THE 'D' WORD
DIGITAL ADOPTION
COVID-19 has acted as a catalyst for digital adoption and improvement in digital skills for consumers and businesses alike. Countless numbers of people, previously averse to adopting or engaging with social technology, have now become digitally competent, with the skills required to set up a Zoom call for friends and family no longer something which divides the generations.
In a professional setting, more of us are working from home and effectively using enterprise social networking applications to collaborate and meet with our colleagues, clients, and peers. The fact that we would be able to remote work in this way and so many of us at the same time was unimaginable at the start of 2020.
For the past couple of months businesses have been grappling with a tricky question - ‘is this behaviour change likely to sustain or will people and businesses revert to old behaviours as soon as the pandemic ends?’. At Motif, informed by numerous historical trends, we are confident that these new behaviours are here to stay. Convenience and speed play a major role in the sustained adoption of new behaviours. And if consumers like the experience, it results in a permanent behaviour change.
DIGITISATION
For businesses, the main barriers for effective digital transformation over the last decade have been a lack of understanding amongst the senior management team, resistance to change amongst existing employees and a short-term profit mindset amongst shareholders. The forced adoption of new technologies to continue operations during the lockdown, and a fight for survival in the post-COVID world, has no doubt weakened these barriers.
For brands in the retail FS space for example, we are already seeing new solutions that we weren’t expecting to see so soon. Online video meetings with a customer to complete a financial review or to open a new account is a new reality.
“The painful reality is that most transformations fail. Research shows that 70 percent of complex large-scale change programs dont reach their stated goals. Common pitfalls include a lack of employee engagement, inadequate management support, poor or non-existant cross functional collaboration, and a lack of accountability. Furthermore, sustaining a transformation’s impact typically requires a major reset in mind-sets and behaviours—something that few leaders know how to achieve.”
Barclays and NatWest are leading with the effective use of video banking during the current crisis. Lloyds and Santander are also using this tech for mortgage applications. Going forward these developments will be transformational for repurposing branch networks.
Meanwhile, on another front, smart digitisation of processes by one of our LP&I clients, who rely on distribution channels to sell/service their products, are having a strong positive impact on brand perception amongst advisors.
Digitisation is therefore changing the competitive landscape in many industries including FS. For established FS businesses such as High Street banks or traditional providers in the LP&I space, legacy IT models have also been key barriers to delivering sleek customer facing applications and effortless customer journeys. Many of these businesses have been learning from Fintech providers and redeploying technology to remain competitive. Doing this will lead to better customer experiences and improved efficiency through automation.
Earlier this year, TSB signed up a strategic partnership with IBM to boost digital channel transformation. As a result, the bank was able to quickly develop and launch a Smart Agent (live online chat service) to better meet customer needs during the pandemic.
COMMERCIALLY FOCUSSED INSIGHTS ARE KEY TO SUCCESS
Understanding what drives attitudinal loyalty can help brands reimagine customer journeys in a way that positively influences their bottom line. For example, a product acquisition journey need not focus only on ease, simplification, and speed. It is also an opportunity to demonstrate a level of sophistication in terms of individualised delivery – helping the brand sow the seeds for deeper customer relationships. Good insights go beyond explaining what makes customers switch on and off by linking the findings to the business outcomes. Employing insight in this way to help design digital features reduces the chances of creating applications that end up delivering sub-optimal outcomes.
SO, THE FINAL QUESTION - HOW DO WE SEE THE IMMEDIATE FUTURE OF FINTECH?
Given the impact the current pandemic is having on the wider economy, a recession that will now follow is likely to play spoilsport for fledgling Fintech businesses.
In the aftermath of COVID, the sad reality is that we will see many businesses failing. The result of this will likely spill onto the FS sector, impacting the credit lines. FS or big Tech businesses with strong cash reserves would therefore be in the best position to take advantage. With the stock markets also coming under pressure, the valuations of Fintech start-ups are likely to be pushed downwards, making them prime acquisition targets for cash-rich FS and Tech businesses.
Increased M&A activity in the Fintech sector will no doubt act as a catalyst in terms of digital transformation. However, traditional FS brands will need to keep up with the pace of change, commit more investment, and further diminish the resistance to digital transformation. This will help them ultimately benefit from this crisis and turn it into a long-term positive.
By Santosh Makhani