The new breed of fintech companies is missing a trick with a
massive market opportunity. Lack of customers isn’t the problem – profitability
is. CEO and Founder of health and finance app MasLife Kash Amini suggests that
there are three key ingredients neobanks lack in their journey to growing
profit.
The ‘doom-and-gloom’ merchants are out in force, predicting
that the UK economy could tank, especially on the back of a second lockdown. Devotees
of 70s English rock will remember an album by the group Supertramp called
“Crisis? What Crisis?”, and you can see the new breed of fintech firms thinking
exactly that. Figures from Accenture’s Digital Banking Tracker show that
neobanks scooped up an extra 6 million customers in the second half of 2019,
tripling their customer base – even before the pandemic hit. But every silver
lining has a cloud, and in this case, Accenture’s Tracker shows some of them
losing as much as £15 per customer in 2019.
The new neobanks are examples of that old adage ‘old wine in
new bottles’. They are doing everything that traditional banking does, but in a
more seamless manner. But a seamless experience is not enough – fintechs have
been focused on providing customer-friendly experience, solid customer service,
flexibility, and quick onboarding. But the technology doesn’t wow customers
anymore. This is what they expect, they don’t want to pay premium rates for
what they consider standard.
Fintechs know they need to offer more than frictionless
technology, but only the right execution will make sense to the customer – to
be in line with their values and attractive enough to drive revenue.
What’s missing is the connection between the platform and
users, which can ease the experience of consumers dealing with their finances.
Make users feel they are part of something beyond banking solutions and give
them a platform that really listens and resonates with the users’ needs and
goals, without making them feel that they are just another client.
Having values and purpose is another positive attribute. Recently
launched German neobank Tomorrow is focussing on protecting the climate,
pointing out to their customers that not a cent goes into armaments and coal
power. Another brand example – non-fintech this time – which has features and
attributes fintechs could integrate into their apps, is Calm, the meditation,
relaxation, and sleep app.
Since the birth of fintech, it’s been quite revealing how
simplifying the user experience has made dealing with financial apps more fun,
and this plays into two separate groupings of the UK population – the
Millennials (born between 1981 and 1996) and Generation Z (born between 1996
and 2015). A 2019 report by finance, IT and media firm Bloomberg showed Gen Z
accounting for 32 per cent of the global population – ahead of Millennials who
weighed in at 31.5 per cent. It’s difficult to pigeonhole these two groups, but
let’s try anyway. Millennials are ambitious, hardworking, and self-focused,
whereas Gen Z is searching for truth, authenticity and looking for ethical
brands. A significant number of these two groups has switched from the way the
banking experience was handled previously to how neobanks handle it. That’s why
there is constant growth and innovation: new designs will only amplify and
substantially attract more users to more neobanks.
Don’t buy some of the negativity associated with Gen Z, like
them having ‘the attention span of a goldfish’. They’re thinking critically
about brands which claim high values, trust, helping the world, fighting for a
better purpose. Pakistani activist for female education Malala Yousafzai – the
youngest Nobel Prize laureate, and Swedish environmental activist Greta
Thunberg are examples of what I think Gen Z is all about. So, you need to
combine the element of finance and seamless tech and add something ethical and
unique, to attract Gen Z – which are your future premium customers.
Below are outlined three attributes the unicorn breed of
fintech firms are missing, which could spell the difference between an
onwards-and-upwards trajectory rather than a crash-and-burn scenario.
Aesthetics
Images that decrease the anxiety associated with financial
matters, together with a calming user interface design. When the user fires up
the app it promotes a more relaxed and stress decreasing approach to handling
the financial app and in turn their finances. The vast majority of fintech apps
are very ‘financial looking’ – aka dry as a bone, and fintechs need to address
the look and feel of their applicationsThree things to help fintech unicorns
grow profitability 4. Customers paying premium rates for financial services,
expect something more than a standard finance app, so fintechs need to add a
better-designed interface, both graphically and interactively – currently
that’s missing.
Incorporating nature and meditation images to give a much
more holistic feel would also promote a better relationship with one’s
finances. Health and wellness themes will make it more pleasant for people to
deal with finances.
Human connection
A lot of fintechs are completely missing the point of
humanising financial apps and giving added value to the customer. When you’re
incorporating finance holistically, it’s important to realise that a healthy
relationship with money is part of one’s wellbeing and affects all the other
aspects of one’s life – personal, business, etc. just as much as physical
health.
Fintechs should think about adding gamification to their
apps. It moves the process of dealing with money away from it being ‘just a
finance app’ and adds more support to creating a healthier approach to personal
finance.
Respected financial psychology expert Dr. Bradley Klontz has
conducted several studies on customers’ relationships with their finances.
People with money avoidance issues will avoid looking at account balances, bank
statements, will not adhere to budgets and run away from their financial
problems. Gamification and calming features can help people overcome the worry
of opening their money account and make them feel more connected.
The way customers feel about their finances affects how they
feel every day about other important areas of their lives. Satisfying the
non-financial aspects of users would help them to evolve in all aspects of
life, as this will ultimately bring them financial freedom.
Purpose
The finance sector and most fintech apps do not have the
consumer’s interest in mind. They are intentionally letting users go into debt
in order to generate revenue. This isn’t the way to humanise the finance
sector, and it is definitely not a mindful approach to customers’ wellbeing and
future finances. Generation Z customers are looking for ethical applications,
so fintechs who can show and prove they care about not just the customer, but
about scenarios chiming with customer feelings – like improving the climate or
minimal use of unrecyclable materials will likely be chosen.
Helping people realise how to reach their potential is
missing big time. Fintechs need to give users a 360 approach to their life and
realise the need for a holistic approach to customer finance.
We have seen these trends emerging in the last few months
with some fintechs startups having approached new ways of engaging with their
customers. But the big unicorn fintech world still awaits a strong player which
will embrace these trends and cater to the current and future premium
customers. Neobanks who find a way to help their customers create healthy
financial habits will win their loyalty and the industry fight for premium
rates.
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