Focusing on customers in every sector of financial services is key to any businesses’ success. But before the latter can happen, companies need to first figure out what their customers want. Last week at the offices of Nxchange (a next generation stock exchange), we held a roundtable on customer experience in alternative finance with transformation firm Virtual Affairs and alternative finance lender Funding Circle. Below are some of the main takeaways.
What SMEs look for in an alternative lender?
SMEs form the backbones of the global economy and fuel both economic growth while also acting as a key source of employment. Despite this, many SMEs have trouble finding suitable funding. And when they do, the process of receiving the actual funds can take a long time and the application process tends to be a hassle. This is in stark contrast to what technology is bringing financial services: fast, efficient, and easily-accessible products and services.
With the above scenario to set the scene, Funding Circle referenced stats from EY’s 2019 Global FinTech Adoption Index. This index indicated that the overarching motivations for SMEs to adopt fintech weren’t necessarily due to more favourable rates, but increased functionality and features, 24/7 365 availability of services, and ease of setting up and using services. Funding Circle’s own inquiry into why SMEs chose their platform confirmed some of the findings; namely SMEs chose their platform because the application process was simple and took only 10 minutes with a 24-hour turnaround.
The unknown: funding is out there
A big barrier SMEs experience when looking for funding from alternative means, such as Funding Circle and Nxchange, is that they’re unaware these options even exist. Alternative funding options, though, are available via other platforms. For example, in the Netherlands, Exact accounting software integrates with Loanstreet, allowing businesses to apply for funding within the software. Additionally, Funding Circle is available via Stripe. in the U.S.
Nxchange had an innovative view on integration. Users on their platform could pay for mundane items, like shoes, with shares, underscoring the real-time integration of two previously unconnected experiences.
These examples of integration between platforms are important. Both for increasing the awareness of alternative lenders while also creating accessible and fast funding channels, All of which is, of course, enabled by technology.
Trends in customer experience that impact businesses
Noting the changing financial environment, Virtual Affairs gave the audience some insights into a few trends in customer experience: increasing expectations, emerging ecosystems, digital illiteracy and “self” control. If businesses learn to master these, they’ll dominate user experience.
Some of the merging ecosystems that consumers are becoming familiar with are WeChat and even Facebook’s Libra. They highlight the trends of money being stored in non-traditional places that are connected to other environments such as social media, banks, and ecommerce. Consumers can easily and cheaply pay for services which then underscore the need for those in financial services to look for partnerships to integrate their services. Only here can providers become part of the ecosystems where consumers live their lives.
Needless to say, expectations from consumers are rising. People expect to receive the same ease of access and speed from financial services as they do from ordering an Uber. If financial services firms don’t meet this need at every point in the customer journey, they’ll no longer have customers.
Nowadays, most consumers are both digitally and financially illiterate. This means firms have to communication in a language their targets understand and in places where they spend their time, like on social media platforms. In terms of communication, visualisation and relevance to each consumer should be priorities for businesses.
Consumers increasingly want to have control of their data—what it’s used for and by whom. At the same time, consumers want ease. But many services remain unconnected. For example, mortgage providers aren’t integrated with pensions and loan providers, which would make consumers’ lives much easier.
Technology can also enable customers to delegate control to a bot or assistant to make decisions for them, expanding the reach of the “self”.
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