiator for fintechs is speed. These start-ups look for opportunities to dramatically streamline business processes through innovation, digitization and cutting out human involvement wherever possible.

A good example of how fintech leverages simplicity and agility is QuickenLoan’s Rocket Mortgage. This service enables customers to upload all of their mortgage application data directly to QuickenLoan’s system, eliminating the need to talk to a loan officer. The system then automatically analyzes the application as an underwriter would do and, if accepted, offers real-time rates for the customer to lock in. Rocket Mortgage reduces the mortgage application process from weeks or months, traditionally, to 10 minutes or less.

Taking stock of mobile capabilities is key

Fintech players like these are forcing financial institutions to rethink how they do business. One area in particular that requires intense focus is mobile services, a favorite delivery channel for fintech services.

In comparison with other industries that send high volumes of customer communications, financial services organizations have been leading adopters of mobile technology. Despite this, financial institutions are under pressure to continue to review their mobile operations and business models, checking them against new market realities and building future-proof platforms that are agile enough to keep up with evolving technology and competition.

Mobile technologies are also shaping consumer expectations about how organizations should engage with them. E-commerce and technology companies such as Amazon, Apple and Google are leading the way in streamlining the customer experience, realizing it results in better engagement, more up-sell and cross-sell opportunities, higher brand advocacy and lower customer attrition rates. Costs are typically reduced as well, which means fewer complaints, lower service needs and reduced acquisition costs.

Credit unions and other financial services organizations should give careful consideration to the many different ways in which mobile engagement is taking place. Popular options include mobile banking (whether as a native app or as a mobile-optimized web page), mobile payments, the use of mobile as a security device and using mobile push messages through an app. There is particularly high interest in mobile push messages, and most major financial institutions are expected to implement this technology in the next five years. Mobile push messages drive higher engagement and can be interactive when, for example, suspicious transactions require a quick response from the customer.

Consider the benefits of a CCM strategy

When developing mobile customer communications as part of a transformed business process, it is important to ensure it is developed in the most agile way possible. This will not be the result if an organization digitizes its business processes and then hard codes its customer communications in the app itself or develops additional, proprietary database-driven platforms that involve costly IT resources to adapt or maintain.

A better approach is to leverage a customer communications management (CCM) platform that marries messaging templates with data from a system-of-record such as a CRM or ERP and pushes personalized messaging out to any delivery format required. This strategy drives agility by enabling the easy repurposing of content for virtually any channel, including integrating directly into a mobile or web app, and it supports tracking and archiving customer interactions. It also enables business users to take full control of message development and management, eliminating the need to involve IT resources.

Other benefits of a CCM strategy include the ability to accommodate customer channel preferences, meet compliance requirements and enhance brand awareness. Moreover, for enterprises that use a corporate-wide communications infrastructure to centralize all of their communications, it will be easier for customer service representatives and front-line business users to gain a full understanding of what has been communicated with a specific customer. Marketers and customer insights professionals can leverage this data as well for better up-sell/cross-sell promotions and more relevant communications in general.

Fintech is pushing the envelope when it comes to relevant customer communications. However, implementing a flexible and agile customer communications management strategy, credit unions and other financial organizations can meet the fintech challenge and achieve enhanced internal processes and improved customer experience along the way.