We have spent a lot of time talking with clients and other friends about what will be the deciding factors in whether consumers will enter into long-term relationships with new fintechs.
Consumer choice is still growing. From 1st April 2012 to 31st July 2018, 52 banking licence applications were submitted to the regulator and these new players are already vying for our affections so consumers may be spoilt for choice. More recently, Apple has announced its latest venture in the fintech scene with a new card in app banking features with Apple Pay.
A survey in December 2018 found that up to a third of under 37s in the UK have two or more accounts with challenger accounts. According to PwC, 54% of consumers are happy to source banking products from multiple providers to get the best deal on each one. If it’s all about costs, monogamous relationships aren’t going to work. The question is now about how fintechs avoid becoming a Tinder fling.
Some time ago, people got very angry when they realised that financial institutions had been misrepresented themselves for decades. For some, it wasn’t just a breakdown of trust; it was the realisation that they’d been in an abusive relationship for many years. It was no surprise that a core of consumers responded to the call of new challenger banks with their lower fees and a refreshing commitment to honesty. Some consumers gleefully stuck two fingers up at the legacy banks and formed an excitable queue at the doors of Monzo, Starling, Revolut and others.
Some people thought this migration would turn into an exodus that would rapidly bring the mass market of consumers in its wake. Sure, the numbers of people using the services of challenger banks are increasing but some industry experts will point out that consumers still aren’t fully committing to the challengers and are simply having a bit of fintech fun on the side while the legacy banks remain the real long-term partner.
Then the thinking turned towards regulation as the key to long-term relationships. A couple of years ago, there was a strong feeling that fintech marketing agencies like ourselves should focus on making consumers understand that new financial disruptors have to observe the same regulations as legacy players.
The logic was that consumers would then trust fintechs and their hard-earned cash, resulting in long-term relationships. Trust is important but it’s not going to make you stand out in a crowd.
If it wasn’t the thrill of something new or trust that would inspire consumers to switch, then it’s got to be good looks and a satisfying user experience? One of our clients recently pointed out that innovation in user experience has plateaued. There now isn’t such a gaping chasm between what new fintechs offer and what the legacy banks are now bringing to market. So what’s left?
Yesterday, I was talking to a video producer I’ve worked with many times. I told him that we are working on a series of videos for a client that is very closely involved with many of the new banks. He said he was a customer of one, so I asked what he thought of it.
He didn’t say ‘I trust it’. He said ‘I love it.’ He explained that he used his challenger bank account for business as it made it ‘so very easy’ for his team to pay for stuff they need when on assignments abroad. Yes folks, he loves it.
Suddenly, life is less complicated with new budgeting and saving features, in-app third-party services and seamless payment functions. Our new relationship is a beautiful thing and satisfies our needs so much better than our previous partner. It’s quick and easy because there are fewer strings attached. It’s all about us and how we want to live our lives. You can see how it might feel like love.
So it looks like fintechs should be ready for the endorphins to begin wearing off. Consumers will realise that they are surrounded by other sassy, attractive financial services opportunities. The idea of swiping right on an app for short-term fintech fun might not be too far away.
Most fintechs won’t want one-night hook-ups. Most want to grow, usually by doing one thing very well and expanding their market share until they become profitable. That means keeping their customers engaged and active for the long-term. So if those players want to remain independent and become successful, neobanks, Insurtechs and others must work hard to attract the right customers, grow their affections and build mutually satisfying long-term relationships.
Let’s face it; how much more scope is there for innovation in user experience? Today, consumers expect a sexy front-end so you’ll need more than that to keep your customers engaged. The amazing thing for us in recent years has been in discovering how many fintechs have forgotten the decisions they’ve made or the attributes of their business that make them special. A fintech marketing agency can help elevate fintechs above their sexy UX and economic benefits and let customers gaze adoringly into their very soul. Yes, it could even be true love.