{"id":54517,"date":"2020-01-30T11:48:04","date_gmt":"2020-01-30T10:48:04","guid":{"rendered":"https:\/\/intellias.com\/?p=54517"},"modified":"2023-05-15T12:27:03","modified_gmt":"2023-05-15T10:27:03","slug":"the-perfect-formula-for-fintech-products-cx-ml-ux","status":"publish","type":"blog","link":"https:\/\/intellias.com\/the-perfect-formula-for-fintech-products\/","title":{"rendered":"The Perfect Formula for FinTech Products: CX = ML + UX"},"content":{"rendered":"

When the FinTech industry was just coming of age, most companies launched with one simple offering: a mobile wallet<\/a>, debit card, or spare change investing app.<\/p>\n

Those products were a hit with users who were still hesitant to trust their hard-earned money to an app.<\/p>\n

But the customer base has matured rapidly. According to Capgemini<\/a>, 52% of retail banking consumers used three or more FinTech apps to supplement services offered by their bank in 2017.<\/p>\n

Today, there\u2019s a newer trend growing around FinTech: platformization<\/a>.<\/p>\n

FinTech apps are rapidly transforming customer experience<\/a> and evolving from utility apps (that do one thing great) into one-stop solutions for all things financial:<\/p>\n

\"The<\/p>\n

Source: CB Insights<\/a><\/em><\/p>\n

This move is happening because app fatigue is real. And when it comes to finances, the majority (85%)<\/a> of millennial users would rather bank with one financial institution that offers a comprehensive range of services.<\/p>\n

The good news? Most FinTech players are succeeding at building an ecosystem of in-app services using cutting-edge technology. They\u2019re moving away from being solutions<\/em> and becoming
\nsuperapps<\/a> \u2014 platforms featuring a collection of connected financial and lifestyle services ranging from wealth management to crypto investing, networking services, and discounts at retailers.<\/p>\n

Now comes the pinch of salt: as FinTech platforms grow more complex and feature-heavy, users start complaining about feature\/information overload \u2014 the exact reason they ditched incumbent banks for \u201cintuitive\u201d FinTech apps in the first place.<\/p>\n

And herein lies the problem: building a technologically advanced financial product is just part of the deal. If the product\u2019s logic is too complex and the customers\u2019 path toward their financial goals is too twisted, you\u2019ll inevitably lose customers somewhere along the way. So, how to improve customer engagement in banking?<\/p>\n

Offering less with more is the new challenge for mature FinTechs.<\/p>\n

But it\u2019s a solvable one using the Customer Experience (CX) = Machine Learning (ML) + User Experience (UX) formula<\/b>.<\/p>\n

Why a customer-centered approach to FinTech product development is the new way to go<\/h2>\n

Millennials are often labeled as the self-absorbed<\/em> and selfish<\/em> generation. As a millennial myself, I believe these stereotypes to be generally inaccurate \u2014 but they\u2019re actually true when it comes to banking<\/b>.<\/p>\n

Here\u2019s the thing: I don\u2019t look for specific banking products. I look for solutions to fulfill my (selfish) at-the-moment needs: finding ways to save for a trip abroad, setting aside money for my wedding, or just assessing the feasibility of ever buying a house in an area I want.<\/p>\n

My customer journey is strongly aligned with my life needs. And yet, instead of placing users\u2019 needs in the spotlight, most FinTech product owners construct customer journeys around products in their portfolio.<\/p>\n

As a result, customers just don\u2019t see the What\u2019s in it for me?<\/em> component in your pitches<\/b>. So much so that 40% of millennials<\/a> say they do not receive any personalized offers from their primary bank and an additional 46% say that their bank does not pitch marketing offers relevant to future purchase plans.<\/p>\n

But most retail banking consumers do want to feel special at all stages of the banking journey:<\/p>\n

\"The<\/p>\n

Source: The Financial Brand<\/a><\/em><\/p>\n

The good news? Unlike incumbent banks, FinTechs already have almost everything they need to deliver a more personalized experience to users.<\/p>\n

The fix: Deploy predictive analytics to suggest the next best action<\/h2>\n

FinTechs often sit on a goldmine of rich data on customers\u2019 transactions and life stages without giving it much thought.<\/p>\n

It\u2019s time to free that data from product silos. By doing so, you can switch from managing a group of accounts toward managing individual customers in the way they want to be managed.<\/p>\n

\"The<\/p>\n

Source: Deloitte<\/a><\/em><\/p>\n

But how can you know your customers\u2019 needs?<\/p>\n

    \n
  1. Use the data at hand<\/li>\n
  2. Design machine learning algorithms to crunch the numbers for you<\/li>\n
  3. Receive next best action suggestions<\/li>\n<\/ol>\n

    Here\u2019s a quick example of defining customer requirements:<\/p>\n

    Linda has booked a flight to Majorca in five months. But her savings account is nearly empty. Perhaps she\u2019ll need some budgeting advice or might want to consider a co-branded credit card offering hotel points.<\/em><\/p>\n

    By adding predictive banking analytics and propensity models to your product, you can catch this need in real time and pitch Linda with an offer she\u2019s likely to accept. In short, you can learn what to sell, when to sell it, and when doing nothing is the best option. This way, you enable new level of customer engagement with predictive analytics.<\/p>\n

    Here are just a few ways the next best action (NBA) concept can be deployed in a mobile FinTech product:<\/p>\n

    Deliver hyper-personalized offers, services, and rewards to individual customers.<\/b> Using predictive analytics, FinTech companies can generate dynamic personas and target users with relevant deals based on their spending data, location, common purchasing behaviors, and past responses to campaigns. These can be delivered as in-app messages, app notifications. or personalized advice from an in-app AI assistant.<\/p>\n

    Improve cross-sells, up-sells, and product recommendations.<\/b> ML- and AI<\/a>-powered models can generate dynamic customer personas. Pairing them with product attribute mapping further allows FinTechs to predict the product a customer is likely to buy next. NBA also enables FinTech companies to deliver a superior customer experience. By knowing what your customers are up to next (buying a house, traveling abroad, etc.), your teams can take actions to steer customers toward meeting their goals. You can also dynamically track and review previous offers to avoid pitching the same products to the same users over and over again.<\/p>\n

    Case in point:<\/b> Morgan Stanley has recently launched WealthDesk<\/a>, a Next Best Action wealth management platform that helps their advisors build better rapport with clients.<\/p>\n

    What exactly can Morgan Stanley\u2019s system do?<\/p>\n