Competition has long been heralded as key to driving economies and industries forward. When firms compete, it’s believed that consumers get the best possible prices, quantity, and quality of goods and services. Despite this method being seen as the optimum for both sides, it’s actually proven detrimental to businesses looking to increase customer loyalty in their brands.

Why? The issue could be increased choice. A recent Adobe report revealed that half of consumers (50 per cent) would buy from a completely unknown brand if it offered them a better experience, while two thirds (61 per cent) claimed to be loyal to brands that tailor experiences to their needs and preferences. With so much choice on offer and businesses constantly competing against each other to grab consumer attention, companies have no problem attracting new customers, but customer loyalty (or stickiness) is at an all-time low.

There are many instances where competition doesn’t benefit customers, too. An example of this is the remittance industry, which followed a competitive model with providers competing against each other to break into new markets first and offer the lowest prices. However, while competition can drive down prices, it can also lead to first entrants shutting a market off from other providers with exclusivity deals. Being first into these markets means companies can set the cost of sending money. This had led to an average global remittance cost of 10 per cent, severely harming those that rely on the services most. Attempting to address this problem, the G8 introduced the “5x5” objective in 2009, which aimed to reduce the cost from 10 to five per cent by 2014. However, four years past the deadline, the average global cost is still hovering around the seven per cent mark.  

So, with competition either driving customers from brand to brand without a second thought or pushing companies to stack the odds in their favour – with even government intervention not making the necessary impact – what can be done to ensure both sides are getting what they want?

Financial services must collaborate for customers

The answer lies in businesses adopting a collaboration mentality. Successful examples of this can be found the world over, where companies have embraced working together for the betterment of their customers. For example, Sky and BT agreeing to feature each other’s channels in the hope of reducing costs increasing the variety in their sport packages. This sort of collaboration is crucial for enabling businesses to reach market segments that they might not have been able to alone – benefiting all involved.

When looking to the financial services industry, the developing world has been able to lead the way with fintech collaboration due to an absence of legacy infrastructure. A study by the GSMA revealed that, across Africa, partnerships with start-ups were one of the driving factors behind its growing tech hubs. Large corporations such as Microsoft, Google and Amazon are providing start-ups with both financial support and free access to their products, helping them offer better services to their customers, and breed loyalty in the future. It’s not just tech giants that are supporting start-ups either – a large number of them have partnerships with mobile operators, such as Orange, MTN, and Vodafone. 

Looking beyond just the start-up scene, we partnered with leading digital money transfer service WorldRemit to open up new remittance routes across Africa, Asia, the Middle East and other emerging markets. Having the ability to offer such a large number of people more services, means we can increase our global footprint, and drive charges down.

It’s thanks to these sorts of partnerships that the importance of collaboration in the financial space is now being recognised. PwC’s Global Fintech Report 2017 revealed that 82% of financial services companies plan to increase their partnerships with fintechs over the coming few years. In turn, these collaborations will support national GDPs, improve customer loyalty and create a strong environment for businesses, both national and global, to operate in.

Collaboration is the key to stickiness

When collaborating for the benefit of their customers, businesses are putting the customer at the heart of everything they do, helping to increase stickiness. If consumers see a brand addressing their needs, concerns and wants, they will be far more likely to support it. Every business sets out to solve an issue affecting consumers, whether it’s fulfilling a market demand for a particular footwear or a financial service to help consumers send money home. Remembering that the customer comes first, and not the bottom line, is crucial. Ultimately by working with other businesses to pool resources that help support customers, companies can create a culture where they will stick by them, increasing profits and loyalty.