How the customer experience has been transformed by fintech

The banking and lending sector has changed beyond recognition over the last decade alone. A key enabler for this has been technology, specifically fintech.

Whereas previously, you had to go into your local high street branch to check your balance, make a payment or apply for a bank loan, now almost everything can be done online. That has been made possible by mobile banking, the digital wallet and the rise of generative artificial intelligence (AI).

AI and advanced predictive analytics are by far and away the most significant of these developments, providing customers with better access to finance and the ability to manage their money more effectively. Many finance companies are already tapping into this trend, with Jones Lang LaSalle’s 2023 Banking and Finance Outlook finding that they plan to spend an additional $31 billion on the technology by 2025.

As well as delivering greater insight and personalised products and services for customers, AI can also make lending available to a wider range of borrowers. Additionally, they stand to receive a better service as finance companies can study real-time analytics and insights derived from transaction AI across their portfolio to better understand their current situation and requirements.

Another inconvenience for customers in the past has been getting their questions answered. Often they were left waiting for many minutes or even hours on the phone to get a simple query addressed.

But now, thanks to generative AI virtual assistants and chatbots, they can go online almost anywhere in the world, at any time of the day, and get an instant response. While the technology can currently only handle basic enquiries, it’s only a matter of time before it’s geared up to deal with more complex queries.

Here are some of how fintech is improving customer lives.

Finance management tools

During these economically challenging and uncertain times, customers need all the support that they can get. One way of doing this is by equipping them with budgeting and personal finance management tools to take control of their finances.

By giving customers a broader view of their financial picture through the provision of self-service tools such as saving pots and in-app budgeting capabilities, they can better manage their money. In return, this enables banks and fintechs to build greater trust and loyalty.

The payment process has also been made easier and more seamless through the use of digital wallets and ecards. Now the user can do almost everything on their smartphone, from transferring money to viewing their transactions in real-time and ordering and activating physical and virtual bank cards.

Assessing inflation

All of these money management tools are enabled by AI. By pre-empting the impact of rising prices and inflation on the customer, the technology can enable them to better manage their finances.

This technology is of huge benefit to lenders too. It means that they can more easily carry out income verification and affordability assessments on applicants, as well as support customers who may be struggling to keep up with repayments or who have defaulted.

But the real power of AI is realised when combined with open banking. By widening the data sets that are typically looked at by traditional credit-scoring algorithms, it can give a much more accurate reflection of a consumer’s financial history, thus broadening the basis on which a lender makes its scoring and credit decisions.

This is a huge benefit to the likes of gig workers or those without an established credit history who couldn’t previously access finance.

Embedded finance to the fore

One of the biggest technological advances, however, has been in embedded finance and open APIs. Now many non-financial businesses can offer financial products through their apps. The process is so seamless that the customer almost doesn’t realise that the transaction is taking place. For example, booking a taxi on an app and then the payment is automatically taken at the end of the ride.

It’s a great way for companies to drive customer loyalty and add a new revenue stream. To determine the best products and services for their customers, however, they need to use AI to look at the customer data and payment process and determine what would be the most relevant and useful offerings.

As customers come to realise the benefits of embedded finance, they are also more willing to share their data. The more relevant data that businesses can access, the better the payment journey they can provide.

Greater financial control

As a result of all of these fintech tools, customers can now take control of their finances like never before. But, while the benefits of this technology are clear, the truth is that it’s only as good as the data it uses.

The gap between the physical and digital banking journey is closing. By continuing to provide and enhance a service that meets the specific needs of the customer, that journey can be improved immeasurably.

The bottom line is that technology is the key to improving the customer experience. It’s also pivotal to ensuring loyalty and retention.