Sanjay Sharma is a Senior Financial Services Analyst for the Canadian region at Mintel. He researches and writes reports on the Canadian financial services industry.
The majority of Canadians believe that technology can change the financial industry for the better, according to an upcoming report on innovations in banking in Canada. In the past 50 years, there has been much imporvement as service delivery and ease of transactions have progressed exponentially from the advent of ATMs to online/mobile banking and more recently, blockchain and artificial intelligence fuelling the rise of cryptocurrencies, chatbots, robo-advisors, etc. Technology has also improved security, despite the challenges of data breaches and hackers. We are still in the early stages of Fintech innovation and there is plenty of scope for technology to impact product innovation and further improve accessibility, security and financial inclusion for all.
Increasing usage of Fintech tools
Mobile alerts such as money-saving tools and budget advice can give clients a better real-time picture of their finances, prevent fraud, offer guidance on budgeting and how to achieve financial goals. While banks need to offer multiple functions from tracking finances to tips to fraud prevention, it is up to customers to choose the type of notifications and features that matter to them. Alerts that can prevent cheques bouncing (resulting in fees ranging from $30-75), insufficient funds to meet credit card bills (which can rack up significant interest charges), pending bill due dates and unusual activity notifications are all likely to appeal to many banking clients.
As the operations of big tech companies straddle regulatory and geographical boundaries, coordination among regulatory agencies is crucial.
Fintech providers can increase satisfaction – and repeat usage rates – by offering more help to users which might help with more complex Fintech products. For example, UK-based banking app Monzo offers a “help” section within its platform with usage information and instant messaging so users can get live help from customer service agents. Another tool which may help users in the middle of an application or usage process is co-browsing. Co-browsing allows businesses to navigate along with customers online, offering live assistance during the digital experience. This prevents customers from getting stuck in online processes or abandoning a transaction halfway.
The future of fintech
Across the world, technology companies are slowly expanding their service offers with financial products that appeal to their customers, with the push starting from Asia. Building on technological expertise and large user base, tech companies have ventured into payments, money transfer, loans, asset management and insurance. The existing infrastructure lends itself to provide basic financial services which are a huge benefit, especially in places where a large part of the population are unbanked. Overall, the entry of technology companies enhances the efficiency of delivery of financial services and their low-cost structure promotes financial inclusion.
However, there are concerns about data and privacy. Companies such as Facebook and Google have billions of users. Naturally, there are concerns about how these companies will use their customer data when offering new financial products. There are also regulatory barriers which need to be overcome. These barriers can be particularly onerous in a highly regulated financial sector such as Canada. For technology companies to enter the Canadian consumer banking space, they must be ready to invest long-term resources, scout potential partners and navigate the regulatory framework. As the operations of big tech companies straddle regulatory and geographical boundaries, coordination among regulatory agencies is crucial.