Positive Experience (Traditional vs. Non- Traditional Firms)

Non-Traditional firms are delivering slightly better customer experiences than banks

The focus of tech-driven firms on convenience, lower fees, and innovation is paying off. Worldwide, non-traditional firms were more likely to deliver a positive experience than their traditional counterparts. Non-traditional firms performed particularly well in North America, despite the fact that banks there have devoted a significant part of their budget toward digital transformation. Additionally, across the world, the strength of the FinTech movement is tending to correlate with the level of positive customer experience in that country.

Non-Traditional Providers Gaining Widespread Acceptance

Almost a third of customers are now using at least one non-traditional firm

Although traditional banks still have significant hold over customers, non-traditional firms are gaining ground. Additionally, customers who choose to bank outside the sphere of traditional banks are likely to engage with a number of non-traditional firms since more than half of these customers maintain relationships with three or more non-traditional firms. Additionally, those most likely to gravitate toward non-traditional firms are Gen Y customers and the tech-savvy, both of which are high potential segments for banks.

Effectiveness of Transformation for Traditional Firms

In-house efforts by banks to transform have not yielded the desired results

Banks are gearing up to respond to the disruption, and collaboration with FinTechs has emerged as a much more acceptable route to transform, than in-house efforts (since they are often bound by inflexible core systems, dated processes, and risk-averse cultures). Tech-driven firms are also adept at deploying customer-focused technology at the back end, such as advanced data mining and predictive analytics to derive insights about customers and react quickly. Critical to making such partnerships work will be Application Programming Interfaces or APIs. Not only can APIs help banks overcome the inflexibility of their legacy systems which may not be compatible with the latest technologies being used by the FinTechs, they also put banks in position to take advantage of FinTechs’ many strengths.