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Has fintech made banking better?
DUCA Impact Lab | Keith Taylor | Feb 18, 2021
Fintech is responsible for a long list of innovations. Helping people make better financial decisions could be next.
Building banking that is not just different, but better, is a common refrain when speaking with fintech entrepreneurs. It is natural to wonder then, what roles are fintech companies playing now in building ‘better banking’, and more importantly, what opportunities are there to better deliver on this promise?
The DUCA Impact Lab was established by DUCA Financial Services Credit Union to explore these types of questions, and to ultimately work with its partners to build and test models of banking that benefit all. Each year, the DUCA Impact Lab, in partnership with Angus Reid Group, examines national perspectives on fair banking in Canada. The study surveys a national pool of banking consumers on their perceptions of fairness in their banking experiences. It evaluates a number of fair banking factors such as transparency, credibility, pricing, as well as access to products and services. It then compares these consumer perspectives with responses from bank employees working in a sales or lending capacity at different types of lending institutions, including fintech’s.
See: State of Fair Banking 2020
Reflecting on the study results for 2020 reveals some key considerations for fintech companies as they continue to innovate and build on their presence in the financial services marketplace. For example:
More people need access to quality advice.
The majority of consumers interact with a financial advisor once per year, or less. In fact, 29% say they have never met with one. Even for those that do meet with an advisor, chances are they either don’t trust, or are indifferent to the advice they get (75% of consumers combined). This is particularly troublesome, given that the right advice is desperately needed - nearly 45% of people with debt say they have neither a budget, nor specific financial goals. Lenders surveyed who work in fintech take an overly ‘sales first’ view of their companies compared with peers, and are significantly less likely to view the primary focus of their company as helping people (21%), when compared to 35% at banks, and 48% at credit unions. Perhaps there’s an opportunity to do both.
Trust is a short-term opportunity, but long-term potential risk for fintech’s.
Nearly as many Canadians distrust financial institutions as trust them, with a winnable 46% of consumers who are somewhere in the middle. Also consider that only 22% of big bank customers think they are getting a good deal on their financial service products; this should translate into opportunities for new entrants and alternatives to the big banks. The level of trust consumers have in fintech companies is generally similar to other lending options to start, but borrower experience becomes more negative post fulfillment. For example, fintech customers are more than twice as likely to respond that their debt has impacted their ability to afford basic health care services such as prescription drugs. Mitigating these risks has benefits for everyone.
See: How Banks, Fintechs, and Customers Win Together
The Fintech sector has produced some amazing innovations, improving the way financial institutions are able to offer a range of services, facilitate transactions and understand customer needs. Extending this innovative thinking to focus on consumer experiences and well being is a natural fit.
About the author:
Keith Taylor is the Executive Director of the DUCA Impact Lab at DUCA Financial Services Credit Union, an innovation hub focused on building banking that benefits all. He works with a range of collaborators such as fintech’s, community organizations, academics and others to build and test solutions to inequity in the banking system.
This article appears as a featured article in NCFA's digital magazine, Fintech Confidential (Issue 3). Click to read the latest thought leadership, insights and trends about Fintech in Canada:
Checkout NCFA's digital magazine, Fintech Confidential (Issue 3, Dec 2020) --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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