August 21, 2019

The future of banking is platforms

Jussi Valsta

CEO of

Technological change and soaring customer expectations are driving businesses to collaborate in new ways, and the banking industry is no exception. We have entered an age of digital platforms that are open around the clock and across the calendar to consumers who expect near-instant service. Such platforms were found earlier mostly in the travel industry but now in most customer-facing operations, financial services included.

As banking services are changing, so will the way that banks acquire new customers. The industry is slowly moving in a direction where customer acquisition will be the job of platforms and banks can focus on creating value for customers, as well as creating lasting relationships. The platforms are not solely for price comparisons but will be deeply integrated with banks’ customer acquisition. This shift has already happened in the travel industry.

As a result of intensifying competition, banks, on the other hand, can focus on strategy, value proposition and customer retention. Banking products today are more complex, so the need for neutral digital advice is increasing, and this is something that platforms can help with.

Fintech can empower consumers to make well-informed decisions on their personal finances, just like eBookers and TripAdvisor are doing in the travel industry. For banks, it can mean more cost-efficient tools to meet existing and potential customers.

The Nordic region has proved to be an important global player in fintech and has been regarded as an example for others to follow for some time now. This is due to the high degree of collaboration between governments, regulators, financial institutions and businesses, and a history of innovation.

One of the biggest trends shaping the personal finance management industry in the Nordics is digital-only banking. The number of players in the financial market with a fully digital presence is growing fast, with providers meeting the customer online and offering an excellent customer experience through fast onboarding and application processes. For consumers, this means easier access to various financial products and more valuable products through increased competition.

One of the biggest trends shaping the personal finance management industry in the Nordics is digital-only banking.

Another big trend is customer journey digitalisation. Many of the big market players in the Nordics are investing in digitalising their existing processes. These improvements will mean shorter product application processes and better digital channels to manage personal finances. By automating credit decision-making processes and leveraging blockchain for smart contracts, consumers don’t have to visit banks or send out the documentation regarding mortgages.

Mobile services are also taking a share of how people take care of payments and other everyday financials. Investing in technologies such as biometrics and cyber security will transfer banking from brick and mortar to pockets. Various mobile wallet and personal finance management services are a good indication of how many of the current physical banking service providers are opting for “mobile-first” strategies.

Finally, there are now improved tools for decision making. Regulation around the banking industry is also changing, resulting in better access to data. The Second Payment Services Directive (PSD2), accompanied by data analytics and, eventually, AI, is a good example which will create banks and third-party service providers a way to offer much more personalised services to consumers based on their banking data.

Financial products constitute the largest part of our monthly expenses. Nevertheless, consumers are used to comparing flights and hotels, for instance. Although we like making informed decisions regarding our purchases, when it comes to personal finances, we tend to stick with the familiar instead of comparing products. The problem is that the current system consumes too much effort. What is lacking is an objective and transparent view of different financial products.

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