I think it’s fair to say that the majority of global financial services providers are playing catchup where financial technology innovation is concerned. There are exceptions to the general apathy, of course, as evidenced by what’s happening in places such as India, where government initiatives have resulted in two-thirds of adults (65%) being financially included, and over six in 10 (63%) having bank accounts. This despite India being one of poorest in the world, ranking 160th in per-capita GDP. And in Kenya, where “it is easier to pay for a taxi ride using your mobile phone than it is in Sydney”.
Closer to home, I can recount stories of travelling through Europe, Canada and the US, where financial technology (or fintech) differs radically. In many US restaurants, it’s not uncommon for a waiter to disappear with your payment card. (Note: credit/debit card skimming can happen anywhere, but card fraud remains a significant problem in the US.)
In Germany, I find it difficult to actually use my cards, as cash is still preferred. In the Netherlands, online payment solution iDeal “was adopted widely by retailers largely because of the low interchange fees (below 0.2%). As a result, Dutch consumers do not have to pay credit card subscription fees in order to shop online.”
So things are moving along in fintech circles, though some might say too slowly. Regulatory changes such as PSD2 will change how banks and other financial services providers operate, but interoperability remains the key factor in ensuring that fintech has a global effect rather than small-scale regional impact.
Key to the success of an explosion in fintech innovation is rooted in listening, and in particular to those people who have become accustomed to using their digital devices to do all manner of things. From watching Netflix to paying their phone bills, to monitoring the baby upstairs, to paying for parking – is there anything our humble smart devices can’t do? Well plenty, especially where our banks and credit unions are concerned. Yet, things are changing, and there’s a sense that players small and large are coming to terms with their slow start, embracing digital just as their customers are looking for good deals, opportunities to switch providers, and find more convenient solutions.
Interoperability is as good a place to start as any. If you’re a banker, thanks for reading this far. It means you’re interested in making things better, so that your organisation can take the necessary steps to future proof its services. Start by thinking of your bank as Netflix, where you can start watching Mr Robot on your phone, pick up where you left off on your tablet, then finish the episode on your TV. This is what your customers want from your bank. Start being more like Netflix.
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