financial services disruptors

 

Moving into 2017, one thing is pretty clear for the financial services industry—digital transformation cannot be ignored. But don’t worry. Just because you haven’t been a first mover with digital financial services doesn’t mean you can’t succeed.

In fact, this might be an example of a situation in which you would like to be second or third to market because it gives you a chance to learn from the first movers.

And while these consumer facing, or ‘Direct’, examples demonstrate the changes in the Direct models, we should not forget that there is a huge indirect / Intermediary channel where the benefits and effects of Digital disruption are also being felt.

As you start to get the ball rolling on digital financial services, you need some role models who are succeeding today to make sure you’re on the right track. Let’s look at 3 UK financial services companies that can teach you some important lessons about digital disruption.

 

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1. Metro Bank—The Pioneer for Digital Banking in the UK

When you think about digital disruptors in banking, you might jump straight to elimination of physical banking and only think of entirely-online products and services. But Metro Bank started in 2010 as the first high street bank to be licensed in the UK in about 150 years.

Although Metro Bank wasn’t necessarily digital, it has been a pioneer paving the way for today’s disruptors. At a time when traditional banking had a strong hold on the UK, Metro Bank stepped in and proved there was demand for more customer-centric banking.

Metro Bank’s customer-first approach laid the groundwork for the recent release of their advanced online banking experience. As a newcomer to disruption, it’s important to note that embracing digital transformation doesn’t always mean a complicated in-house development process.

Metro Bank leveraged Backbase, a leader in omni-channel customer experience platforms to build out its online offerings to keep up with its customer-centric values. If you want to streamline digital banking, the lesson here is that partnerships can help your enterprise pivot more smoothly than undertaking massive projects on your own.

2. Atom Bank—The UK’s First Digital-Only Bank

As if starting Metro Bank wasn’t enough, founder Anthony Thomson went on to set up the UK’s first digital-only bank to offer real products and services.

While there are skeptics surrounding digital-only banking, Atom Bank’s lack of branches and call centers, coupled with total functionality through a mobile app, is appealing to younger customers. And according to Atom Bank CEO, the company believes that older consumers are coming around to the idea of online banking.

The lesson you can learn here is that an agile mindset is critical for digital transformation success. At release, Atom Bank only offered savings accounts for their customers. Traditional firms may not be able to imagine going to market with anything less than a full feature set.

Atom Bank has plans to soon release checking accounts, loans and mortgages as well as an Android operating system app offering, but getting to market with a minimum viable product has helped build a customer base ahead of competitors.

3. Guevara—Making Peer-to-Peer Insurance a Reality

The traditional insurance industry has been a race to the bottom for years, leaving incumbent firms to look for new ways of unlocking potential revenue.

Digital transformation is starting to have a significant impact on the industry, especially as online peer-to-peer insurance companies come to market. One example is Guevara, which focuses on auto insurance for now.

The idea is that Guevara pools customers in groups and takes their premiums to cover claims. When money is left over, it results in discounts for the group (specifically those who have not submitted claims).

At a time when the customer experience is everything for financial services, online platforms like Guevara seem to be the future. That’s not to say you need to you need to become a peer-to-peer insurance company. Rather, you need to take customer feedback seriously as consumers grow frustrated with the lack of transparency and over complication in traditional insurance.

Know Where Friction Exists in Your Customer Experience

As a traditional financial services company looking to embrace digital transformation, the first step is to understand how you’re being disrupted and what is the customer experience friction that’s holding you back.

What’s interesting is that this understanding also compliments compliance needs whether they be regulatory, risk, disclosure or simple proof.

Whether a new entrant or a traditional player, working in direct and/or indirect channels, where the degree of “legacy” can be an obstacle, or not, there are customer experience improvements that can be made now, and along the course of the ongoing digital journey.

If you want to dive a little deeper into how new technology like machine learning and companies embracing digital transformation are impacting traditional financial services companies, download our free ebook, Uncovering Hidden Revenue from Online Customers for Financial Services.





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John Thompson

John Thompson

CEO