Bullish On Leading Edge? Don’t Get Gored.

Bruce Lowthers
FIS | Chief Operating Officer, IFS
Posted on October 4, 2016

Fintech customer service

Three months ago, I spotted a $21 charge on my bank statement for a line of credit. I checked online, and the account showed a zero balance, which, to me, meant I owed nothing.  But then I started receiving letters telling me the bank was going to suspend my account because I hadn’t paid them the $21. Wanting to avoid additional hassle, I tried to pay the charge through my online banking account, but couldn’t because my balance was zero – I’d landed in the banking Catch-22 zone.

My next move was to send the money to my credit card account to make a $21 payment to the bank, but my payment didn’t relieve my non-existent debt. A week later, I received notice that my line of credit had been cancelled due to non-payment! Unsurprisingly, after calling four different managers to get the issue resolved, I closed every account I had with that bank.

Don’t forget who brought you here

Despite its embrace of the latest technology, my bank failed at providing a straightforward, intuitive solution to a low-tech consumer problem. In the race for innovation, financial institutions miss that most FinTechs still haven’t solved the vast majority of banking problems that consumers encounter. Instead, they’re mainly focused on solutions that grab attention.

According to Accenture, the volume of funding for FinTech startups surpassed $22 billion in 2015 – nearly double the investment from 2014. McKinsey lists around 2,000 FinTech startups in its database. The few that have gained major traction in the marketplace, such as PayPal and M-Pesa, are succeeding because they do a better job fulfilling customers’ needs: faster service, more accessibility, convenience, less hassle, frictionless experiences. But success doesn’t happen overnight, and it often requires pivoting from an original concept.

It’s difficult to estimate how much capital is wasted in FinTech, largely because venture capitalists mourn their losses quietly, but Investit places the failure rate of technology firms at 80-90 percent. In a study of 450 FinTech startups from 1995 to 2002, McKinsey counted only five survivors. Granted, we’re living in a different world than the late 1990s, but how many of today’s companies will survive the shakeout of the packed FinTech landscape?

The tortoise beats the hare

The vast majority of bankers do not need to be at the head of the class when it comes to adopting technology. Being on the leading edge can be a bloody affair, and it often takes a long time to recoup investment.  Sometimes, thinking of this as a marathon rather than a sprint can pay off. Instead of jumping for flash, focus on technology that enables your financial institution to provide convenience and service experiences that are aligned with your customers’ expectations.

Bankers’ business decisions often focus too much on solving problems through technology instead of how to provide great customer experiences and build a competitive edge. Just like you wouldn’t process your own debit or credit card transactions unless it gave you a competitive advantage, you shouldn’t chase innovation just for innovation’s sake.

Here are four customer-centric actions to consider:

  • Focus on providing better customer experiences – more user-friendly self-help tools, quicker access to funds and seamless payment solutions.
  • Embrace the basics of sound execution. Don’t use lack of technology as an excuse. For example, most people default to another credit card because they cannot get the credit they need with the first one, not because it lacks bells and whistles.
  • Market to consumers. Both of my “personal bankers” have gone silent these days. What does it tell me that I’ve never been offered a credit card by my own primary banking institution?
  • Invest in innovation that’s relevant to your customer base. Do your due diligence to ensure that the investment represents a sound bet. Hundreds of millions of dollars have been wasted on big technology that has not improved the customer experience or generated measurable revenue.

In almost any environment, customer service will far outweigh differences in technology when it comes to satisfaction.  What can you do to ensure your place of business isn’t falling into the innovation trap?

What can you do to mitigate frustration among customers who, like me, make good faith efforts to resolve problems with your financial institution?



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Bruce Lowthers
FIS | Chief Operating Officer, IFS

Beginning his career as a certified public account, Bruce now serves as the Executive Vice President of FIS, the world’s No. 1 financial technology provider, and as the CEO of Global Retail Payments. His division is responsible for $2.6 billion in revenues and encompasses financial services, emerging commerce and retail services.