Innovation and Finance: how do the new FinTech players communicate?
What is a fintech company?
A portmanteau of “finance” and “technology,” this term refers to companies in the financial sector that provide innovative banking and financial services based on new technologies. They may originate from the startup world—that is, innovative young companies with strong growth potential—or belong to large groups that incubate these companies to analyze market trends without altering their own operations. This is the case with Alpian, a Geneva-based fintech incubated by the Reyl banking group. Fully digital, this neobank targets a wealthy clientele known as “mass affluent.”
Major banking groups are also on the lookout for any opportunity to acquire the most promising fintech unicorns. Take Crédit Mutuel Arkéa, for example, which in September 2015 acquired 86% of the equity in the online money pot Leetchi. Crédit Mutuel Arkéa’s goal in acquiring this French unicorn was to accelerate its international expansion while integrating its Mangopay offering, designed for businesses. In addition to acquisitions, banks are increasingly investing in promising fintech companies—a way to stay on top of new trends and reach new customers. Credit Suisse, Swisscom, and ZKB (Zurich Cantonal Bank) are among the largest investors in fintech.
These financial technologies have a wide range of applications, including online banking, mobile payments, crowdfunding, cryptocurrencies, savings management, insurance and credit, online financial advice, and algorithm-driven decision support… Promising Swiss fintech companies include the startups Crowdhouse, a real estate investment platform in Switzerland, and Qumran, which offers products for analyzing and tracking digital interactions, both of 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." This app aims to simplify payments and investments by allowing users to buy cryptocurrencies, set up savings plans, and purchase stocks.
Among the most dynamic and promising countries in terms of fintech development, Switzerland ranks highly. According to Azzedine Chaibrassou, a member of the Swiss Finance + Technology Association and CEO of the fintech company Qard, which specializes in lending to small e-commerce businesses, “There is a genuine desire to build a fintech ecosystem in Switzerland—not only because of its banking culture, but also because of its tremendous capacity for digital innovation.” Indeed, Switzerland offers a particularly favorable environment for fintech development. It attracts startups from around the world that come to benefit from cutting-edge expertise within its highly effective incubators.
Digitalization, accessibility, and transparency: the pillars of FinTech
Technology is making banking more accessible
The influence of new technologies has gradually shifted consumer behavior toward greater autonomy. Consumers are now seeking simplicity and innovative services. Fintech fits perfectly into this trend because it meets these new needs. It is primarily used to help businesses and consumers improve the management of their financial operations, but also to make their daily lives easier. Take the example of Wecan Comply, a platform that uses blockchain technology to simplify compliance management between custodian banks and independent wealth managers. Developed by the Geneva-based service provider Wecan Group, this solution has notably won over the Geneva-based banks Lombard Odier, Pictet, Edmond de Rothschild, Reyl, and Hyposwiss.
Leveraging new technologies, the solutions offered by fintech companies typically take the form of apps, software, or algorithms that run on computers and smartphones. By providing digital services, they are transforming the general public’s relationship with financial institutions.
Fintech is revolutionizing financial and banking services through innovative technologies. In fact, checking your accounts, borrowing money, or making payments are no longer done the same way. We now talk about online banking, crowdfunding, virtual money pools, and global money transfers, but also about “cashless” transactions—that is, the digitization of payment methods. Users now have the option to pay digitally, particularly via their smartphones. Take the example of Africa, where this cashless method has proven its worth. Thanks to it, people in urban and rural areas, rich and poor alike, 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, notably with the recent acquisition of PayStack, Nigeria’s leading online payment provider, by Stripe, a global fintech giant, for over $200 million.
Thanks to new technologies, these financial firms are now accessible, and their products are easy to use.
Accessibility of services
The accessibility of services is one of the key strengths of fintech companies. Since they do not require human intervention, fintech services are fast and efficient. In fact, the time required to open an account or obtain a loan is shorter, and the costs of services at these institutions are more competitive because they are available exclusively online. They also offer customer service capable of responding to inquiries 24/7. To access fintech services, all you need is the required apps.
Although chatbots, artificial intelligence, and automation help fintech companies provide fast service and a customer-centric experience, it is important for them to maintain a human connection with their customers.
A strong social media presence
In response to changing consumer expectations and needs driven by digitalization, fintech companies are adapting to maintain their relationships with customers. Indeed, reaching these new consumers requires adopting their own language and using the tools they prefer, such as social media.
Social media makes it easier for fintech companies to stay attuned to their customers’ needs and build lasting relationships with them. In addition to keeping their customers informed and managing their accounts, fintech companies also leverage the reach of social media to attract new customers and build customer loyalty.
Since fintech companies rely on strong relationships with their customers, the use of social media is essential. However, as part of their marketing and media mix strategy, in addition to social media (online media), fintech companies also use offline media such as television and large-scale outdoor advertising (skysigns, giant posters).
The customer at the heart of development
Fintech companies have built their success on their ability to meet and anticipate their customers’ expectations by fostering greater communication with them. Capitalizing on the frustration of individuals and professionals with their banks, fintech companies seek to improve every aspect of the banking relationship while freeing themselves from the organizational, compliance, and profitability issues faced by large banking groups. They strive to understand their customers more deeply, particularly through their careers, social media channels, hobbies, and interests. To this end, they regularly introduce new services that they adapt as they develop, based on feedback from their early users. For example, customer testing and feedback are typically followed by new versions or software updates. Building an emotional connection with the customer is the foundation of their marketing strategy to create a truly collaborative product.
Innovation, flexibility, and agility are the watchwords of these disruptive new players. By focusing on innovative services, digital technology, and greater accessibility and transparency, fintech companies have addressed the unspoken needs of traditional customers and met the expectations of younger generations. They have succeeded in bringing about lasting change to an industry where competition had never really been a factor. The financial giants have, in fact, understood this and have begun investing in and partnering with fintech companies.
