Like many industries, financial services were heavily impacted by the waves of changes in customer needs and expectations throughout the course of the pandemic. However, many of these developments have in fact been ongoing for some time now. What the pandemic has done was not only accelerate digitisation efforts, but pushed providers to reevaluate the current industry landscape and what is really driving value. Based on NielsenIQ’s global syndication, The Finance State of Play, mobile wallets - not debit cards or mobile banking apps - are the most often used method of payment for a majority of online activities in Indonesia, including online shopping (42%) and even paying for bills (40%). From the same study, 38% of online Filipinos are investing in cryptocurrency, the highest amongst investment products including more traditional products such as fixed deposits, stock, and property.1
These trends present new growth opportunities that financial services providers have the power to unlock; however it will be challenging to do so alone. Customers now demand even more seamless experiences and engagements, as well as more personalised offerings. This calls for greater innovation and collaboration across the system. Fintech, retailers, intermediaries and other new industry entrants are challenging the traditional value chain by offering simple, efficient, and safe means for customers to access, protect and grow their wealth. Within this increasingly interconnected landscape, financial services organisations need to reevaluate their understanding of, and position within, the financial services ecosystem.
For financial services organisations to generate and capture new value, there are a few key factors for success that should help inform their strategy.
Use ‘convenience’ to drive customers
Like so many other sectors, the financial services industry is seeing an ever-growing demand by customers to be able to do things faster and more easily. This pursuit of convenience and efficiency is a key driver of customer decision making. In Australia, close to 2 out of 5 health insurance customers (39%) bought their policies on an insurance company website - out of which, 35% selected convenience as the main driver for choosing that purchase channel. However, in Singapore, a majority of health insurance customers (44%) chose to purchase from their agents for the same reason - convenience.1
With this in mind, brands have an immense power to shape the customer journey. With developments such as open banking, new technologies and the entry of new intermediaries, it is now even more important to collaborate within the ecosystem to enable customers to access finances seamlessly across platforms, devices, channels and brands. This is especially pertinent now, with more people switching to long-term remote work - enabling them to access their financial needs wherever they are, whenever they need to, would be key to winning and keeping customers.
Personalise experiences for the right customers
As customers have increasingly more information at their fingertips, they are more empowered to actively search for and choose brands and products that suit their unique needs. The need for personalisation has become a key deciding factor for customers when they are choosing a financial services partner. In Thailand, 28% of customers chose their life insurance company because it had different policies to suit their needs, compared to just 17% who purchased it for lower premiums.1
Financial institutions can no longer target customers on a homogenous level and will need to communicate the right offerings across a strategic set of digital channels. In markets like India and the US, i-banking is just as important as branches for customers to read up on or inquire about new financial products, while other markets and segments see branches or agents as customers’ preferred touchpoints.1 By putting the customer at the centre of your strategy, and defining them well based on a variety of attitudinal and behavioural dimensions, brands would have a clearer picture of how to make the brand more relevant to their customers.
Redefine your company’s position in the value chain
As the ecosystem becomes increasingly complex, understanding your organisation’s positioning within the evolving value chain would be key to tapping into new areas of growth.
Some companies generate new value by creating their own mini-ecosystem, serving the customer end to end without them needing to leave a single platform. For example, BIDV Smart banking is an initiative from the local bank in Vietnam where they turned their mobile banking app into a super app, integrating utilities ranging from basic financial services to shopping, travel, education, and health services.
We are also seeing financial providers strategically expand their foothold across the ecosystem through partnerships and acquisitions. An example is Grab, a most used app for ride-hailing and online food delivery, partnering with OVO, a leading mobile wallet in Indonesia used most often by 54% of e-wallet users in Indonesia. Since a majority of ride-hailing users (59%) and online food delivery platform users (61%) use mobile wallets as their preferred payment method, there is a clear synergy between these categories that can be leveraged.1
Despite different market level nuances, we see a similar picture worldwide where traditional financial institutions can no longer stay relevant by operating in silos or with traditional models of customer engagement. While this does pose significant challenges and for many, requires critical structural changes, organisations that are able to think holistically about their customers’ fundamental changing values as well as the company’s positioning in the ecosystem will see a greater advantage in unlocking new growth.
To find out more about the Finance State of Play global syndication, or how to navigate these key trends, please contact your local NielsenIQ representative or [email protected]
About the author: Connie Lee is an associate director of consumer insights and syndicated research lead for the financial services vertical at NielsenIQ
1The Finance State of play 2021 is a survey completed by n=9,679 financial services customers across 12 markets, including Australia (n=612), China (n=1,514), India (n=898), Indonesia (n=1,129), Malaysia (n=601), Philippines (n=600), Saudi Arabia (n=604), Singapore (n=504), Thailand (n=602), Turkey (n=812), UAE (n=811), USA (n=1,003). Fieldwork for all countries except for Indonesia was completed online and in February/March 2021. Fieldwork for Indonesia was completed via face-to-face and telephonic interviews in June/July 2021. The study aims to provide banks, insurance, and payment brands a view of the market landscape, key trends, and the level of openness to financial innovation worldwide.