Other parts of this series:
- Design for life! How Fjord’s 2020 trends impact financial services
- In 2020, financial services firms will reset metrics of success
- Money is morphing—so must financial services’ offerings
- Digital Doubles — a 2020 trend to power financial services
- Fjord 2020 trends—life-centered design will change financial services offerings
How we think of money—what it is and what it can do—is changing. This is creating opportunities for a host of new products and services. As more non-traditional financial services companies step in to fill new entirely new roles in this sector, legacy players are being challenged to keep up.
Once upon a time, we went into a bank and waited in a queue. Then, we self-served with online and mobile banking. Now, many societies—in Asia, especially—are going cashless. In China, mobile payments are now so common that paying with cash is practically unheard of.
Societies are going cashless. What will this mean for financial services?
If money is the foundation of FS offerings and the way people perceive, use and deal with money is changing, innovation and rapid adaptation of current FS offerings will be imperative. This will include the development of new offerings as well as change in terms of how services are structured, offered and priced. Awareness of customers’ evolving perceptions of the value provided by FS organizations will be very important.
To keep pace with this sector transformation, FS talent, HR, culture and mindsets will need to be recalibrated. How can FS talent and organization (T&O) staff prepare?
Understand the opportunities
Over the next few years, change will accelerate, says Fjord.
• Use of biometric mobile wallets (payment by fingerprints, facial or retina recognition) will grow significantly with mobile biometrics expected to authenticate US$2 trillion in in-store and remote payments transactions in 2023.
• New ecosystems are emerging, with start-ups providing all manner of improved customer experiences.
• New digital currencies are also challenging traditional notions of money. In West Africa, 15 countries recently agreed to adopt a single cryptocurrency called Eco in 2020.
Impact in different markets will vary according to local economy contexts. And this trend won’t just affect financial institutions or those wanting to become one; every organization and individual involved in any financial transaction—retailers, employees and customers alike—will be impacted.
or banking incumbents there are significant opportunities. But there are also challenges to overcome if they hope to become ‘Money Changers.’
Trust can significantly influence the bottom line and competitiveness.
To build it, behaviors and actions must match stated values.
Focus on trust, offer better value
Trust in legacy banking systems has been challenged—among younger people, especially—by scandals and traditional players’ failure to adapt fast enough to evolving customer expectations. In addition, as the business of sending money to individuals and companies becomes increasingly instant and free, quality of experience and value are a becoming critical differentiators. This is putting greater pressure on traditional banks to offer better value.
Can traditional FS organizations adapt fast enough?
In The Bottom Line on Trust, our research quantifies the impact on revenues when a drop in trust occurs. The losses for banking (-21.8 percent) and insurance (-3 percent) are significant.
To build trust, transparency, privacy and security will be essential, as will integrity (part of which is offering better value). To ensure the behaviors and actions of FS organizations match their stated values, a shift in culture and mindset among leadership and the workforce may be required—near-term cost savings and profit improvement cannot be allowed to jeopardize trust.
To build trust, it must become a core part of a business strategy that balances growth, profitability and sustainability.
New technologies will continue to raise the stakes.
Another Fjord trend, Walking Barcodes, also emphasizes the need to prioritize privacy and security. Facial and body recognition now make people as trackable in the real world as they are online, and 5G will create opportunities for new products and services. But we must all learn lessons from digital world. To build trust, it must become a core part of the business strategy. And that strategy must strike a careful balance between growth, profitability and sustainability.
Join me next week as I explore the opportunity that Fjord’s Digital Doubles trend presents for FS organizations.
Meantime, click here for more on Fjord’s 2020 Trends.