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Innovation and Finance: how do the new FinTech players communicate?

For several years now, fintechs have been transforming the financial sector by bringing new services to individuals and businesses. Whether it is online banking, participatory finance, mobile payments, savings management or financial advice, fintechs are making good use of technological innovations.

Innovation and Finance

What is a Fintech?

A contraction of "finance" and "technology", this term refers to companies in the financial sector that produce innovative banking and financial services based on new technologies. They may be startups, i.e. young innovative companies with strong development potential, or belong to large groups that incubate these companies to analyse market developments without changing their operations. This is the case of Alpian, a Geneva-based fintech incubated by the Reyl banking group. This 100% digital neo-bank targets a wealthy clientele known as "mass affluent". 

The major banking groups are also on the lookout for the slightest opportunity to buy up the most promising Fintech unicorns. Take the example of Crédit Mutuel Arkéa, which in September 2015 bought 86% of the capital of the online kitty Leetchi. Crédit Mutuel Arkéa's objective in acquiring this French unicorn was to accelerate its international expansion, while integrating its Mangopay offering dedicated to professionals. In addition to takeovers, banks are increasingly investing in promising fintechs as a way of not missing out on new trends and reaching new customers. Credit Suisse, Swisscom and ZKB (Zurich Cantonal Bank) are among the biggest investors in fintech. 

The application areas of these financial technologies are varied: online banking, mobile payment, participatory financing (crowdfunding), crypto-currencies, savings management, insurance and credit, online financial advice, decision support through algorithms... Among the promising Swiss fintechs are the startups Crowdhouse, a real estate investment platform in Switzerland, and Qumran, which offers products to study and track digital interactions, which won the FinTech Awards in 2017. We can also mention the online bank Swissquote, which recently signed a partnership with PostFinance to launch "Yuh". An app that aims to simplify payments and investments by allowing to buy cryptocurrencies, make savings plans or even buy shares.  

Among the most dynamic and promising countries in terms of fintech development, we find Switzerland in a good position. According to Azzedine Chaibrassou, member of the Swiss Finance + Technology Association and CEO of the fintech Qard, which specialises in lending to small e-merchants, "There is a real desire to create a fintech scene in Switzerland, of course because there is this banking culture, but also because there is a very high capacity for innovation in digital technology. Indeed, Switzerland offers a particularly favourable framework for the development of fintech. It attracts startups from all over the world who come to benefit from the cutting-edge expertise within its particularly efficient incubators. 

Digitalisation, accessibility and transparency: pillars of FinTech

Technology democratises access to banking 

The influence of new technologies has gradually shifted consumer behaviour towards more autonomy. They are now looking for simplicity and innovative services. Fintech is part of this logic because it responds perfectly to these new needs. It is mainly used to help businesses and consumers to improve the management of their financial operations, but also to facilitate their daily lives. Take the example of Wecan Comply, a platform that uses blockchain technology to simplify compliance management between custodian banks and independent asset managers. Developed by the Geneva-based service provider Wecan Group, this solution has convinced the Geneva banks Lombard Odier, Pictet, Edmond de Rothschild, Reyl and Hyposwiss.

Based on new technologies, the solutions proposed by fintechs generally take the form of applications, software or algorithms running on computers and smartphones. They change the relationship of the general public with financial institutions by offering dematerialised services. 

Fintech is rethinking financial and banking services through innovative technologies. Indeed, checking accounts, borrowing money or paying are no longer conceived in the same way. We are now talking about online banking, crowdfunding or participatory financing, virtual savings accounts, worldwide money transfers, but also "cashless", i.e. a dematerialisation of the means of payment. Users now have the possibility of paying digitally, in particular via their smartphone. Let's take the example of Africa, where this cashless method has proved its worth. Thanks to it, urban and rural people, rich and poor, have a safe, secure and affordable way to pay their bills and make transfers, whether or not they have a bank account. In Africa, the fintech sector is booming with the recent acquisition of PayStack, Nigeria's leading online payment company, by Stripe, a global fintech giant, for over $200 million. 

Thanks to new technologies, these financial companies are now accessible and their products are easy to use. 

Accessibility of services 

The accessibility of services is one of the strengths of fintech. Since they do not require human intervention, fintech services are fast and efficient. Indeed, the duration of the procedures for opening an account or obtaining a loan is shorter and the costs of the services provided by these establishments are more attractive because they are only accessible online. They also offer customer services that can respond to requests 24/7. To benefit from the services of fintechs, you simply need to have the required applications. 

Although chatbots, artificial intelligence and automation help fintechs to offer fast service and a customer-centric experience, it is important that they keep a human connection with their customers. 

A strong presence on social networks

Faced with the changing expectations and needs of consumers brought about by digitalization, fintechs are adapting to maintain their relationship with their customers. Indeed, addressing these new consumers means adopting their own codes by using the tools they prefer, such as social networks. 

Social networks make it easier for fintechs to listen to their customers' needs and maintain a lasting relationship with them. If not to inform and manage their customers, they also take advantage of the reach offered by social networks to attract new customers and retain them. 

As they rely on strong relationships with their customers, the use of social networks is essential within fintechs. However, as part of their marketing strategy and media mix, in addition to social networks (online media), fintechs also use offline media such as television or spectacular displays (skysign, giant poster).

The customer at the heart of development

Fintechs have built their success on their ability to respond to and anticipate customer expectations by increasing communication with their customers. Capitalising on the frustration of individuals and professionals with their banks, fintechs are seeking to improve every aspect of the banking relationship while freeing themselves from the organisational, compliance and profitability issues of the large banking groups. They strive to understand their customers more deeply, including their careers, social channels, hobbies and interests. To do this, they regularly offer new services, which they adapt as they develop them based on feedback from their first users. For example, customer tests and feedback are usually followed by new software versions or updates. Creating an emotional bond with the customer is the basis of their marketing strategy to create a truly collaborative product.

Innovation, flexibility and agility are the key words of these new disruptive players. By focusing on innovative services, digital technology and greater accessibility and transparency, fintechs have responded to the unmet needs of traditional customers and the expectations of new generations. They have succeeded in bringing about a lasting change in a sector in which there had never been any real competition. The financial giants have understood this and have started to invest and partner with fintech companies.

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