The Evolution of Financial Products for the Modern Customer
A summary of Barclay’s Innovation Spotlight Series
Traditional banking is being reshaped by emerging trends and technological advancements. Customers no longer seek just basic transactions; they desire experiences that align with their lifestyles, aspirations and the moments that matter. This shift in expectations is driving banks to innovate and offer more personalized and engaging services.
Key Drivers of Change
Several factors are influencing the transformation of financial products:
- Economic Pressures: Rising inflation, the cost-of-living crisis, and increased interest rates are making it more challenging to access mortgages and funding. Individuals and SMEs are becoming more resourceful in managing their finances.
- Technological Advancements: The proliferation of AI and large language models (LLMs) is revolutionizing the financial sector. AI is not only enhancing productivity but also introducing new risks that require robust regulatory frameworks to ensure safe adoption.
- Regulatory Developments: New regulations like the Consumer Duty in the UK and the EU Green Deal are catalyzing innovation. These regulations aim to improve consumer outcomes and drive sustainability in the financial sector.
- Customer Expectations: Modern customers, especially Gen Z, expect digital experiences that are seamless and integrated into their daily lives. They value personalized services and flexible work-life balance, influencing how banks engage with them.
Banking on Experiences
Banks are increasingly focusing on delivering experiences rather than just services. For instance, loyalty programs are becoming a significant draw, with 76% of surveyed customers expressing a desire to benefit from such programs. By integrating AI-powered solutions, banks can provide personalized rewards and enhance customer journeys, similar to the approaches seen in retail and travel sectors.
Embracing Complexity
The financial needs of consumers and businesses are becoming more complex. Products that were once accessible only to a select few are being democratized through digital channels and automation. This shift is enabling banks to offer sophisticated financial solutions at scale, addressing diverse needs such as cross-border transactions, debt management, and financial planning.
Powering Impact
Sustainability is becoming a crucial aspect of financial products. With the sustainable finance market expected to grow significantly, banks have the opportunity to lead in providing climate-friendly solutions. By partnering with fintechs and leveraging innovative products, banks can support the green transition and meet the rising demand for sustainable practices.
Conclusion
The financial sector is at a pivotal point where innovation and customer-centric approaches are essential. Banks must continue to evolve by embracing technology, addressing regulatory challenges, and focusing on delivering meaningful experiences. As they navigate this transformation, the goal should be to create financial products that not only meet modern needs but also contribute to a sustainable future.
About Flybits:
Flybits revolutionizes how financial institutions deliver personalization. Their award-winning framework simplifies the connection between financial institutions, their data, and their customers. Flybits’ platform accelerates the delivery of critical use cases with minimal IT intervention, empowering digital teams to seamlessly deliver data-led insights across all channels. Supported by leading fintech investors including Point72 Ventures, Mastercard, Citi Ventures, TD Bank Group, and Information Venture Partners, Flybits has offices in New York, London, and Toronto.
