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The rise of UK fintechs

By Janelle Estes is Chief Insights Officer at UserTesting

In February, digital bank Revolut became the UK’s most valuable fintech startup after a funding round saw its value triple to £4.2bn. It has since announced that it’s set to launch in the US very soon, where no doubt it will continue its swift growth trajectory.

It’s this type of headline news that is pushing fintechs to the forefront of consumers’ minds.

Trendy. Innovative. Exciting. Those aren’t words most people would use to describe traditional financial institutions, but technology is a lightning rod for disruption, and is propelling these types of brands into the mainstream and creating wide appeal.

Fintech companies seek to improve upon traditional financial services experience by using new technology to streamline processes and enhance the overall customer experience. These startups are encroaching upon established markets, leading with customer-friendly solutions developed from the ground up and unencumbered by legacy systems.

At the end of last year we surveyed customers of some major fintech brands, including FNZ, Habito, Monzo and OakNorth, to better understand the shift in consumer interest toward fintech. The study asked these consumers to talk to us about why they chose to do business with that company, what the company does that traditional financial institutions don’t, and how loyal they are to that company.

These were the three key trends we found to be driving fintech customer experience:

  1. In-demand products and services.
    Fintechs are listening to market needs and offering up services customers previously did not realise they needed, such as digital wallets, automatic savings, and instant and hassle-free accessibility. The most common reason consumers chose their fintech company, which accounted for 34% of responses, was because they offered a product or service that consumers couldn’t find elsewhere. This highlights an important distinction between traditional and emerging financial services models. Fintech companies have the advantage of not being burdened by an organization’s legacy technology or traditions. As a result, they’re able to adapt to create products and services that may not fit into the frameworks, or philosophies, of more traditional organisations. Fintechs are pouncing on the opportunity to serve new customers in the margins that traditional financial institutions had mostly ignored and have created new personas and market opportunities as a result.
  2. Trusted recommendation.
    When it comes to finances, people rely on trusted friends, family, and colleagues to recommend products and services. One third of respondents said they were referred by a friend, family member, or another trusted source, such as a respected publication or blog. Rising fintechs are earning that trust by crafting customer-centered experiences that break away from traditional financial institutions.
  3. Ease of use.
    Seamless and superior digital experiences that exceed expectations are driving customer satisfaction and loyalty. Nearly one in four people (24%) responded that fintechs are putting the customer at the heart of their products and experiences. Consumers also noted stellar customer service, a good rewards program, and the convenience of an online experience, as key benefits fintechs offered over traditional institutions.

Superior digital experiences

Customer empathy, better products, and superior digital experiences are key reasons why consumers are favouring fintechs over traditional financial institutions: 50% of the responses were related to better or differentiated products and features, such as lower fees, higher annual percentage rates (APY), higher spending limits, and increased transparency. Many talked about the high interest rates, fees, and requirements that come with doing business with a traditional bank.

Consumers also talked about the stronger digital experiences that fintech companies provide compared to traditional banks. Nearly one in three (30%) respondents said a better digital experience was key, citing factors such as simpler design, easier application process, and resolving issues through the website or app vs. calling customer service.

Human insight is key to customer loyalty

When it comes to their finances, consumers have high expectations, and constantly changing needs. On the surface, it may seem that fintech companies are on the verge of fully disrupting traditional financial institutions, but don’t count on that just yet.

As our findings highlight, consumer loyalty is driven by a number of factors, none of which are set in stone. Trendy or not, having the right product at the right price at the right time is crucial to earning customer loyalty. Financial services companies, traditional or otherwise, need to continually empathise and understand the changing needs of today’s sophisticated consumer.

Consumer loyalty for financial products can be fleeting, but the companies that incorporate fast human insight into every stage of the development process will continue to earn the loyalty and business from consumers.