This past year was a testament to the fact that technology and business are forevermore joined at the hip: strategically, tactically, and operationally.
Digital transformation, the buzzword of 2019, was clearly tested in 2020. While many financial institutions (FI) across Canada were faced with the challenge of serving both prospective and existing members remotely, their current digital channels (if existent) were also challenged to an extent that FIs have not experienced before. This experience, which for many resulted in member attrition, loss of forecasted account growth, and also strain on customer support teams, stressed the importance of having in place a digital strategy, and compelled organizations to accelerate initiatives in new and innovative ways. As we enter a new year, the world has changed, presenting challenges and opportunities that require us to adapt and grow in real time.
As consumers we have all grown accustomed to the online, instant, convenient and easy experience provided in today’s retail e-commerce world. These expectations have carried forward to all other aspects of our lives, and financial services is no exception.
In speaking with FIs across the country, these marketplace expectations paired with competition from non-traditional online lenders have placed real urgency in developing and executing on a long term digital strategy that delivers an exceptional personalized experience. To execute you need the right tools to onboard and validate new members, and to offer those members products and services that are tailored to their customer lifecycle and financial journey. If executed correctly there is a unique opportunity to increase share of wallet and overall member financial wellness. If not addressed, member attrition is the threat faced as more Canadians move to managing finances online. Proof of this can be found in the Canadian FinTech Lending Study 2020, which surveyed over 2,597 Canadian FinTech Lending customers, showing that the majority (71%) of Canadians are now managing more of their finances online this year than they did 12 months ago.
Just as the days of viewing technology as something for “IT folks” are in the past, the days of thinking that “digital strategy” is separate and distinct from the greater business/enterprise strategy are also long over. A digital strategy will create additional revenue streams, improve efficiency ratios, and deliver a superior member experience.
As we begin 2021, one of the challenges is that there is no silver bullet or one-stop-shop to solve for a FIs’ end-to-end digital and technical needs. Consolidation of digital and technical services, systems, and tools with a singular third party provider is often incorrectly touted as the only way to achieve the sought after omnichannel experience – that is the seamless customer experience across all channels and touchpoints with their brand. While this approach can be appealing for ease of vendor management and procurement, it can be restrictive and puts unneeded walls around an institution’s growth and strategy.
With open banking on the horizon in Canada, API-driven platforms are optimal, and necessary, for FIs to absorb best-of-breed technology and services to achieve their strategic goals and objectives. Like the concept of open banking itself, this approach gives the FI flexibility, control, and choice over who they want to work with and for what. The advantages are threefold:
- The FI gets to define their own experience based on need, performance, and preference.
- It puts the impetus on providers, rather than the FI, to work together and develop integrations necessary to support their mutual clients and the overall ecosystem.
- It forces providers to focus on what they do best, rather than delivering an “all in one, but master of none” solution approach, effectively creating an ecosystem of deeper, richer solutions.
The future is going to be defined by FIs, FinTechs, and service providers willing to collaborate and partner to achieve long-term viability in their solutions and to deliver true value. Sustainable long-term success is not about a one-size-fits-all approach or finding refuge in an all-in-one provider for ease of management and procurement; it is about seeking out best-of-breed API-driven platforms, and partners that share a keen willingness to collaborate and build together. This is where true long-term value is recognized.
Although 2020 was a year of physical separation, it was also a year of finding new ways to connect with others – professionally and personally – and for me it magnified the importance of strategic, philosophic, and cultural alignment across partners needed to innovate at speed and to push the Canadian financial service landscape forward.
About Andrew Pastoric
Andrew leads Valeyo’s strategic partner engagement and enterprise initiatives. Follow Andrew on LinkedIn.