We’re no longer waiting for consumers to choose fintech. They’re already doing it in large numbers. This means that going from being a product-focused financial business to being customer-focused has never been more critical. 2021 has shown us that financial services is a resilient industry, but resting on one’s laurels would be imprudent. In the UK, energy prices continue to rise, the property market remains hard to predict, and following the retail and consumer industry is like watching Succession on loop. Yet, outside the pink pages and the bubble of media hyperbole is this simple fact: things aren’t nearly as bad as you think.
Depending on what you read and where you read it, the effects of the 2016 referendum (and passing date of January 2021) offered no seriously detrimental impact to London’s status as fintech pack leader. Sure, there were bumps and some grinding, some downplaying and exaggeration from all sides of the debate, yet fintech UK continues to thrive. Post-Brexit and post-pandemic uncertainty is bolstering rivals’ ambitions to steal the City of London’s crown, with various PR machines going hammer and tongs in the quest to unveil “the new capital of fintech”, but London is indeed a resilient beast.
New opportunities have been revealed that generate better collaboration and connectivity among Pan-European fintech providers. With fintech companies in a better position to partner with one another rather than traditional financial incumbents, dependency on creaking technological infrastructures and countries with lagging regulation is reduced. Government help comes in the form of the Kalifa Review of UK Fintech, which outlines changes to the UK’s Initial Public Offering (IPO) market, improvements to visa to “attract global talent”, as well as support for growth-stage fintechs. Innovation should prosper within this strong, blossoming ecosystem.
Regulation needs to improve. The muddy waters of data regulation, for instance, is a complicated example. When the EU GDPR laws ceased to apply to the UK (1 January 2021), UK GDPR laws came into effect. Many amendments were made to ensure each set of GDPR laws worked with each other with as little friction as possible, yet all wasn’t plain sailing. International businesses found themselves subject to compliance from two entities to do business across the relatively small footprint of Europe. Cross-border data compliance is a complex thing to get your head around, and we haven’t even touched on data protection and privacy compliance outside of Europe!
No way to control it, it’s totally automated
Technology can help to discover answers to many complex problems. From 2021, if you’re not talking or thinking about technology as a business benefit, you may as well give up and join a monastery. Digital transformation initiatives are underway, with 20% of CEOs citing “digital” as their primary concern (compared to 17% in 2020, and 15% in 2019). Despite increased enthusiasm, deploying advanced technology remains a stumbling block for many FIs.
Robotic process automation (RPA) and intelligent automation (IA) are solutions to problems that many haven’t even considered, let alone tackled. Yet, the future is bright, and 2021 has shown that RPA and IA are in the ascendency. In September, Gartner predicted significant growth for the RPA market, as businesses look to capitalise on process gains, increased productivity, and reduced costs. As the era of no-code gathers steam, we should expect to see changes across every major industry, not just financial services, with improvements that include speedy app development, adaptable innovation, and more opportunities to discover untapped talent.
Efficiency gains aren’t the only reward for embracing automation technology. FIs can create better digital customer experiences. We can open new accounts in a couple of clicks, quickly apply for a loan, and enjoy talking to an advanced chatbot without even knowing it! With a greater understanding of our finances, we in turn reward our banks and financial service providers with our loyalty. (At least, that’s what banks are hoping for.) And with 14 million British citizens having opened an account with a digital-only bank, that’s a heap of loyalty to nurture.
A cashless society
Technology is also dying. ATMs used to be considered high-tech, but a decline in use has been led by the pandemic, mobile payments, and the changing face of retail. Access to cash is still a concern for millions of people, and bank branches are still a relevant “channel” for a significant number of people. The answer to finding a balance is being tackled by FIs who value a multichannel approach, where different customers are catered for by different methods. Not everybody is using mobile banking or contactless payments, so cash will be around a while longer. Still, the UK is fast becoming a cashless society, with data indicating cash obsolescence by 2026.
Driving this trend are the so-called “tech giants” such as Google, Apple, Samsung, Facebook and Amazon. These may be the companies FIs need to help customers make the steady transition from physical to digital banking. The alternative is to invest in and cater to 20th century customers unwilling to accept change. Vulnerable people and non-technical people need our help in traversing the changing face of financial services, not paper-based excuses to stand still and do nothing.
It makes sense that replacing old technology with new is a solid way to prevent creative inertia, cybercrime, customer apathy, process inefficiency, and business decline. If the financial trends of 2021 have taught us anything, it’s that the UK is fertile ground for growth and change, and that the Great British public is as adaptable as ever.
With advances made in blockchain, cryptocurrency, payment mechanisms and data security, the digital-first economy looks set for greater improvements in 2022 and beyond. Digital transformation strategies will be accelerated, businesses will adapt and improve, and customers will benefit from new and exciting ways to manage their finances. We’ll meet you here, same time next year, to take a look at what actually happened!
