How digital is changing the face of financial services

Emma Steeley, Commercial Director of AccountScore, a fast-growing company which provides bank transaction details for companies, discusses the factors that contribute to fast growth in the financial services sector

Digital transformation is a big theme for fast-growing companies in the financial services segment. What do you think this means for companies in the sector?

Emma Steeley (ES): In terms of digital transformation, growth is driven by optimising the processes, creating greater efficiencies within the business and then being able to deliver greater revenue. Open banking is obviously a big part of that for us. A good example is where a bank is now provided visibility on a new-to-bank customer and they’re able to use third parties to deliver the data in such a way they enable them to make informed, real-time lending decisions on data that was previously unavailable.

There are many parts to the puzzle. First, accessing the data, then analysis. Then being able to ingest the data and incorporate it into lending scorecards that provide richer user experiences, and larger choices to the financial services provider for the consumer.

How much progress do you think the big financial services companies are making with digital transformation?

ES: It will take some time because there are very complex legacy systems in place, which can be difficult to change quickly. The customer is expecting a seamless experience, and often the customer-facing changes are easiest for a corporate but these have to go hand-in-hand with the backend changes. And we’ve got to give them the time to be able to do that.

One thing that really comes out of the survey is that, for fast-growing companies, collaboration is key. Do you see a lot of collaboration in practice?

ES: I completely agree. All companies have got to think openly when it comes to alliances. A one-size-fits-all approach is highly unlikely to succeed. In our experience, Fintechs have got the ability to drive new business models within the bank, but the bank still maintains the public-facing brands that are able to maintain the customer’s trust.

What kind of arrangement works best between Fintechs and the bigger financial institutions?

ES: One of the keys to successful collaboration is that the big financial services firms understand the requirements and capabilities of Fintechs. You know, a lot of that sits around the information security, the regulation piece, the legal and compliance, because the Fintechs often don’t have a large team to be able to deal with that. The most successful collaborations that I’ve worked with have been where there has been a complete understanding and mutual engagement with the projects on both sides.

There needs to be a constant conversation. But there also has to be a cultural shift – one partner does not fit all needs. There will need to be a variety of partners collaborating with the firm to make everything work. The bigger firms need to bring these partners together and really make it work.

While I still think bigger firms will continue to take equity stakes in Fintech firms, I feel that could restrict the Fintech organisation. The smaller firm may end up getting swallowed up, as opposed to doing what they initially set out to do. As soon as the Fintech loses its ability to be nimble and adapt, then that’s when the original promise is unlikely to be delivered.

Our survey found that, from a digital spend point of view, the customer experience was paramount. But in your experience, is the behind-the-scenes stuff getting the attention that it should?

ES: Absolutely not, 100% no doubt about it. We know that the customer wants to have this seamless experience and the better the experience, the more the customer is engaged. But if the backend is not working as expected, then it creates a massive backlash. So the internal systems have to be maintained, otherwise you’re in a whole world of trouble.

Right across the board from the smallest Fintech to the largest banking corporation, they’ve got to be investing and ensuring that everything is working as it should be.

What are the biggest challenges to successful digital transformation?

ES: The main issues that I’ve encountered are employee pushback, lack of expertise to lead a digitisation initiative, a lack of overall digitisation strategy and a limited budget.

If you have a cohesive plan that sets out the objectives within a business that is well communicated to an organisation, that’s what tends to lead to the success of a digital transformation.

How can companies keep up with the pace of change?

ES: Firms need to be more intelligent when it comes to understanding customer needs. That’s something that is very important. The ability to act on real-time intelligence is impacting the industry as a whole and it will drive revenue and profitability now and in the future.

I think that financial services are starting to interact differently now with their customers. It’s moving towards the context of exchange, which I personally think has never been more vital when it comes to acquiring new customers and providing the very best service and experience for existing customers.