• Johan Sörmling, Head of Mobile Identity at Signicat


• 06.10.2021 03:30 pm
undisclosed

New technology-led businesses are very good at engagement. Social media sites are incredibly “sticky”, with people coming back again and again to speak to their friends, or—more likely—argue with their neighbours.

The same is true of many of the fintechs that have sprung up over the last decade. Anyone travelling on the London Underground is likely to witness a riot of colour as travellers tap in and out with cards from fintech banks. The easy-to-use apps are proving popular with those making lots of transactions and who want to track them.

Unfortunately, these two entities share a problem. They can attract customers, and get them onboard their platforms. Those customers return again and again. But they are not taking the next vital step. For social media platforms that may be buying or clicking on advertising, or engaging with promotions. With financial providers, it’s about doing more than the basics, whether that’s taking out credit, having a salary paid in, or trusting them with bigger investments.

Patience and authentication

How can this change? The best place to start is to consider what fintech providers are doing differently. One aspect is that they have taken an innovative approach to onboarding, with slick application processes that can be completed on mobile devices, the integration of digital ID schemes, and video liveness checks all making the process simple. Onboarding is generally fast, which means new customers don’t have to wait long until using the service. In some cases it could even be considered fun—not an easy claim for any financial service.

Engagement is also high, with many customers using apps every day to check balances, or how investments are changing. But engagement isn’t enough to be profitable. Part of this is the high cost of customer acquisition, but it’s also because the products that get customers onboarded, such as current accounts, are not very profitable on their own. To be profitable, they have had to both introduce new products, such as loans and premium accounts, and move customers from engagement to action.

A big part of changing this relationship is simply patience. If consumers are coming back regularly, then something is working. Key to this is having the right authentication to make sure people are comfortable returning, to feel that they are secure but that they have easy, unrestricted access. While this is partly a waiting game, more can be done.

Financial relationships are intimate

Moving from engagement, where consumers are onboarded and regularly use an app—but are not yet profitable—to action is not a single step. It is actually three steps that need to be taken one at a time, at the customers’ pace.

Engagement and building loyalty: This is the first step, where customers start to use a service more and more. Customers return to the service and are engaged, but they neither fully trust or distrust the service. They’re likely to use it for low-risk transactions. The better the service is and the more accessible it is, the more likely they are to stick with it.

Adding intimacy[1] [2] [3] : This isn’t as X-rated as it first sounds. If you were to ask most people if they enjoyed an “intimate” relationship with their financial services providers, they’d probably laugh. Business relationships are very different from what we think of as “intimate relationships”. But think again. We trust financial institutions to keep money safe, and also potentially sensitive information. We trust that our data won’t be sold on or used for ill purposes. The more people interact with providers, the more intimacy they build with this provider, and the more they will use it for services beyond the basics. It may not be how we usually think of intimacy, but the faith people put in providers make it possibly the most intimate relationships we have.

Taking action: Finally customers will, at their own pace, be ready to take the action that providers need, that shift to profitable services. For example, someone signing up with a challenger bank may need a good amount of time using the service before they are happy having their salary paid to that account, or taking out a loan with that provider. It’s not that they are averse to the idea, but expecting that instant level of trust is a big ask.

This multi-step process requires authentication that won’t stand in the way. If customers are to continually return and gain that intimate relationship, then they need to interact with a powerful user experience that is uninhibited by authentication at the point of action. Friction when it is unexpected and unwanted will stop this process. All providers need to realise that this journey is quite a bit longer than it first appears.