All posts by Nathan Marquiss

Director of Sales Nate Marquiss is an innovative, consultative, and seasoned sales executive who is focused on providing value to his clients by developing and selling payment and money movement related technology. He has a successful track record creating strategies and delivering solutions for some of the world's largest financial services organizations in the areas of global payments, retail banking, wholesale banking, credit cards, and international remittances.

The Big Question About Fintech

The financial services industry has been working diligently to deliver personalized, seamless, and on-demand customer experiences through digital and emerging channels. This is perhaps most evident in the explosion of FinTech for everything from online loans to peer-to-peer payments. Financial transactions that once seemed impossible are now commonplace, like paying bills via mobile devices or depositing checks with the snap of a picture.

Use of FinTech is becoming more widespread

A recent EY study estimates that in 2017, the overall adoption rate of FinTech was 33% among digitally active consumers. This is more than double the adoption rate reported in 2015, which was 16%. In addition, awareness of FinTech grew at a rapid pace. The study shows that 84% of digitally active consumers were aware of FinTech services in 2017, compared to just 62% in 2015.

And FinTech users don’t rely on digital channels just for their financial needs. The same study reports that 64% of FinTech users prefer to use digital channels to manage all aspects of their lives, compared to 38% of non-users.

Financial institutions are thinking differently, thanks to FinTech

Financial institutions are taking notice of today’s fluid digital landscape and the impact it’s having on consumer expectations. A study by PWC shows that more than 80% of financial institutions believe their business is at risk due to emerging FinTech and 88% are concerned that they’re losing revenue to these innovators. However, this increasingly competitive landscape is also encouraging them to think differently. The study shows that 77% of financial institutions will ramp up their efforts to innovate internally and 82% expect partnerships with FinTech companies to increase over the next three to five years.

The most popular categories of FinTech

FinTech encompasses many different categories of financial services. The EY study indicates that money transfer and payment services are the most popular categories of FinTech, with 50% of FinTech users leveraging these services in the previous six months. This number rose from a mere 18% in 2015 and represents the highest uptick among all categories of FinTech. Insurance services also saw a significant jump from 2015 to 2017, rising 16 percentage points in just a two-year period. Other popular services include financial planning, borrowing, and savings and investments.

The rise of digital-only business models

The FinTech revolution has given rise to new consumer environments that exist exclusively as digital storefronts. Neobanks, for example, are one-stop-shop financial institutions that have no physical retail footprint. Their entire business strategy – including goods, services, and customer engagement – are strictly delivered via digital interaction channels.  These “digital-spinoffs” are distinct from traditional banks and have differentiated offerings that focus on transforming the customer experience. Being relatively new, it is yet to be seen if neobanks can independently scale or foster profitable businesses, but the concept is gaining traction with consumers. Given their increasing comfort with digital-only businesses that lack any true storefront identity, one can only predict that these types of business models will continue to gain momentum.

The generation gap

Is FinTech only for the young? The EY study shows that Millennials (25 to 34-year-olds) are the generation that’s most likely to use FinTech. Globally, 48% of Millennials use FinTech and the number in the US is even higher at 59%. This is perhaps unsurprising considering that these “digital natives” grew up with the internet and are now reaching milestones that require financial products, such as home loans and college savings plans.

However, digitally active consumers in the 35 to 44-year-old age group aren’t far behind. The study shows a usage rate of 50% in the US and 41% globally. The older generations are increasing their adoption rates as well. Forty percent of digitally active US consumers who are 45 to 64-years-old use FinTech and 17% of those who are 65 and older do so as well.

The big question

Millennials are clearly in the driver’s seat when it comes to the adoption and evolution of FinTech. They are new customers for many of the services that FinTech companies offer and they demand similar user experiences they find elsewhere online. But an overemphasis on this generation might mean that FinTech providers are missing out on revenue opportunities with older generations. Or perhaps they’re overlooking the up-and-comers who might have different needs and wants than the Millennials of today.

So, the big question is this: How can FinTech providers put forth strategies that encompass all generations? This requires a collective, cross-functional strategy that reaches valuable consumers who might find themselves outside of the FinTech circle. FinTech providers must be focused on developing strategies that help identify these prospects, offer solutions that meet their needs, and ultimately convert these non-users to bring them into the fold.

To paraphrase my father, it’s crucial to learn as much as we can from those that are different from us because the world is changing, and the rate of change is only getting quicker. It’s time for us to get outside of our comfort zone and anticipate changes before they happen. The availability of information at the speed of light and the ability to reach people literally in the palms of their hands makes everyone demand more. And we, in turn, should demand more of ourselves as technology providers to meet these diverse needs.

The Bottom Line: FinTech has revolutionized financial services, from peer-to-peer payments to online loans. This is especially true for Millennials, who are the generation most likely to use FinTech. But what about everyone else? FinTech providers must employ collective, cross-functional strategies to serve the most diverse audience possible.

Alacriti provides financial services and payment technology solutions to companies in the financial services, healthcare, insurance and utility industries. We offer payment processing solutions and provide software, services and outsourcing of the technology for our clients. Alacriti has a successful track record in delivering several technology solutions for some of the world’s largest financial services organizations in the areas of global payments, retail banking, wholesale banking, credit cards, and international remittances.

Are You Adapting to Consumer-Driven Payments?

Over the past decade, technology has infiltrated consumers’ lives in a profound way. Consider that in 2011, only 35% of Americans owned a smartphone. As of 2018, that number climbed to 77%. Americans ages 18-29 are almost completely saturated with smartphones, with 94% of young adults owning them. And let’s not forget about tablets. Over that same seven-year period, tablet ownership jumped from approximately 10% to 53%. (Source: Pew Research Center)

Mobile commerce is rising…

This explosion of mobile technology has changed how consumers gather information, communicate with one another, and conduct commerce. While ecommerce has been around since the early days of the internet, more and more consumers are paying for goods and services with their mobile devices. In fact, Business Insider projects that by 2020, mobile commerce will account for 45% of the total ecommerce market in the United States, with an approximate value of $284 billion.

…and creating payments disruption

Mobile technology has also changed consumers’ expectations for how they pay. Again, thinking back a decade ago, traditional banks and financial institutions were the mainstays of consumer finance and money movement. Since that time, new payments technology has emerged from industry disruptors that are focused on changing the game. Payments can be made with the tap of a smartphone via digital wallets, money can be transferred easily among individuals through peer-to-peer (P2P) payments, and formerly cash-dependent transactions like parking meter fees can be paid through apps. As more and more technology fuels alternative payment methods, the old “top of wallet” mindset has evolved to become “preferred payment method.”  

This plethora of options can provide highly efficient and personalized experiences for consumers. But it can also create headaches for retailers and billers. With so many ways to conduct commerce and make payments, expectations may vary wildly by consumer. And trying to keep up with their changing expectations can feel like an insurmountable task for many businesses. According to Baymard Institute, payment issues are among the top reasons for consumer frustration.

How can retailers and billers adapt to the new normal?

The truth is, there’s no “one-size-fits-all” model for accepting payments. Years ago, payments strategies weren’t as dynamic as they are today. The pace of change was slower, and trends were more visible over time. There were fewer channels and methods to account for when managing a payments strategy.

However, in today’s world, payments strategies must be highly fluid and respond quickly to new trends that develop seemingly overnight. Consumers’ preferences can be so dynamic that they may vary according to the specific retailer or biller. And customer experiences must respond seamlessly to meet their diverse needs.  

So much of the business world revolves around the old mantra, “If it ain’t broke, don’t fix it.”  Even as it relates to the receivables that companies depend on for cash flow, adoption of new payments technology oftentimes takes a backseat to other business initiatives. When retailers and billers face resource constraints that prohibit them from quickly responding to this changing landscape, collaborative partners can offer the technology that’s needed to meet the needs of modern consumers.

The ripple effect of negative customer experiences

It’s important to remember that savvy consumers have easy access to tools that can broadcast one negative experience to a large population of potential customers. Twitter, for example, gives users 280 characters to deliver brand-specific messages to over a billion audience members. Customers can post negative reviews on a variety of websites and search engines. And word-of-mouth travels quickly on social media platforms.

For retailers and billers, technology that facilitates positive customer interactions and counteracts negative experiences before they happen is more important than ever. Enhancing your payments strategy to offer quicker, more convenient ways to pay is just one way of streamlining the customer experience. Not only can this create positive brand interactions for your end users, it can also empower your business to collect its money faster.

Conclusion

Customers’ expectations are changing rapidly, and businesses must habitually find new ways to serve them. Commerce and payments technology that’s used widely today wasn’t even in existence yesterday and this rapid evolution continues to drive a new era of customer relationships. Adopting a comprehensive yet easily adaptable payments strategy has never been more important and will only continue to grow in importance over time.  

Whether retailer, biller, or bank, we’re all stakeholders in today’s ecommerce world. It’s up to all of us to come together and provide new customer experiences that are fast, secure, and, most importantly, satisfactory to our patrons.

The Bottom Line: Technology is changing consumers’ expectations when it comes to their payments. Retailers and billers of all sizes can find it challenging to stay at the forefront of these changes. When they face resource constraints that prohibit them from responding quickly, collaborative partners can offer the technology that’s needed to evolve strategy and deliver tailored customer experiences.

Why Should Businesses Embrace Disruption?

Customers today are much different from yesterday’s customers. The way we discover, communicate, and connect with businesses is dramatically different than just a few years ago, and the customers of tomorrow will be different still.

Technology evolves quickly, and the rate of change has incredible implications for the business world. These changes not only disrupt roles, structures, competitive environments, and the markets and societies in which businesses operate, but also the overall evolution of customer behavior, values, and expectations.

It’s becoming difficult for businesses to navigate what customers want and expect. Many institutions view recent shifts as a time of ‘Digital Darwinism’ — an era where technology and society are evolving faster than businesses can naturally adapt. Often bound by resource constraints, budgets, and even fear of the unknown, many institutions shy away from necessary digital transformation.

It’s natural for businesses to hesitate – change is difficult, and the road to digital transformation at the current rate of disruption is far from easy. As a result, much of business today is geared around the status quo or business as usual. Fear of the unknown leads many businesses to disregard the current state of digital maturity within legacy systems and solution sets and ultimately strains the customer experience.

This ever-changing wave of technology brings challenges, but it’s an important movement in the business realm. Businesses need to get outside their comfort zones to better understand the customer experience and how it might need to change in the future. Disruption forces businesses to look beyond their traditional norms and adapt their strategies as technology and consumer behavior evolve. While it can be argued that financial technology or “fintech” contributes to disruption, this sector is also key to finding solutions that can help businesses overcome technology challenges and uncover opportunities to improve operations.

Digital transformation can help businesses better relate to and engage with customers along the entire value chain. Albeit a difficult obstacle to embrace, digital transformation can help businesses grow, discover new market opportunities, and scale efficiently. Embracing disruption ultimately fuels strategic changes within internal systems while creating unique solutions to meet the needs of today’s digital customers.

Ultimately, the only constant is change – technology is not going away, so it’s time for businesses to embrace it. Disruption, change, and digital transformation is all integral to the future of business and necessary to meet customer expectations. Emerging technology can, and should, be integrated into business strategies to help meet these modern challenges. Even the smallest investments in digital transformation can help improve customer adoption rates, customer retention, and the overall digital experience. Seen as an obstacle, technology can bring a lot of frustration; it’s up to each business, however, to figure out how to harness technology to remain relevant and uncover new possibilities.

Old Habits Die Hard – Resistance to New Technology

The rise of e-commerce in recent years has stemmed the introduction of innovative new technologies, and a globalized economy as a whole.  Heather Cox, Citi FinTech CEO, once said that “Technology is eating the world.”, yet many banks and lenders continue to rely on traditional means of interaction with their customers. Much of that customer base consists of aging populations comfortable with traditional payment methods like checks and cash. Resistance to new technology, however, could alienate demographics that banks need for future growth and drive them towards emerging alternatives.

The electronic landscape continues to grow and change at an incredible rate. Smartphones and other technologies have created demand for instant information and service that is entrenched in a ‘bigger, better and faster’ mentality. Amazon began as the largest distributor of books in the United States but has since leveraged new technologies to transform into one of the world’s biggest retailers as a whole. Apple is the biggest distributor of music – also a digital product line. Much of the physical distribution and hands-on customer service models of traditional commerce are becoming obsolete. Ultimately, these demands are calling for more efficient means of communication and interaction leading to instant gratification.

The rise of digital payments is an example of this, though many financial institutions continue to offer outdated customer experiences.  Even when banks offer new apps and mobile access points, decades-old technology often lies behind these interfaces, offering limited capacity to the new age consumer holding a modern mobile device. Many of these systems were developed long before the digital age we now live in, originally built for slower ‘branch-based’ interaction and overnight processing.

Financial institutions are not immune to the rapid evolution of consumer behavior.  Consumers demand faster fulfillment, and the speed of change also continues to get faster. Banks have seen a steady decline in physical branch locations for years, and that trend will likely accelerate as consumers increasingly conduct financial activity through their smartphones, tablets, and other devices. This decline in physical interaction offers the banking world a unique opportunity to engage customers through new digital channels such as enhanced ATMs and interactive interfaces.

Doing more with less has been a cliché motto for years, and now banks can apply that same concept to how they conduct business with, and for, their customers. With an automated yet intelligent suite of digital enhancements, banks can offer customers services that save time and effort, as well as the flexibility to do things their own way whenever they want. A tailored Integrated Voice Response (IVR) system, for example, offers customers self-service options to conduct business anywhere. Digitally interactive apps and ATM screens can offer similar functionalities.

Fewer branches do not equate to fewer access points, nor does it mean fewer customers. Brett King once wrote, “The bank is no longer somewhere you go. Banking has become something you do.” New technology has changed how customers view their finances, and in many cases how they bank and manage money. Every aspect of e-commerce, payments, or banking can now be accessed from a central device that most consumers have in their pockets. Despite their reputations, financial institutions can still adapt to the changing times by making simple cost-effective improvements to their technology infrastructure.

The days of balancing a checkbook, now thought to be something your parents did, are quickly becoming a thing of the past. Technology is eating the world. Can’t wait to see what happens next.