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Funding Options NL Guest Blog: Does fintech have a future without the human touch?

The finance sector in the Netherlands and beyond has been transformed by the arrival of fintech and the digitalisation of the industry. However, the human touch continues to play a crucial role in business finance, according to Eugenie Casier, director of Funding Options Netherlands, a marketplace for business finance.

Want new trainers? Click, and they’re on their way. Need to transfer money to your darling son? Tap, and done. Even business loan applications can be submitted within a matter of minutes. You’d be forgiven for thinking that all our finance needs will be automated in the (near) future, but the picture is more complex than that.

According to Kearney’s European Retail Banking Radar 2019, traditional banks have seen customer numbers decline by two million since 2011, while neobanks have enticed 15 million customers to sign up in the same period. They are 100 percent digital, with lower overheads and geared towards mobile, and have caused a seismic shift in the industry.

The corona crisis has given the industry a further boost as people who had previously shunned digital, have been forced online to stay connected.

It is not too much of a stretch to assume that business owners may now feel more comfortable managing their affairs online, rather than visit a bank branch.

However, we need to ask ourselves what the limits are of digitalisation. The willingness of the majority of customers to embrace new technology and new ways of banking will determine the speed with which these changes take place.

In the Netherlands for example, only 18 percent of consumers in 2018 were willing to share their personal details with fintech providers in return for better – read, more personalised – services.

What’s more, despite AI, digitalisation and PSD2 driving the ‘bank of the future’, we have not yet arrived at the point where AI and technology can replace human insight and expertise.

Just because it’s possible to conduct all your business online doesn’t make it right in all situations. On a personal level, it’s great to chat to our nearest and dearest on Whatsapp, but sometimes you just need to hear their voices and see their faces. Business owners might be able to submit an online finance application in a matter of minutes, but sometimes they benefit from real human interaction to help them through the process.

The customer is king

Banks, fintech and other parties can utilise technology to come up with clever finance solutions and partnership agreements that will serve the needs of the business customer.

But as Kearney’s report recommends, financial institutions should place the customer experience centre stage to maintain and grow their revenues. That means that banks shouldn’t just anticipate the needs of individual customers, they need to also be able to meet those needs.

From our perspective, individual support is key here. For fintechs and business finance marketplaces, having experts available to speak to customers as and when needed, is absolutely crucial.

So, rather than relying solely on full digitalisation – or the soon to be obsolete traditional business model – we should champion a hybrid model instead. The customer will benefit from both technology and the human touch.

Quick action vs. carefully planned application

When a business owner submits their finance application, the algorithms used by fintechs and business finance marketplaces will return possible solutions within a matter of seconds. This will be fine for some customers with straightforward finance needs and circumstances.

In this instance, encouraging business owners to speak to a business finance expert who can offer tailored advice can be more of a hindrance. It could lead to unnecessary doubts or delays – to the detriment of the business.

In contrast, business owners with a more complicated state of affairs or finance needs, could benefit from a more personalised approach. This is where the human touch – underpinned by technology – can make a huge difference, not only in terms of the customer experience but also business outcomes.

Business finance specialists have the right knowledge and can tap into their experience, intuition and creativity to work with the entrepreneur in finding the most suitable finance solutions available to them.

A carefully planned application can only be submitted once to each individual lender, so it’s important to get it right the first time. Failing to do so, will diminish the entrepreneur’s chances of getting the right finance solution that brings about the most business success.

Mix of finance solutions

Sometimes, a financial provider doesn’t have a single solution to a financial challenge. This is often the case when a business owner doesn’t meet the conditions set by the lender . Entrepreneurs have no other alternative but to look at a mix of finance solutions with multiple providers.

However, it can be difficult for entrepreneurs to find the most optimum mix themselves – and it’s easy to get disillusioned with the process. A marketplace can be a godsend as it offers choice and speed. Especially when the technology is combined with a specialist who takes the time to fully understand the needs and circumstances of the businesses before finding the best possible finance solutions. This includes talking the entrepreneur through the various possible combinations.

Support from start to finish

Some entrepreneurs want to feel supported throughout the finance process: from that first moment the application is made to when the money hits their account.

But it doesn’t end there. Business finance experts can use their expertise to help think of other solutions. For example, they can point out opportunities and challenges that the entrepreneur hasn’t yet included in their business forecasts. By asking the right questions, based on their experience and expertise, business finance experts can encourage entrepreneurs to look to the future. What will their business needs be in a few years’ time?

Customers who enjoyed a positive experience are more likely to come back in the future as their business matures and they have different finance needs.

Marketplaces for business finance give entrepreneurs choice. A choice of finance products, a choice of providers and a choice of individual support. A hybrid model of technology-led solutions and personalised support provides a win-win and will secure fintech’s place in the industry for years to come.

Funding Options is the leading marketplace for business finance, helping businesses across the Netherlands and UK find the right funding for their situation. To celebrate Amsterdam Fintech Week Funding Options will host a webinar panel discussion about “How will AltFi players rise to meet the expectations of the post-Covid, tech-savvy customer in the next 18 months?” For more information, visit www.fundingoptions.com/xfw

Read more about Funding Options.

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