FinTech is here; evidenced by new and emerging solutions that continue to revolutionise financial services, impacting how we manage customers and how they, in turn, manage their money. The industry is in disaggregation with FinTech startups deploying solutions that are luring customers out of typical banks
Customer-centric solutions such as peer-to-peer lending, personal currency and direct payments are offered at a fraction of the price.Mobility is a key driver and payment revolutions like Apple Pay are creating headline news. However, the key to creating a true value-proposition and better user experience is the personalisation of services. This is best achieved by collecting and analysing customer data, or Personally Identifiable Information (PII).
Changing regulations across the globe are impacting the level at which companies can collect and store PII data. New laws will soon prevent companies in Europe and the US from using this data without consent from its owner – the consumer – and technology is playing a huge role in determining how customer behaviour can be seen, tracked and leveraged without explicit permission. This role can be explained under what we call the ‘Six Ds’ – the latest trends of emerging financial technology.
DigitisedThe financial industry has seen rising demand from consumers for more online and mobile services for several years. Many consumers now even wish to handle transactions as complex as mortgage agreements online. This cultural shift and the proliferation of social media have created more data than ever for corporations to collect, extrapolate and even sell. However, while the industry moves toward digital processes to save money, time and trees, many systems for customer account opening and customer account data still rely heavily on paper-based processes and document storage. Personal information will soon be in a digitised format too, available via an app for customers alone to update and give companies permission to access.
DematerialisedThe days of walking around with a camera, a GPS device, a phone and a compass are indeed long gone. As technology becomes increasingly sophisticated, separate devices are rendered redundant and, instead, dematerialised into applications hosted on a smartphone or tablet. Similarly, buying software on a CD-ROM is ancient history – the market has moved to cloud-hosted and SaaS solutions. These require little to no spend on hardware and enable rapid technological improvement rather than resales.
DemonetisedA consumer can download a personal financial management app, use it to track spending and better save for a deposit on a house – a completely free, life-changing tool. Many new technologies not only offer exceptionally high value, but are also incredibly affordable for a business or a consumer to use. Square, for example, allows small businesses – a cab driver or a local fruit stand owner – to collect payments easily using a small, inexpensive piece of hardware.
As consumers, we often accept ‘freeware’, complicit of the trade-off we enter into. The internet music streaming service Spotify serves a series of unavoidable adverts to subscribers of its free service. Consumers are beginning to understand that, in the context of technology, nothing is truly free, although awareness has not yet hit its peak. Many users of Uber, for example, are unaware of the data collected and utilised by the company. Like it or not, this is a major trend.
DisruptiveWe all use technology that, upon establishment, disrupted its respective industry in order to bring consumers a new service. Uber reinvented how we view taxi services. The Uber app makes finding a car in your area easy, but it allows you to pay less for your journey and in a more convenient way. Airbnb now sells more rooms per night than the top 11 hotel chains combined.
Me2B technologies for the financial industry will soon embrace another big change, allowing individuals to update and control the use of their PII data via an app. By granting a bank or business real-time permission to access their personal data, consumers protect their personal information and streamline processes such as opening a bank account. They will also be able to control who uses and accesses their data, eliminating the Big Brother factor and ensuring prior consent to its use is granted, backed up by regulatory enforcement.
DistributedTechnology is moving toward a distributed approach. Bitcoin, for example, has taken currency and distributed and digitised it. Personal data should, and will be soon become distributed, or put back into each consumer’s hands to control.
DecentralisedWe are moving away from centralised control of information by the government and large consolidated warehouses. Instead, information is increasingly housed in smaller data sets distributed over broad networks of computers and systems. This is a positive change, as it reduces the industry’s energy footprint and decreases risk of a single point of failure for data-breach.
Financial organisations the world over are clamouring to find ways to mine and use customer data, which, in turn is giving rise to consumers becoming more aware of how their data is tracked and used. Consumers are comfortable trading spending history for a free service, but are beginning to question why a taxi company such as Uber should have access to family photos.
This raised level of awareness will require a whole new business model to emerge to address the use of personal data. The consumer will be at the core of that business model – and in the future will even be able to self-monetise the utility value of their PII. In order for this to happen, regulation, public policy and consumer demand will soon collide in a battle around ‘consent-to-share’. As a result, new solutions are already coming to market that enable consumers to digitally manage and share their identifying information across most of industries and verticals. Now is the time to start standardising these solutions. We believe that this standard will quickly become the minimum level expected from consumers. How the industry will respond is yet to be seen, but one thing’s for certain – however readily it is embraced, data, its ownership and privacy will help shape the future of the banking world.
Stuart Lacey is CEO of Trunomi