Fintech is hot. There’s no doubt about it. Everyone is talking about it. And it seems like everyone is jumping on the bandwagon.
More than 100 Canadian fintech startups have launched since August 2015 and – according to a recent report from financial consultancy Ernst & Young – Canadians’ adoption of financial technology is expected to triple over the next year.
As the trend continues to catch on, traditional financial services companies are looking for creative ways to retain their customers and create experiences that add value. The reality is, today’s digitally-savvy customers don’t particularly care about legacy systems or outdated policies. And, financial firms are looking for new ways to compete with startups by disrupting their own business models to better serve existing customers and attract new ones.
But, when you really think about it, fintech isn’t such a new phenomenon.
Credit cards, ATMs and online banking are examples of how technology has disrupted traditional business models and channels in the financial space. And, as I think back, my firm Delvinia has been helping to launch fintech-related solutions for Canadian financial firms for more than 18 years.
Delvinia helped one of Canada’s big banks launch online banking back in 2000, we developed a crowdsourcing platform for another major financial institution in 2006, and most recently, we helped to launch a new global digital platform for one of the largest insurance firms in North America.
The fact is, technology has been at the heart of financial services for a very long time. So why is fintech so hot right now? Well, there are a lot of reasons, not the least of which is customer expectations. Three years ago I was invited to visit a call centre operated by one of our insurance clients. I will never forget hearing one very frustrated customer saying, “Why is it so hard to buy your travel insurance product? It should be like buying a coffee at Starbucks.”
Well today, with fintech startups such as Sure and Cuvva, buying insurance really can be that easy. With a few taps on a mobile device Sure enables travellers to use their flight details to purchase insurance for the duration of their flight, while Cuvva customers can purchase car insurance by the hour simply by uploading a picture of the vehicle they are using.
Death by a thousand cuts is another reason fintech is hot. Fintech startups are eating away at the edges of today’s financial services, which is leading to brand loyalty disruption. The days of using one institution for all of your financial needs are quickly coming to an end. I know from my own experience, that the service provider who offers me a seamless experience on my mobile device, is the one who’ll win my loyalty.
When it comes to fintech disruption, the power of platforms can’t be overlooked either. Apple, Uber and Amazon have all created platforms that have removed the middle man between brands and their customers. And fintech startups have the same opportunity to wedge themselves between financial firms and their customers. Not to mention that Apple or Amazon certainly have the resources at their disposal and could one day be your next bank.
The democratization of financial services is another reason fintech is so hot. You can’t overlook the Uber-hailing millennial segment when you’re looking at the financial services sector today. Many of these younger customers wouldn’t think twice before lending money to a friend via a messaging app. Think about that.
There’s no doubt, each of these factors is influencing the big banks and insurance firms, pushing them to double down on their innovation efforts. Throughout Canada, major players in the financial services space have been creating their own digital labs and incubators, forging partnerships with competitors or investing directly in fintech startups.
Unlike the music, hotel and taxi industries, many financial services firms are quickly embracing this change. And, there are many great fintech examples coming out of traditional firms in Canada.
Delvinia recently designed and built a direct-to-consumer platform for Green Shield Canada using our innovation framework. The SureHealth platform, which launched earlier this year, is a prime example of an innovative fintech project that was led by the organization’s strategic marketing team from day one. Here are a few key takeaways on why the platform is seeing early commercial success:
- There was a very clear and simple vision from the outset.
- The development of the platform was customer-led and enabled by technology, not driven by it.
- The goal was to design a seamless customer experience with a mobile-first philosophy at its heart.
- The team focused on designing a base-level platform that did one thing really well. A launch date was set, and we focused on bringing that vision life.
- And, finally, there was a fully-integrated marketing program to support the launch, drawing on the knowledge and talents of experts in direct, digital and data.
The platform is a great example of enabling technology and user experience to commercialize a fintech initiative for Canadian consumers. With an innovation mindset, a clear customer-led vision, and the ability to be agile, financial services firms truly can disrupt their traditional business models and embrace fintech.
Steve Mast is president and chief innovation officer at Delvinia