All companies want to be more customer centric, more data-driven. With growing competition and the low cost of customer acquisition, superior customer service will be a major factor in the success of any business. Companies best leveraging technology to offer products and services tailored to improving the customer experience, will win.
We are witnessing a digital revolution; and it includes all possible innovations in retail, healthcare, telecommunications, banking, investments, insurance, and even cryptocurrencies like Bitcoin.
FinTech leads the way
This revolution is clearly apparent in the financial services industry; where traditional banks are reimagining their services, data and systems to market to the growing needs of each consumer.
The rise of FinTech is a perfect example of how technology companies can disrupt a steady-state market, like financial services. The rate of investment in FinTech is staggering – $5.4 billion was invested in FinTech just in Q1 of 2018, according to a report from CB Insights.
Clearly FinTech means big business; not only for established players in the market, but it’s opening doors to new companies to upend the market as we’ve known it for the past decades. Here are a few examples:
- Stripe, democratized the payment processing unit making it easy for small and mid-sized businesses to accept online payments.
- Yoyo Wallet, is a provider offering mobile payments combined with a loyalty platform which provides customized loyalty programs.
- PayPal’s Affirm, helps decide if an applicant should receive a loan.
The Role of Big Data
The best FinTechs are providing tools that deliver personalized services to customers by gathering and analyzing massive amounts of data. Relationship analysis and language comprehension, are just some of the ways FinTech is leveraging the power of Big Data using cognitive technology.
One of the main sectors largely impacted with Big Data is lending and credit scoring. Traditionally, the credit scores were based on financial transactions and referred to for all credit activities. With Big Data, factors have expanded to consider such things as ability and behavior. Companies can use data ingestion tools to aggregate a variety of data sources to build a more holistic view of their customers. Imagine, banks and investment firms could provide personalized investment strategies based on a customer’s politics and ideology as determined from the customer’s social media activity. For example, if a customer tweets regularly about green energy, the bank could suggest a green energy fund for investment.
As financial service companies expand their digital footprints with mobile apps and other new technologies and services; Big Data plays a significant role in offering contextual and personalized engagements to increase opportunities for up-selling and cross-selling.
Overall, companies can offer better customer experiences and do so more economically, while their customers benefit from better advice for their investments and planning.
The Role of AI
In some form or another, the financial services industry has been leveraging AI and machine learning for quite some time. With the addition of Big Data, the industry is seeing a fundamental transformation through the use of advanced analytics. This combination of AI and Big Data promises to help new and established companies bring innovative and smarter solutions to their customers.
Currently, AI mostly augments the benefits financial service companies normally offer. For instance, AI can be used to deliver more personalized services, investment advice and financial planning; all the while reducing manpower and providing more customized service.
Furthermore, with AI, consumers and companies are at lesser risk of fraudulent activities while making financial decision making simpler.
The Bottom Line
Customers benefit when companies make use of AI and Big Data. Personalized offers, better customer services, competitive pricing are the basic requirements to gain loyal customers. Consequently, we’re seeing lots of activity from the traditional banking sector to small financial institutions and new start-ups now leveraging the latest technologies.
Technology has never been more accessible, customizable, or affordable. It’s leveling the playing field. Those companies who understand the needs of their customers faster, and are able to deliver cheaper, will win.
Competition across all industries is only getting more intense, especially as more companies enter traditional markets. Fortunately, consumers and businesses all stand to be the big winners with better experiences in the end.