Why the Slow-money Challenge is financial services’ next digital imperative

Why the Slow-money Challenge is financial services’ next digital imperative

On January 1, 2018, all banks in the EU will lose a key competitive advantage because of the Payment Services Directive(PSD2). From that date on, they will no longer have proprietary access to data in their customers’ online accounts, including their transaction and balance history. Other regulatory frameworks also pave the way for accelerated competition and an increased digital disruption. Consequently, players within banking, finance and insurance, can’t view their customer relationships as confidently as before. A new Cognizant/ReD Associates study sheds light on what direction financial providers should choose.

How will you secure the long-term relationships with your customers on a global arena in a more digital future? At the surface, money matters appear simple. However, most existing reports on the future of financial services, primarily focus on asking customers what they want. The problem is, your customers do not know what they want, or why they act the way they do.

A comprehensive, in-depth study
What to do then? We decided to spend some time with people; only by understanding how people relate to money, you can transform your customer relationship. The new study “The Future of Money”, was conducted together with Cognizant partner ReD Associates. Over 3,000 people were surveyed across EU and the U.S., and above that, anthropologists spent a few days with core respondents, meeting their family, friends, and financial advisors.

Focus on the slow money
The study provides new clarity on what matters to your customers, where to focus innovation and what you as a leader must do to ensure digital investments deliver on what customers really want. The study also reveal an opportunity to drive substantial revenue growth while strengthening the customer relationship:

  • Customers experience their financial lives as fragmented and uncontrollable, and are looking for stability and security.
  • Digital innovation and fin-techs have largely focused on solving problems related to people’s “fast money” (their daily and short-term spending).
  • Financial providers should focus the next wave of digitization on what we call people’s “slow money” (any future spending or saving).
  • Financial institutions must change its entire relationship with customers, engaging people as co-producers.

While digitization has delivered many benefits for customers and companies, it hasn’t resulted in the strong customer relationships necessary for winning in the future. In contrast, our study demonstrates that getting slow money right will make consumers more loyal, less price sensitive and more inclined to do more business with your organization. That’s why we believe that resolving people’s slow-money challenges is the next digital imperative in financial services.