Welcome to our Fintech Predictions Series 2022. The rapid speed of change in banking during 2021 was like no other, but will it continue, and what are the predictions for 2022? We sat down with Cheryl Chiodi, an expert in financial services technology with digital intelligence company ABBYY, to identify the roadmap of what lies ahead for the fintech industry.
Hi Cheryl, welcome to Fintech Predictions Series. Could you please tell us more about yourself and how you arrived here at ABBYY?
Cheryl Chiodi (CC): I am currently leading financial services marketing at ABBYY. Here, I work closely with financial institutions to overcome their content and process challenges to improve operational efficiency and achieve customer excellence.
I closely follow and analyze the financial services industry trends and frequently deliver keynotes at the Wall Street Technology Association and The Taiwan Academy of Banking and Finance.
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Hi Cheryl, please tell us about the role of diversity and inclusion in the fintech industry.
CC: We are witnessing a big push on diversity and inclusion already.
Without a doubt, this will be a huge priority for financial services institutions as people globally recognize the need for more equality in the industry.
I recently attended the American Banker Gala where Jane Fraser, CEO of Citi, was honored as the Most Powerful Woman in Banking for 2021. There was an underlying theme and strong recognition among all delegates that the industry needs more women in positions of power. Even though we have a long way to go, there is a very positive outlook for the future regarding diversity and inclusion.
There is definitely a heightened awareness and focus on this subject and also in the way people look to invest in businesses. What came through loud and clear at the gala is that there is a misnomer that women don’t support each other — a kind of mean girls’ spirit that makes women not want their female colleagues to excel. That notion was totally crushed at the event as the overwhelming feeling is that we all want to help each other grow and achieve. I look forward to seeing more high-profile female appointments in 2022.
Should we expect fintech companies to become more socially responsible in the New Year?
CC: Yes, we can expect them to become more socially responsible with regard to investment, products, and services.
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We’re already seeing the impact of climate change on people’s buying habits. 2022 will see that go one step further in banking with Environmental, Social and Corporate Governance (ESG) taking its place as a dominant and permanent concern across the financial services industry.
I see ESG being an industry-standard within the next five years. Consumers are gravitating towards brands that speak their values, and banks will need to respond accordingly. For example, credit card companies may offer rewards for purchases that leave less of a carbon footprint — rewarding behaviors that support ESG. One such example is giving extra cashback or points for purchasing a bicycle as opposed to fueling a car with gasoline.
What about ESG’s role? Could you elaborate further for us?
CC: Investors are also aligning with the fintech organizations that have a focus on ESG leadership.
Five years ago, it was not something we thought about when opening a bank account or purchasing goods, but now people are consciously staying away from brands that don’t meet their political, personal, environmental, or social values.
Do you think Fintech and Automation are made for each other?
CC: I expect there would be an increased focus on automation costs in 2022.
This is obviously not unique to financial services.
The uncertainty over the last 18 months meant business leaders in every industry had to re-think their expenditure for automation and process efficiency. This will be a continued theme in 2022 as banks and other financial institutions focus on optimizing costs. They will need to gain true insights on exactly how their processes work and where efficiencies and inefficiencies lie. They may have handoffs with bottlenecks, errors and omissions, and repeated data entry. These flaws can be detrimental to both customer experiences and the bottom line.
One area of concern is onboarding. A recent survey showed only 15% of financial services executives are highly satisfied with how long it takes to onboard customers. Not surprisingly, almost half said they want to accelerate onboarding and 33% want to improve it, yet it ranks low on their list – showing a strong disconnect between the data and executives’ beliefs about onboarding challenges. This is why accurate insights into processes are important for financial institutions before they invest in automation. The goal will be to capitalize on, and optimize costs, especially since the survey showed that over half of the top organizations will be spending more on automation in 2022.
What about Customer Lifetime Value (LTV)? Tell us more about bringing Intelligent Automation (IA) to the center of every fintech operation in 2022.
CC: I think we will see a much greater emphasis on customer lifetime value.
Thanks to intelligent automation, financial institutions will be in a better position to extend their relationship with customers. Instead of a ‘one and done’ approach, such as providing a single car loan, banks will be looking at offering a multitude of services to clients throughout their lifetime. With behavioral analysis, natural language processing (NLP) and other data, banks can gain a better understanding of their client’s needs — knowing when their auto loan comes to an end and offering another deal, or providing offers of better interest rates when a mobile device scans their proof of income documents. This 360-degree view of customer behavior allows financial institutions to offer more personalized and bespoke services and increase their lifetime value.
How should companies leverage technology collaboration?
CC: I already see a growing collaboration among the FinTechs!
Previously FinTechs were seen as huge competition and a threat that needed to be stopped — but now traditional banks are embracing the notion of partnering with Fintechs. We will definitely be seeing more SPACS (special purpose acquisition companies) and mergers and acquisitions with smaller regional banks in 2022.
Many of the financial services incumbents have their own innovation labs and are seeking more collaboration with FinTechs to embrace their tech ecosystem.
How are you preparing for the new year?
CC:Resilience is bouncing back in 2022
If COVID taught us anything it was our ability to be resilient. This remains a priority in 2022 as banks realize they must never sit on their laurels and always be ready to respond quickly to the next big event or crisis. We don’t know what that will be, but financial institutions consider resilience and agility to be key factors for survival. Pre-COVID banks would have needed 18-months to introduce a new product, but the pandemic showed leaders just how agile they can be. Take the US government Paycheck Protection Program, under the CARES ACT, for example, which needed to be expedited at break-neck speed. That sort of execution was a lesson learned on the need for resilience.
Tell us more about the user experience benchmarks for fintech marketplace.
CC: The user experience is still Queen in 2022
Recent research among leading bankers showed the overall majority, 73%, cite improving customer experience as their number one priority, followed by reducing operating costs and streamlining onboarding.
The underlying focus throughout all automation will still be on the user experience in 2022. People are becoming less tolerant. It’s called digital fatigue — if you’re making customers go through three to four clicks for a simple task on their mobile device then you may have lost them to the competition who can do it with one click.
Also, the idea of brand loyalty no longer exists — that era ended with our grandparents who would use the same bank again and again for their lifetime of major purchases.
Now, people will shop around and do their homework. If they obtained a good rate with a particular bank for a loan, they will still look elsewhere for the next best deal — social media recommendations, influencers, comparison sites etc., all come into play. This is especially true for millennials and Gen Z.
In fact, 67% of millennials say they would try financial services from brands they trust that are successful in other sectors, like Nike, Google and Apple, that may not currently be offering financial services products. Apple has found a way to capitalize on this millennial shift away from credit cards and traditional banking products, fueled by their own crippling student loan debt and a market crash that significantly impacted their parents. The Apple card is a beautiful, white, titanium card that arrives in a special envelope, encased in a cardboard sleeve, and has found itself the subject of numerous “unboxing” videos on TikTok and YouTube. Perhaps that aesthetic distracts the new cardholder to the fact that the card is backed by a 150-year-old American multinational investment bank.
Fintech is growing rapidly. Do you think skills gap will be the biggest hurdle for this industry?
CC: Yes, the existing skills gap is already impacting automation.
Unfortunately, a scarcity of talent will be a continuing problem in 2022. The huge shortage of developers will be one of the biggest challenges with research showing a 35% shortfall in this expertise by 2025. Skilled developers will be snapped up by highly technical corporations and are unlikely to be drawn to lesser attractive places, such as a bank. Banks aiming to introduce digital transformation will need to find alternatives to keep pace with automation and the competition.
The introduction of low-code/no-code platforms will provide much-needed assistance. This new ‘drag and drop’ technology is rapidly growing and will enable financial institutions to automate different document-centric processes without the need for experienced developer knowledge.
Low-code/no-code products can be integrated by the business user and are becoming more readily available through online digital marketplaces. The easier and faster it is for banks to automate will obviously also impact the bottom line, so these tools are also a necessity for meeting the aforementioned goal of cost optimization.
Thank you so much Cheryl for sharing your Fintech predictions with us! We look forward to speaking with you again very soon…
[To share your insights with us, please write to sghosh@martechseries.com]
