Last week, a handful of CardFlight team members and I were in Las Vegas, meeting with customers around our industry’s over-the-top event, Money20/20. Events like these are a great opportunity for us to learn about the critical issues facing the partners we work with to provide small business payments solutions. It also gives me a chance to observe current market trends and to reflect on where fintech is headed. Here are some persistent themes we took away from the discussions we had last week.
The manual and cumbersome steps that “old guard” financial institutions have long used for internal- and customer-facing processes are causing them to lose market share. Financial institutions are looking to digital tools as a way to combat this, and are largely ready to shift from process-led to customer-led sales processes. I expect to see increased efforts around digital applications and underwriting systems that make it easy for merchants to apply for credit without having to interact with a sales rep, as well as better self-service support once a relationship is established.
The old way of doing risk management for new customers was to ask an applicant hundreds of questions and make a “snapshot in time” underwriting decision. The requirement to provide such a great deal of information frustrated prospective customers at best — and caused them to entirely abandon the process at worst. Beyond that, inflexible underwriting models led to inefficient risk management.
The new model involves asking for the minimum amount of information upfront, and then calibrating the risk management to the size of the risk, based on the information known at that time. Requirements for allowing users to process their first transaction are very low and are easy to understand. Of course, when significant dollars start to flow, the risk and underwriting decisions become much more refined.
Organizations thinking through new initiatives are considering everything about their customer’s journey. They want to know how they apply, how the account is underwritten, what the welcome experience is like, and how their brand flows through to the entire customer experience. A lot of attention is directed toward automating and integrating the merchant’s experience. Even when the process isn’t fully automated, companies are very cautious to implement anything new without fully considering the entirety of their customers’ lifecycles.
Gone are the days of hardware manufacturers differentiating themselves on the specs and components of their boxes. The focus of financial institutions and merchants alike is on how software helps them run their businesses better. The hardware that this software runs on is becoming an afterthought as cloud-based software is intended to run across many different platforms.
Related to this, Software As A Service (SaaS) is one of the most dominant delivery models. Purchasing decisions aren’t just based on the capabilities of the solution at a current point in time, but are also a factor in how these solutions will be enhanced and maintained going forward. Buyers don’t just want to know what your solution does today, but they also want to know how you’re going to help them respond to the future market shifts that we aren’t even able to anticipate today.
As we look towards 2020 and beyond, we’ll be keeping an eye on these trends and their impact on the future of payments. We’re excited to play a part in shaping the fintech market by helping financial institutions make more of the products they offer their small-business partners digital with SaaS-based solutions that get better over time.
Image credit: Money20/20 on Twitter
