In a powerful inaugural study, experts and researchers at LinkedIn and Capgemini, in collaboration with Efma, explore the intersection of fintech providers, traditional firms and the new, ultra-personalized customer journey. For both incumbents and challenger brands, the World Fintech Report reveals the moments that matter most to customers, showcases financial services innovation from around the globe, and outlines the practical steps to apply innovation from within.
“Seismic shifts in the client journey from social, mobile, and digital technology are upending every aspect and business process within financial firms, from sales to product development to customer service,” noted Hearsay CEO and founder Clara Shih, a member of the study’s executive steering committee, in the report. “To succeed, innovation can’t be exclusively owned by a CMO, CIO, or innovation team. Digital innovation has to become everyone’s job, from the CEO and board down to advisors on the front line.”
The study polled more than 8,000 financial services customers in 15 countries, including the U.S., Canada, UK, France, Hong Kong, Spain and Australia, as well as more than 100 interviews with senior-level executives.
Among the key findings, from its executive summary:
Rise of the Fintech Movement
- The rise of fintech has been aided by a perfect storm, created by increasing customer expectations, expanding VC funding, reduced bariers to entry and increased pace of technological evolution.
- Customers are embracing new fintech products, with 50.2 percent globally saying they do business with at least one non-traditional firm.
- Traditional firms hold an advantage over non-traditional firms as they closed the gap on areas of convenience and quality of service over the last year.
Fintech, Traditional Firms Both Must Improve on Delivering Positive Moments of Truth
- Customers indicated significantly low levels of overall positive experience. Mobile, however, struck a chord with key customer segments of Gen Y and tech-savvy.
- Both traditional and non-traditional firms struggle to meet customer expectations on the most important Moments of Truth, which revolved around digital transactions, transparency, convenience and proactive updates.
- Gen Y and tech-savvy customers, widely regarded as influential customers of the future, offer higher revenue potential.
In Face of Fintechs, Traditional Firms Trying, but Struggling to Apply Innovation
- Fintechs have made headway into financial services, with close to two-thirds of executives stating fintechs are setting the bar higher for the entire industry.
- Traditional firms have become more open to partnership with fintechs, and they are pursuing a wide range of strategies in response to fintechs. Almost as many firms are developing their own in-house capabilities (59.2 percent) as are seeking partnerships with fintechs (60 percent).
- The actions of traditional firms to foster innovation have not measured up to the amount of effort put into them.
Inculcating Innovation Requires Methodical Approach
- Adopting a step-wise approach for applying innovation – for example, using the four-stage Capgemini framework of Discover, Devise, Deploy and Sustain – can be useful in helping institutions spread innovation throughout the organization.
- Securing senior leadership commitment, having a clear vision, and adopting a more innovative culture will be important for addressing disruption.
- Financial services firms need to be prepared for prospective future disruptive scenarios such as entry of BigTech or platformification, which can lead to a fundamental shift in the industry.
The report was unveiled at the recent LinkedIn FinanceConnect event, now in its fourth year. At the event, Shih hosted a fireside chat with JP Morgan Chase CMO Kristen Lemkau about the growing importance of Social Business and why some businesses succeed, while others fail. Kristen shared her firm’s latest groundbreaking marketing initiative, how she and her team have pushed the rest of the company to embrace digital, and how to change culture from within through leading by example.
Shih also was honored as a LinkedIn Agent of Change at the event, alongside industry leaders including Barclays UK CEO Ashok Vaswani, DBS Bank Chief Innovation Officer Neal Cross and Citi FinTech COO Yolande Piazza. In her Agent of Change video, Shih discusses whether incumbent firms hold a “trust” advantage over fintechs:
For more information on the 2017 World FinTech Report: