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FinTech insights: What Consumers Want

FinTech insights: What Consumers Want

FinTech insights: What Consumers Want 1024 681 Border Crossing UX

Want to know insights from new FinTech products and services? Well so did we so we went along to the first Techstars FinTech Speaker Series powered by Datamonitor Financial to discover: What Consumers want.

This week François and I were working from London and also attended the FinTech Speaker Series Event with Datamonitor Financial that was being held at the Barclay’s Techstars Accelerator at London Escalator. The talk on that week was: ‘What consumers want’ and as a UXer it is hard to resist! We decided to go along and check it out as not only do we like a good accelerator, have a real interest in FinTech and how it is changing the way we use and view our money. Once I discovered there was free beer and pizza there was no stopping us!

The event itself consisted of three analysts (Daoud Fakhri, Sam Murrant and Bartosz Golba) from Datamonitor sharing their insights into both behaviour and attitudes of consumers in three areas of finance: Retail banking; Consumer payments; and Wealth Management. This was all expertly tied together by Kit Carson, Head of Banking Products at Datamonitor Financial, who really highlighted the salient points and added context from additional research that has been conducted. I loved hearing directly from the analysts. You could really tell that not only did they know their reports, but they cared about the robustness of the information supplied and where you could gain true insight and where you could only make an assumption. By the time we got to the pizza there was plenty to mull over whilst grabbing a slice!

The full deck of slides is available from Datamonitor Financial but here were my key takeaways from the three talks:

Retail Banking – Daoud Fakhri

**Firstly, I must apologise to Daoud for calling you Dale on Twitter – I simply misheard at the start so sorry!**

Daoud expertly took us through the state of play of retail banking through the eyes of the consumer. He shared with us some of the biggest challenges that are facing retail banking and some clever FinTech start-ups looking to change the way we think about and manage our finances.

The challenges for retail banking

38% of Global consumers thinking that their bank do not see their customers as a top priority

  • The breakdown of the retail banking relationship: There is a clear issue with the trust and basic relationship between the banks and their customers. That combined with 29% do not view their interactions with banks as a positive experience and 32% do not regard their bank as forward looking or innovative shows the breakdown between the banks and their consumers. Banks need to start showing that they put their customers first by delivering products and services that meet the needs of their consumers.

 

  • Customers become paralysed by too much choice: The paradox or paralysis of choice from online consumers has been highlighted as an issue across sectors for years. With the damage to the perception of trust between banks and customers it is more important than even for banks to provide customers with what they crave: Simplicity and transparency. It is crazy that 25% of global consumers do not understand the products and services offered by their bank! This coupled with the evidence that by reducing its savings product range from 23 to 5 accounts RBS has seen a 50% increase in their sales. It does prove the age old saying: “Less is more”. By providing simple, clear propositions that are designed for the consumers will increase both sales and trust with the customers.

 

  • Know your customer and their preferences: The introduction of new channels and methods for banking e.g. via mobile, internet or branch, means that banks and FinTech companies need to focus on the different needs of their customers. Whilst there are still clear demographic divides, for example young consumers will be more inclined to mobile banking and less inclined to spend time on their finances, it is important to focus on behavioural commonalities as opposed to demographic commonalities when segmenting your audience and designing your products and services.

 

  • Mobile banking: Mobile banking is not the be all and end all to banking. For example, mobile enthusiasts (people who using mobile FinTech apps daily) are great for cross-selling and up-selling. Yet they are also fickle beasts who are more likely to switch products and services. So, selling to them may be easy but retaining them is hard. Therefore, the best way to retain them is to appeal to their behaviour of day-to-day financial management and remove all effort and friction to them completing these tasks. This is the best way to keep them engaged and also turn them into advocates of your products and services.

 

Consumer payments – Sam Murrant

Sam’s focus was on consumer payments and how advances in technology are changing the way that we interact with our money and transfer it. By understanding the insights from the current methods of payments and the adoption to new methods FinTech companies working in this space can learn who to target and how-to on-board users of new services.

 

The challenges for consumer payments

56% of consumers stated that nothing would persuade them to transfer money using social media.

  • The unequal pace of progress: This is something that we talk a lot about with our clients whose products or services heavily rely on new technological developments or new business models. Technology always develops faster than the consumer or even providers mindset. Think about digital currencies such as bitcoin: currently 4.8% of consumers use a digital currency but 75% said they never would.  Is this because they don’t have the technology to use it or because it is such an abstract concept to them that they can’t engage with it at all?  I would suspect it’s a combination of the two. When it comes to currency, I do believe most people have the attitude ‘if it isn’t broken, don’t fix it’. Does this mean there is no point in trying to change things – well no. It just means that the new platform, currency, application etc has to be better than the old way for people to take it on. Your product or service must solve a real problem that they have and must be better than using cash or a card. Therefore, product and service development in this space is more important than ever – just ensure that you are developing for real world problems, focus on early adopters only and if it gains traction you could have a truly disruptive business.

 

  • Usable is better than novel: When developing a new FinTech product or service there has to be an element of familiarity as well as innovation. When it comes to money people like to feel safe and secure to build trust. This is especially important when developing FinTech. One of the easiest ways to do this is to provide an innovative idea or service but in a familiar way. If it is easy to pick up and use your product you will see early adoption and advocacy within peer-groups. For example the way that Tink, a new app that allows you to track and monitor your spending, uses timeline views and interfaces similar to Facebook and other social platforms means that adopters already familiar with disseminating information in this way are bought in from their first view. It is only by providing useful information in a way that is simple and easy to interact with that you will gain early adopters for your products.

 

  • It’s all about a compelling, value-adding user experience: Well I couldn’t have said it better myself! From the work that we have done with start-ups we know how important it is for early adoption of users. That is why we totally agreed with Sam when explained how critical providing a good UX is when on-boarding new customers. If the UX is good people will not only be able to use it, they will enjoy it. This is key to them telling their friends and family and peers to encourage them to us it too. The best way to get ambassadors from early adopters is a compelling and value-adding experience. But how do you do that? Focus on the key needs of the early-adopters and build a product that works for their top tasks whilst having all the required hygiene factors for FinTech (convenience and security). That combined with continuously adding value by anticipating the changes in behaviour and needs or the user and technological advances mean that you will certainly provide a great user experience that will help on-board new customers and retain the old ones.

 

Wealth management – Bartosz Golba

Bartosz took us through the changing world of wealth management and how insights have changed the way asset management services are delivered. In this world of High Net Worth (HNW) individuals it is key to providing the right technology and information to empower them to use your services and products.

The challenges for wealth management

£7.6bn of assets are self-managed by HNW individuals in the UK

  • A variety of management services: When looking at HNW individuals (people with over $1m in liquid assets) and their preferences for investment services there is a clear need for them to have access to a variety or combination of discretionary (made by the investment manager solely), advisory (made by the investment manager through discussion with the HNW individual) and execution only (made by the HNW individual only with no advice) services. In fact, 10% of all HNW investments, coming to a total of £7.6bn investments, are made as execution only. This means that FinTech companies need to supply a variety of platforms and products that support all three methods of investment.

 

  • Taking full advantage of self-directed investments: Whilst 10% doesn’t seem like a high proportion of the consumers, £7.6bn is a lot of money that could be invested using your product or platform. The key to on-boarding these customers is to understand why they make their own investments. Bartosz’s insights showed us that it is for a variety of reasons from them feeling ‘sophisticated and confident in managing their investments’ through to ‘saving on management fees’. Structure your products to support these user mindsets and offering information to help empower them to make the investments that they want.

 

  • Know your market: Different region and different types of affluent individuals want different things and have different motivations for self-directed investments. For example, in the US 15% of HNW individuals manage investments themselves but for slightly different priorities to their British counterparts. The most common cited reason for managing their own investments was to save on management fees, therefore when developing platforms and products for the US the emphasis must be on reducing their costs, whereas in the UK it should be on empowering them to manage their own investments. Likewise if you look at the mass affluent individuals (people with $50k-$1m in liquid assets) we see that a high proportion (up to 88%) will make a self-directed investment and will conduct all their research themselves and sometimes only through family and friends, another different mindset to HNW individuals (whether US or UK based). This market is worth up to £1,300bn and is a compelling one for product developers and wealth managers to target. When developing your product or service it is imperative that you have a clear idea of which market you are tackling and in which geographic region in order to tailor your offering to their specific needs and mental models.

So, as you can see there was plenty of food for thought for a Tuesday evening!  I would like to thank all the speakers for a fascinating journey into the mindset of consumers and actually discovering what they want.

For more information on how to provide an excellent user experience to your customers then get in touch with me or for deeper insight into the world of consumers and finance contact Datamonitor to find out how they can help. Or pop along to their next event: Part II: Dare to be Different, Techstars FinTech Speaker Series powered by Datamonitor Financial

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