Expanding customer expectations are reshaping the financial services industry, driven by the bar set by big technology firms, and the customer journey is being redefined by creative, agile fintech solutions, according to a new report.
However, many fintech startups have realized they will struggle to succeed alone, and are increasingly looking to collaborate with the traditional financial services firms they once sought to overthrow.
Their ability to expand their base, gain full customer trust, scale operations and navigate the regulatory environment depends on the engagement, support and insight of the financial services sector.
Capgemini and LinkedIn, in collaboration with Efma, a Paris-based nonprofit group that facilitates networking among banks and insurers worldwide, developed the report based on a global survey encompassing responses from traditional financial services firms and fintech firms, including banking and lending, payments and transfers, investment management and insurance.
According to the report, emerging technologies have transformed the customer experience by eliminating multiple pain points across the customer lifecycle.
More than 90% of fintech firms said agility and providing an enhanced customer experience were key to competitive advantages, and some 76% said being able to develop new products and improve existing products and services was critical to success.
Their challenge is to scale up and create robust business models. Since 2009, fintechs have raised nearly $110 billion, but most are likely to fail if they do not build an effective partnership ecosystem, the report said.
At the same time, financial services customers trust traditional firms more than fintechs, according to the report. “Fintech firms are finding success with a customer-centric focus that fills in gaps left by traditional firms,” LinkedIn’s vice president for global market solutions, Penry Price, said in a statement.
“These gaps opened the doors to fintechs, but trust in traditional firms remains important to customers.”