Winners of fintech boom will put customer front and centre

Young learners: Pupils of Broughton Primary were introduced to the world of banking and IT at Avaloq Innovations Tanfield office in Edinburgh

Fintechs, with their often purely web-based financial services offering, are fuelling the rise of easily-accessible online competition.

The ease of setting up an account was cited as the top reason for using a fintech in a recent survey of banking clients conducted by Big Four accounting firm EY.

The research also revealed that access to different products and services and a better online experience are key motivators in the adoption of fintech services.

Francisco Fernandez, Avaloq chief executive

Ultimately though, as EY states, it is the simplicity involved in using fintech products and services that is driving take-up among clients.

The move to a competitor’s offering is just one click away, meaning banks and wealth managers must constantly adapt and refresh their own competitive strategy.

The focus for financial organisations needs to be on how they differentiate themselves, whether that’s by winning a client with a specific offering before upselling additional services to increase profitability or focusing on a specific niche market and ensuring they stand out by providing an attractive product.

The latter option is most likely to enable a financial services organisation to become a client’s primary bank.

“It is vital for a country like Scotland, where financial services represent a significant part of the GDP, to look ahead and anticipate the next wave of fintech opportunities,” says Philippe Meyer, managing director of Avaloq Innovation in Edinburgh, which develops and provides software for core banking.

Improving and differentiating the client experience must become an integral element of the competitive fight in today’s digital age.

The Avaloq group is committed to collaborating with fintech businesses across the globe through its Software Exchange platform, which launched in 2015 and connects providers of innovative software for digital banking with financial institutions which intend to create a ground-breaking user experience.

This, as well as its developer portal which also facilitates joint collaboration, results in additional functionality to support increasing client engagement, ensure consistent client experience and drive potential new business opportunities.

“Fintech is crucially important for Scotland,” says Meyer. “Automation is disrupting all industries leading to what has been called the Fourth Industrial Revolution.

“Financial services are no exception and a lot of innovation is coming from the move towards artificial intelligence and the introduction of other disruptive technologies.

“This trend will reshape the job market, and a lot of undergraduate jobs available today will be transformed due to automation.”

He says developing an attractive environment for fintechs starts with the talent pool, with these businesses relying on professionals with a strong skillset. “It is critical that schools and universities deliver a number of relevant profiles through an adequate curriculum.

“The financial services industry should work with the education sector in two aspects: firstly to help attract the next generation of professionals to a technological career path, and secondly to develop relevant curricula.

“This is why Avaloq is working with Scottish universities on innovative projects so that academia can better understand what is relevant to our industry.”

On top of the group’s work with higher education institutions, Avaloq is liaising with schools and organisations to promote IT to young people through site visits.

Avaloq recognises the benefits of learning about banking at an early age for both potential future professionals and the industry as a whole.

Most recently, the firm invited students from the reception year of Broughton Primary School in Edinburgh to visit its premises and get a taste of the world of banking and IT.

“The youngest children we invited were born five years ago, when the Avaloq Innovation development centre in Edinburgh opened its doors,” explains Meyer.

“The business decided it would be great to celebrate the fifth anniversary with some children who may find themselves working for the company in the future.

“Jer White, one of our technical writers, has some experience writing fiction, so he wrote a special picture book story to explain some banking concepts using terms the children would understand and could relate to.

“We hope the students had fun, learnt a little about the industry, and will keep using their Avaloq piggy banks in preparation for opening their own bank accounts.”

While raising the financial awareness of children is important, so too is informing young people who are at a stage where they are making decisions about their future career.

“This is why we also plan to invite S3-4 students (aged between 13 and 15) to discuss careers within the industry with our staff,” adds Meyer.

“We hope they will better understand what a company like Avaloq does, and gain insight into the skills they might need if, of course, they decide to enter the sector once their formal education is complete.

“Many young students may not have even contemplated programming as a career path, assuming it’s too technical to grasp, however I believe coding is one of the few things in life which is both engineering and art.”

The Broughton school visit wasn’t a one-off event. Avaloq is committed to helping develop the next generation and ensuring young people in Scotland have the knowledge required to progress their careers once they leave education.

Meyer adds: “Of course, programming won’t be for everyone, but if holding these events helps just a small percentage realise this is what they want to do, then this will have proven worthwhile.”

Education is key to innovation

As the digitisation is in full swing, the banking industry remains a challenging environment.

Consumers have embraced the latest fintech trends, now banks and wealth managers are starting to keep up with the latest demands.

Innovation is key to achieving this goal and ultimately, retaining clients and attracting new ones.

This is why education is so important.

At Avaloq, we’re always looking for the early innovators and disruptive thinkers who can bring something new to the table.

A fresh perspective on what a bank and its technology should look like can have a huge ripple effect on the entire industry once an idea catches alight.

In a world where people expect a seamless banking experience, whether in store, at home or on the move, it is innovative thinking which makes this possible.

Of course, those banks and wealth management firms which fail to innovate will almost certainly find themselves left behind by the competition; especially as the fintech movement forges ahead.

This is why inviting the next generation of professionals to our offices and hopefully igniting that innovative spark from an early age is so important.

We also hold innovation events such as the Avaloq Innovation Day at which our employees can present their innovation ideas in an informal way to their colleagues.

The best ideas are put forward by the innovation board, a group of delegates of the executive board who act as “venture capitalists”.

The Avaloq innovators then share these ideas with the Avaloq community to present their ideas and to understand first-hand if their ideas might be a business success.

At the Avaloq Investor Day, the results are presented and the innovation board decides which ideas get a group investment and are eventually developed.

Software that powers the banking industry

A leading player in the fast-moving world of fintech, the Avaloq group employs more than 2,000 people from 60 nationalities.

With its core and digital banking software, banking suite and its international network of business process outsourcing (BPO) centres, Avaloq delivers trustworthy and efficient banking through providing a great user experience.

The business’s technology and services are used by 155 banks worldwide and by an additional 300 co-operative banks in Switzerland. It is the only independent provider for the banking industry to both develop and operate its own software.

In today’s challenging banking environment, the Avaloq software ensures seamless regulatory compliance, enabling banking and wealth management professionals to focus on adding value to their client base.

For more information visit Avaloq.