Roisin Levine, Head of UKI & European Partnerships, Wise Platform
There’s little in life more personal than how we manage our money. From our salaries to our rent payments, student loans to nursery fees, and the occasional night out, how, when, and where we spend our money is entirely unique to us.
A personalised banking experience is becoming a higher priority for consumers across the world. Fintechs and challenger banks have acquired a larger market share over the last ten years, partly as a result of the highly-tailored products they offer.
Legacy banks have long offered a personalised experience through branches. High-street bank branches are designed to offer space for tailored conversation with customers about their specific needs. This is most useful for those customers who are not digital natives, but can be valuable to people of all ages and circumstances.
But tailored advice without the availability of tailored solutions only goes so far. The key to delivering a more personalised experience can be found in digital transformation, strategic partnerships and open banking. Employing new technology can enhance a bank’s offer, and there is a large and relatively untapped opportunity for even the most established high-street banks to leverage tech without compromising their face-to-face service model.
Banks are turning to fintech partnerships in large part because fintechs can help them overcome challenges to internal innovation, including legacy infrastructure and a stretched pool of resources to respond to growing market competition. Where building new infrastructure and products at the largest traditional banks can be a burdensome process, new technology is the bread and butter of fintechs. They are able to specialise and innovate relatively unburdened by bureaucratic processes and risk averse cultures, and are able to step in quickly to solve customers’ unmet needs.
For example, neobank Monese was set up to simplify banking for customers with products such as their credit building tool. For young people looking to build out their credit score, a simple product experience like theirs, which doesn’t require a credit card or involve high interest rates, feels more thoughtful, personalised, and accessible than taking traditional avenues.
Fintechs and neobanks have proven that this approach is popular with consumers, who are voting with their feet. The latest figures suggest that 75 percent of consumers globally have adopted at least one fintech provider outside of their traditional bank*, favouring digital delivery and making the most of new services that work specifically for them.
Through fintech partnerships, banks can respond to the threat of customers searching for new providers by enhancing their services without having to dedicate significant cost and effort into doing so. Using something as simple as an API integration, banks can provide their customers with the same highly-specific services that fintechs specialise in, which lie outside of a bank’s core offer. This means customers can make use of more niche products that work for them without leaving their existing banking app, driving customer engagement, satisfaction, and retention.
TSB Bank is an example of a high-street bank that has prioritised digital transformation as a means of complementing the in-branch experience. Jason Wilkinson-Brown, Head of Partnerships and Open Banking at TSB, told me in a recent interview that offering customers access to hundreds of fintechs’ services right from within the TSB app via open banking bolsters them to make financial decisions that work for them.
Establishing a strong digital transformation strategy might be seen as a move that might water down a bank’s commitment to the in-person approach to relationship building that defines a high street branch. However, the opposite is in fact true; digital transformation allows banks like TSB to further enhance their relationship with customers by building a more rounded picture of their finances.
The high-street branch is no longer enough on its own to meet the demands of a consumer base that expects highly personalised services in every aspect of their banking experience. However, by pairing this model with focused partnerships, banks such as TSB can combine an established and effective in-person presence with the modern capabilities of fintech, seamlessly creating a more personalised offer. By providing customers with the best of both worlds, banks can empower them to take control of their finances in the way that works best for their unique needs.