Member Article

Celebrating Ten Years of Fintech Innovation and making it all about you

Here at Contis, we’re currently celebrating ten years in business – and have been reflecting on just how much has changed during that time. We know speed is crucial in fintech - in everything we do. But when everybody is moving so quickly, it can sometimes mean we don’t stop to see just how much has been achieved.

Ten years ago, in 2008, the global economy was in the grip of a sub-prime mortgage scandal that sent convulsions across the Atlantic and around the rest of the world. At the time, it seemed like unpicking all of the masses of associated securitizations and derivatives would be an impossible challenge. The world of finance was in the doldrums as it picked through the complex weavings of financial products.

Our industry is nothing if not adaptable, though. And it was out of the ashes of that global crisis that some of the innovators we are now so familiar with really started to take flight.

Alternative banking providers have flourished in the last ten years in a way nobody could ever have predicted – and the digital economy now offers greater transparency, utility, and user-friendliness than many of the legacy systems that preceded it.

Here I want to examine how these changes have come about - and offer some insight into what the driving forces behind those changes might’ve been.

Make it easy 2008 didn’t have free payments to friends and family via PayPal (that came in 2013), and now in 2018, one survey (Discover’s annual holiday shopping survey) claimed that sixty-five percent of millennials plan to make a purchase on a mobile device.

That’s compared to 48 per cent of Gen X shoppers and 30 per cent of baby boomers, according to survey data released by RetailMeNot, which publishes websites that give consumers access to coupons.

Apple pay came along in 2014, and many a content Apple bubble inhabitant is well pleased with their ability to pay with high security, privacy and convenience. Contactless payment as a method was invented a trifle over ten years ago in 2007, but things were really becoming mainstream a year later when Eat became the first restaurant chain to adopt contactless in March 2008.

Payment types and digital services are increasingly linked. Digital-only financial service providers firms like Monzo as a well-known name have really made an impact on millennials too. It has become the figurehead of a wave of challenger, alternative banking providers – accessed by digital devices and always available to assist lifestyle choices. Along with social media, the ability to access, monitor, and manage personal finances from a mobile device means that the digitally-connected now have the ability to be totally financially aware. Many will not be familiar with a chequebook, and the idea of manually reconciling personal current savings and accounts with credit spending will be totally alien to them.

Make it all about me The power of the fintech community has raised levels of speed and service for all customers, from wherever they consume financial services. App-first, people-first brands captured a chunk of the market from traditional banking players and pushed the whole ecosystem to up their game. Now the whole financial community is playing a more skilled game of ‘give the customer what they need’.

The way they’ve done this stems from one overriding ethos: People centricity. Traditional services were designed to be administered by large businesses in an efficient way for the business. But as the economy became digitally-driven and self-service oriented, consumers started to use financial services in a way that fitted their needs and lifestyles, rather than the business. Out went enforced queuing in high-street retail units, in came the app. Out went long application forms, in came wizards.

It’s all about you, and you and you Back in 2008 statistical modelling was still the main game in town when it came to sorting good customers from bad financial consumers, or fraudsters from legitimate users. It was slow and used broad brushstrokes to build a big picture of what was going on. Fast-forward to 2018 and these techniques have been superseded by artificial intelligence, machine learning, and a strong focus on data analytics to underpin how the customer is understood and served.

By piecing together multiple data points about actual and typical customers, modern fintech firms are truly able to understand how their users consume services and how to better optimise them for continuous improvement. This became especially important as many major lenders became much more risk averse during the financial crisis. By better knowing their customers, more nimble providers could serve the market with less risk – supporting customers who really needed greater financial access but were blocked by older processes from living their best lives.

Making use of AI and all manner of digital deductions are the newest type of financial experts – robo-advisors. Brand new in 2018, robo-advisors now sit on many screens, supporting first-line customer contact and helping users create well-optimised decisions based on a wealth of data beyond anything a human expert could retain or parse in a timely fashion. Just like other forms of AI and data analytics applied to other areas of the fintech space, robo-advisors also make use of smart technologies to reduce the overall prices paid by users and widen access to financial markets, aiding financial inclusion.

To sum up a decade in fintech is no easy feat – and there are many more important technologies, processes, regulations, and firsts out there that could be considered as epoch-defining. But running through each of them is a willingness to meet the customer on the customers’ terms. Core to these successes are a commitment to speed to market, flexibility, to full services, and of course – all underpinned by innovation.

This was posted in Bdaily's Members' News section by Contis .