When it comes to managing and investing money, consumers today have more options than ever. Gone are the days when you pick one big-name bank and put up with a bunch of fees. It’s a buyer’s market now, and success in financial technology (or fintech) depends on which institutions can best tailor their services to individual consumers.
For most companies, that’s required a serious investment in the “tech” part of fintech—whether it’s transforming business internally with new digital tools and practices or offering new products fueled by machine learning designed to achieve longer-term, bigger-picture goals. Here are just a few ways that companywide digital transformations and innovations are helping fintech leaders serve their employees and customers better.
Lincoln Investment and Betterment
Offering personalized customer experiences while embracing a remote workforce
What’s the first thing a digital transformation alleviates in any business? Communication lags. For a 50-year-old institution like Lincoln Investment, that means being able to support 1,100+ financial advisors nationwide managing over $36 billion in assets with a home-office team of 450 in real time. Lincoln Investment is able to provide its financial advisors with technical assistance, access to documents and more, whenever and wherever they need.
“The way people think about and use money varies wildly across the country. Having full-time employees in Wyoming means they’re going to ask you questions about what a checking account needs to do that might be very different from the way people use checking accounts in New York.”
Newer fintech organizations, like online investment company Betterment, are establishing remote communication from the ground up as part of their business growth model. Betterment currently has offices in New York and Philadelphia, but over the past six months it’s been looking beyond those cities, more than doubling its remote employee numbers and growing its workforce living outside New York from 2% to 15%.
Boosting its remote workforce creates a more engaged, successful company overall, according to Betterment CTO Mike Reust. Moreover, Reust added, having employees who live where their customers do has given Betterment an invaluable competitive edge.
“The way people think about and use money varies wildly across the country,” Reust explained. “I grew up in a tiny town in Indiana, and the way everyone thinks about money there is hilariously different than anyone I’ve met from the East Coast. Having full-time employees in Wyoming means they’re going to ask you questions about what a checking account needs to do that might be very different from the way people use checking accounts in New York.”
The complex algorithmic modeling at the heart of Betterment’s product suite also invests customers’ money in ways that work for their specific needs rather than adhering to any cookie-cutter, conventional wisdom about how one should play the market. The core feature enables Betterment to offer “sophisticated personalization at scale,” and to create more financial safety generally.
“We use advanced mathematics to best solve your financial problems for your specific context,” Reust says. “In a single day, your entire Betterment portfolio is being run through a personalized model that is going to take action on your behalf.”
Online-only bank N26
Using sophisticated technology to augment financial services
Integrating workplace platforms amplified by customer-facing products also allows financial institutions, regardless of size, to deliver a personal finance advisor experience to a wider customer base. German online-only bank N26, for example, incorporates a sophisticated tech stack that uses machine learning and data-mining to streamline financial services on the front end, so customers are never offered options they don’t need.
“We can filter out in the background people for whom maybe a savings product is not relevant because they don’t have any money to save,” N26’s U.S. CEO Nicolas Kopp told MIT Sloan’s Fintech conference earlier this year. In June, N26 announced it had attracted more than 3.5 million customers, up from 2 million last fall.
Saving time internally while expediting growth externally
Intuit, the parent company to global products and platforms like TurboTax, QuickBooks, Mint and Turbo, has been using software to improve the financial lives of customers since 1983. Recently, Intuit’s internally integrated collaboration tools have allowed its engineering and customer support teams to:
- Pool customer concerns and technical issues
- Dramatically reduce the time it takes to address each concern and issue
Thanks to a streamlined set of digital tools, Intuit is enjoying more seamless collaboration and better employee engagement. This in turn makes it possible to do more to address more customer needs.
It’s also seen significant growth in 2019 after doubling down on machine learning and data to expand its offerings for self-employed and small-business customers. In its most recent earnings call, Intuit reported a 15% revenue boost year-over-year, with 4.5 million QuickBooks online subscribers. CEO Sasan Goodarzi attributed the company’s strong growth in 2019 to the expansion of its small-business and self-employed SaaS products.
The company is simultaneously investing heavily in automation and artificial intelligence for repetitive tasks like invoice processing, which, as CFO Michelle Clatterbuck puts it, “frees up employees to focus on valuable work [and react faster to] what’s happening in the moment.”
Providing customers a holistic digital view of their finances
Financial services startups like Monzo might have begun with brick-and-mortar-free banking and a checking app, but increasingly, they’re using the flexibility a digital model affords them to give customers a more holistic view of their finances.
Monzo CEO Tom Blomfield told The Guardian he wants the banking app to provide its customers with a dashboard for connecting and comparing all their financial transactions—including mortgage interest rates and student loans—to savings accounts and credit cards. This is a functionality that many fintech companies are working toward, but thanks to the sheer number of niche credit unions and small local banks in the world, has yet to be entirely realized. Yet, the flexibility afforded by digital innovation allows banks and companies like Monzo to make that a reality for customers.
Digital innovation breeds customer loyalty
Through digital innovation, for employees and customers alike, these companies are able to offload the inefficient tasks of yesterday and get busy focusing on people’s overall financial health, whether that’s by incorporating features like third-party mortgage rate comparisons or growing online communities where customers can help themselves.
By building products and business models that specifically address consumers’ financial challenges, these financial services organizations can introduce new standards of trust and customer loyalty that will yield competitive, long-term success.