Digitalisation is an ongoing process that has revolutionised every aspect of our daily lives. Everything from how we communicate with one another, to how we pay for goods and services has been transformed by technology. Even the UK Government is calling itself ‘digital by default’.
And, with these advances in technology, has come endless opportunities for innovators to come forward and revolutionise the way we do something that we’ve always done. One industry in particular has welcomed a vast range of new innovators – the financial services industry, in which the number of e-money providers has doubled over the past two years.
Where are the opportunities in e-money?
While industries far and wide have been riding the wave of digitalised innovation, it seems the bigger, more traditional players within these industries are often much slower on the uptake. This has been no more apparent than in the red-taped world of financial services where bigger, traditional institutions have struggled to bring their processes in line with our 21st century world.
But the big banks’ approaches to innovation, or lack thereof, isn’t sitting well with the public. In fact, research of 1,000 UK consumers found that over half are frustrated with their high street bank and 41% explicitly stated they felt there is room for improvement when it comes to customer experience in the movement of money.
With traditional banking lagging, fresh, bold forward-thinking firms are racing to the fore to offer consumers the services typically provided by a bank, but in a more innovative manner. These young firms are facing customer dissatisfaction with big financial institutions head-on and offering consumers alternative, and arguably better, ways to pay.
Which brands are already innovating?
When it comes to those who are ahead of the pack, it’s the consumer brands who are already innovating and building a legion of loyal customers in doing so. These brands are blurring the lines with financial services and extending their relationship with customers by blending seamlessly in with their day-to-day life.
An example of such a brand is Starbucks, the American coffeehouse chain, which has created its own prepaid mobile app. Customers are encouraged to load money onto the app in order to purchase their coffee and are then offered regular deals and discounts. This builds customer loyalty and helps integrate the brand into the customer’s everyday life.
Other brands getting in on the act include Apple and the launch of its Apple Pay service. Customers are able to make contactless payments through an iPhone or Apple Watch, using near-field communication (NFC) without having to reach for their wallet.
Even travel companies are buying into e-money – with the lines of Trainline enabling commuters to purchase their travel passes via the app which can then be inspected on their phone.
And that’s not all – there are some innovators who are lightyears ahead, offering services beyond the realms of any technological enhancements we have seen before. One example is Kerv – the world’s first contactless payment ring. Another is Zwipe – a payment card that verifies customers through their fingerprints rather than a pin.
Is regulation likely to hinder brand innovation in the e-money market?
Here in the UK, we’re fortunate that the regulators, such as the Financial Conduct Authority (FCA), are working hard to help foster innovation – recognising how it can promote competition, create greater choice for consumers and help introduce a more customer-centric approach in the provision of financial services.
Ultimately, if the regulators want to create a more customer-centric approach to financial service and product provision, innovation needs to be at the centre of all strategies and protected by regulation. Instead of acting as a hindrance, it’s likely that the regulators will instead be helping to bring more innovations to the market that are able to help customers more easily manage their finances.
For those brands who are wanting to ride the wave of innovation, now is the time as there is a whole sea of opportunities out there. With high levels of customers left frustrated by convoluted, and expensive, banking processes, there is a potentially lucrative market to tap into. It’s in brands’ hands to race head and try to capitalise on the opportunities afforded to them in the shortcomings of traditional banking.
By Scott Dawson, commercial director, Neopay