At our last Digital Futures event at the Soho Hotel, Simplicity Partners discussed how legacy banks and insurers should strip back the complexities of their business and return to focusing on specific consumer needs. Find out more below…
As with every industry, the financial sector is in a transitional period due to new innovations in digital technology. Consumers are increasingly deserting bank branches and turning to online and mobile to manage their finances. In fact, usage of banking apps has increased by over 350% in the past 5 years. As this trend continues to grow, consumers are increasingly demanding financial services that streamline the purchase journey and quickly deliver relevant information.
Start-ups like Monzo, GoCardless and InMyBag have begun building a significant market presence by providing these consumers with an easy-to-use, convenient experience that is tailored to specific needs and/or pain points. InMyBag, for instance, provides an insurance service that enables people to get same day replacements for electronic devices that get damaged or stolen. GoCardless, on the other hand, was founded as a way for growing international businesses to simply manage recurring payments across multiple territories.
As a point of focus, we discussed how simplicity and convenience is crucial to retaining customers and delivering a service that is rewarding.
The significance of simplicity cannot be understated. In the 2017 Simplicity Global Index Report, it was found that 64% of consumers are willing to pay more for a simpler brand experience. Companies like Amazon, Uber and Netflix have created greater expectations in consumers’ minds for a simple, pain free experience. If legacy banks and insurers are unable to adapt to changing consumer behaviours and trends, they run the risk of becoming redundant in their lives.
As well as simplifying existing products and services, businesses can also respond to industry developments by looking at new markets, new customers and new ventures. For example, in 2007 Vodafone launched (via its Safaricom and Vodacom operators) M-Pesa — a mobile payment service that operates via texting rather than smartphone technology. The service specifically worked for East African nations as it enables people to digitally transfer money without the need for 3G.
Customers are more likely than ever to switch brands or services if they are unhappy with the experience or service they are receiving. By not creating truly valuable digital experiences you may run the risk of losing market share to both startups and the traditional financial institutions who are embracing new models of banking and insurance.