How fintech companies are using the data shared by customers

In recent years the advancements in tech and data analytics made within the financial service industry, including banks and fintech enterprises, have brought fundamental changes in the way that the banking experience is perceived. 

The rise and rise of smartphone adoption and connected devices are resulting in more and more information and data being stored and sent back and forth. Much of this data is shared with consent from users who are signing up for a more focused and targeted experience from service providers. What differentiates fintech organizations is their aggressive use of technology in customizing experiences for diverse consumer segments.

Companies like SmartCoin are serving niche customer segments hitherto excluded from the services of traditional financial institutions through scalable AI/ML models that help create advanced underwriting mechanisms.

Customers are paying attention to the experience being delivered from player to player. Fintech companies are increasingly taking up market share owing to their ability to serve the discerning Indian customer’s diverse and dynamic needs. The rising and now raging popularity of fintech is compelling traditional financial institutions to rethink their business models.

How fintech leverage data to serve customers better 

Fintechs operate on a framework of Algorithms, Artificial Intelligence (AI), and Machine Learning (ML), which enables the processing of vast volumes of data generated every day to create actionable items. The data shared helps players in anticipating customer behavior.  This creates a win-win for customers as well as businesses by way of bringing tailored products, upsells, cross-sells, and strategic planning that considers the pulse of customers. In simple terms, data helps fintech companies target customers with bespoke offerings that help evolve their financial journey appropriately. 

Evolving with customer expectations

Online banking has increasingly served to alter perceptions of how banking services should be delivered to customers. In the New Normal brought in by the pandemic, customers are no longer interested in visiting physical bank branches or even waiting for days to have their banking requests processed. Fintechs are addressing these needs by providing frictionless financial services without boundaries that enable real-time data transfer, which results in faster processing of requests.

Fintechs have heralded a change in the industry by leveraging Data Analytics to bring more customized options in financial services. Another upside of fintech companies being built on modern technology platforms is their ability to be agile in adapting to prevailing market conditions.

Bringing what the customer wants

With the advancements made by fintech in enhancing customer experience, customers are now expecting companies to anticipate and understand their expectations. This is again where data is coming in handy in enabling companies to know their customers better. Every day there are vast volumes of data being generated as a result of your web activities, including card transactions, ATM withdrawals, credit score checks, and other financial tools.

Fintech companies are pooling such data to create holistic customer personas and match them with tailored offerings. Customers are known to pay more attention to offers that speak directly to their needs. In financial services, winning customer trust is crucial, which customers judge by the experience delivered. In the case of app-based platforms, if it doesn’t operate optimally and in a convenient way, customers are likely to have doubts about your products and services as well. 

Rich segmentation and bespoke offerings

The deeper fintech delves into data to know its customers better, the better it can segment them according to behavior and expectations. Segmenting potential customers appropriately can help companies improve their marketing efforts to enhance outreach and recall. Segmentation is also very useful in identifying high-value customers that are easiest to convert.

Segmentation, at its crux, is the act of leveraging data to sort customers into neat categories based on the following: 

• Demographics (age, gender, geography, profession)
• Online behavior
• Employment (years in business, reputation)
• Financials (income, net worth, assets)

Managing key risks effectively

A big part of operating sustainably in the fintech business is getting the risk engine right. Most leading players are making this possible with data analytics that strategically identifies bad investments, and potential red flags in user behavior, helping separate high-risk customers and in turn bringing down delinquencies. 

Bringing intuitive automation

AI-operated chatbots provide 24/7 interactivity and problem-solving. These are smart virtual assistants that can manage transactions, provide key information, and assist customers in multiple ways.

Robotic Process Automation (RPA) is another technology that goes a long way in improving the user experience by enabling bots to handle repetitive (and labor-intensive) tasks, helping bring down human intervention. This is ensuring minimal errors and reduced pressure on the workforce, who are now free to handle more complex queries and offer better customer service.

Detecting fraudulent activity

Swift and impeccable identification of fraud is also a winning proposition that data is helping fintech offer its customers. With the use of advanced AI and ML-led algorithms, companies are able to flag potential fraud before it can even occur. They analyze the spending habits of customers and subsequently identify purchases or locations that do not exactly fit the profile drawn up using data.

The Bottom Line: The tech in fintech will continue to evolve

The fintech industry is evolving at break-neck speed. The active use of artificial intelligence, machine learning, and big data are ensuring a more personalized experience for customers.

In fact, customer experience is the key differentiator and prime mover within the industry right now, contributing to siphoning customers away from traditional financial service providers.