FINANCE: FinTech and Innovation Trends for 2018: the Fall Of One Size Fits All
Recent Gauteng Business News
INCREASING demands from the marketplace will bring about new challenges to meet multi-segments in 2018. The common trend across industries – but in sharp focus for FinTech innovation – is the continued diminishment of a one-size-fits-all approach wrtes Brian Richardson.
Tailor your tech
Most banks have established an app – but it generally offers the same digital services for every customer. This will be replaced by highly specified and targeted digital platforms for individual needs. Loans, insurance products and credit aren’t widely differentiated in the market. This will likely change dramatically in 2018. Be prepared for state-of-the-art, omnichannel platforms and products, as safe and secure as they are convenient. A mortgage-only bank, for example, might be possibility in the future.
Financial service providers must critically examine whether they can and should be all things to all be people. And more importantly, whether they can be effective as such. It warrants tough strategic debate and thrusts internal competence; capacity and market demands into the spotlight.
A balance of bricks and clicks
It’s hardly up for debate whether digital is the future, but many financial service providers are still slow on the uptake. The traditional bricks and mortar bank model is expensive to operate – and competition isn’t coming from traditional banks. It’s from Mobile Network Operators (MNOs), particularly in emerging markets. The competition isn’t as easy to identify or predict. Players like Amazon, Google, PayPal and Starbucks have forever changed the landscapes of digital payments as we know them – and this will continue to be the case in 2018 and beyond. The only way to participate is to innovate.
It’s damned if it’s not data
The use of data to improve products and services is no longer a consideration, but a necessity. It’s finding new and shrewd ways to use data to offer value-added services. Proactive, individual, targeted services at critical life stages will be a game changer. It’s about building a 360-degree view of the customer by managing data effectively and converting into the right streams.
Endangered species must adapt
Solid and lethargic entities are in danger of becoming extinct if they don’t innovate quickly. The Post Office, for example, holds the trust of a large portion of the lower end of the market and is ideally poised to re-emerge as central community hubs. It would be a missed opportunity if entities of this nature didn’t capitalize on their network in a way that benefits both themselves and the community – be it through financial literacy, job creation or mobile payments.
The continued decline of cash
It would be remiss not to mention the continued decline of cash. Governments in emerging markets should be incentivising citizens to discontinue using cash. This will ultimately create more convenient and infinitely safer communities for the lower end of the market. Although cash can’t be made completely unavailable overnight, the alternatives must be more freely available.
Building on the idea of a state-backed cashless society, said governments will suffer if they rely on the existing four or five banks in the market to do all the innovating. If this is the case, I fear we’ll still be lamenting the plight of the unbanked in 2028. Financial services fields must be opened up to more innovative competition, without removing the regulations that exist to protect the uneducated.
E-commerce for a different market
Though e-commerce has primarily achieved success at the top end of the market, there exists a formidable opportunity on the opposite end for these services to not only flourish, but bring convenience and relief for those who desperately need it. For many individuals living in remote and rural areas, making the extensive trips into urban hubs for essentials is physically exhausting and expensive.
What if e-commerce giants could service the lower end of the market to truly liberate them of their weekly or monthly purchasing needs? The traditional challenge has always been the lack of a credit or debit card, which can be overcome by the introduction of a virtual card service. A temporary set of card details, designed and released for one transaction only. A cost-effective payment mechanism with endless benefits for retailers and customers.
Central to the most significant FinTech trends of 2018 is the role of financial services in offering effective payment mechanisms for every sector of the market. The needs of the market – discovered and undiscovered – continue to evolve at breakneck speed. To even begin meeting them requires financial service providers to engage in rapid digitalization strategies that will equip them for the new and exciting challenges faced in the year to come.
Business News Sector Tags: Finance|