It's Not Business As Usual
It's Not Business As Usual
Psyma International appointed Charles Schembri to the position of Vice President of the U.S. Financial Services Practice in 2016 as a sign of their commitment to the financial services industry. Charles brings extensive experience in marketing research with leading financial services players worldwide to enhance Psyma’s sector knowledge and expertise in the US.
Significant regulatory hurdles. Overriding concern about the safety and security of financial services data. New fintech competitors. The financial services industry has traditionally been slow to change, with limited options for consumer and business customers. Which, according to Psyma’s financial services industry expert, Charles Schembri, makes their response to this current environment even more important.
“The financial services industry is at an inflection point. Traditional financial services firms really need to educate themselves about their competitors and the evolving customer. It all starts with understanding what the customer needs. Firms need to understand how to serve customers that are becoming more susceptible to doing business with non-traditional financial services players,” said Schembri. He notes that non-traditional products and services and the brands that offer them are becoming more attractive to consumers (such as Venmo for payments, and Lending Club and SoFi for lending) and small businesses (like Kabbage for small business loans). “Traditional firms need to answer questions such as, ‘Who is my target customer?’ and once that is decided, ‘How do they want to be served?’” Therefore, insightful market research is still very much needed in financial services.
While the “fintech revolution is alive and well” at this point, they are not taking massive amounts of share from their well-established peers. “But what they are doing,” according to Schembri, “is getting people to question where they park their money. They are getting people to question the traditional financial service options in light of what they really need and how they want to be served at this point in their lives.”
“Consumers today usually start their search online when they need a new product or service. In this way, consumers are finding products and services from alternative brands,” reports Schembri. Additionally, “Convenience is variable. What is convenient for one financial product or service, may not be convenient for another, and the notion of convenience seems to be constantly evolving throughout the customer journey.” While online-only firms (including virtual banks, who have no brick-and-mortar presence) have been slow to take off, that may change as consumers shift from being branch-loyal to brand-loyal.
That evolution is why traditional firms are partnering with new entrants to develop the online/offline service offerings and experiences that best meet the needs of their customers. “It all comes back to first, what’s your strategy? Are you trying to acquire new customers, retain existing customers, or grow your share of wallet? Then, given that, who are your target customers and what do they want and need?”
Another example of this trend includes open banking, where banks and other firms share data among themselves to gain an advantage over new market entrants. In this way, they find new ways to improve the overall customer experience while simultaneously protecting customers and market share. (Schembri references a Forbes article for more information on this topic.) Through open banking, banks come together to share the cost of services. For example, Zelle was backed by more than 30 US banks to compete with Venmo, and others have collaborated to provide micros-services such as credit reporting to cost-effectively meet their business customers’ needs.
As companies strive to better understand their customers and how to serve them, they will need to adopt new strategies and swiftly adapt to help achieve greater efficiencies and growth. “They need to rethink their relationships with customers entirely,” noted Schembri. When companies better understand their customers – who they are, what their needs are, how they want to be served – then and only then will they be able to compete effectively.