Investments up to USD 210 billion in 2021 are the evidence of a tremendous movement in the FinTech industry. On the one hand, challenger banks have taken a foothold in the market. Established players, on the other hand, have gained considerable speed in bringing their product and service portfolios to the pulse of the time with the help of a FinTech or their own digitalization department. Just at the right time – because the industry is stumbling.
Lear in this blog post from billwerk:
- What banks and insurance companies of the future look like
- Why subscription business models are gaining so much traction
- What a FinTech company can learn from other industries about subscription services
- Which advantages a subscription management platform offers you
Trend No. 1 : Flexible payments
Digital payment methods have become more diverse and will continue to evolve in the coming years with new entrants – Big Tech companies leading the way. During the pandemic, transaction volumes grew by 21% annually. While this growth will drop back to 14% in 2022, a steadily growing digital payments segment of 11% is expected by 2026. However, the real business potential here lies in the data collected. A FinTech rarely competes with ApplePay, Amazon Payments, etc. FinTechs are primarily those companies that use intelligent data processing and process automation to offer immediate niche solutions for value-creating services that go beyond the mere payment process.
Trend No. 2: Hyperpersonalization
The acceptance of digital financial products is increasing rapidly. While the amount of purely digital banks included 30 million customers worldwide in 2017, this number will rise to 210 million by 2022. By 2026, according to analysts, 350 million people will obtain their account and other financial products through one of the challenger banks or a FinTech company. However, digital-savvy consumers have been concerned long with more than just the availability of an ordinary checking account. There is also a growing readiness for sophisticated, innovative banking services from market disruptors. P2P (peer-to-peer) credits – credits between private individuals – is doubling every year. Crowdfunding models for different asset classes are gaining presence in product portfolios. In comparison, digital asset management seems almost low-risk. The strong diversification of financial products is a response to customer needs, which have always been characterized by individualized offerings and servicing. Today, technological advances are accelerating and deepening the opportunities for customized investments and modular insurance for the mass market, as well as the availability of smart tools for personal finance.
Source: KMPH – Pulse Of Fintech H2’21
Trend No. 3: Ecosystem Banking
In order to meet the high customer approach in the digital age, banks and insurances must open up to new cooperation models. A FinTech can quickly evolve from a competitor to an important ecosystem partner if business models are radically questioned and adapted. For 62% of customers, cost is still the number one decision criterion for financial providers. Cooperations are important to optimize the internal organization, yet expanding the product portfolio and thus creating maximum synergies. The trend is clearly moving in the direction of platform business: customers want small-scale, flexible services at the best price – but all from a single source!
Trend No. 4: Subscription models
Against the background of these market dynamics, it is clear to Gartner that the introduction of subscription models in the banking and insurance industry will be a central step in the realization of contemporary business models. In the consumer sector, the analysts even assume that 75% of products will be available in a subscription model as early as 2023. While many customers have gained their experience with subscription services in other areas of life such as entertainment (Netflix), shopping (Amazon Prime) or mobility (Uber), it poses major challenges for established financial companies and often also for a fintech. This is because subscription services are not just a question of new pricing, but require a major rethinking in almost all business processes. At the same time, the subscription model provides a solid structure to follow for the necessary business transformation.
Lessons learned in the subscription business
For the success of subscription models, it is important to keep the following in mind:
- On the corporate side, subscription services make sales planning more controllable. This key business advantage must not be overburdened by complicated, hard-to-find cancellation options.
- When it comes to financial and insurance products, customers want their needs to be taken into account holistically. FinTech companies should ensure that new solutions actually create genuine customer benefits and do not overload their customers with additional services. Subscription business must not become “old wine in new bottles.”
- Data protection regulations are strict, and yet they offer sufficient scope for the development of personalized services. In a complex ecosystem, where different providers and products make up a whole, handling personal data can become a fine balancing act. Regardless, customers must always be able to feel 100% confident that data privacy compliance is guaranteed.
FinTech in the focus: Subscription Management with billwerk
But how does the entry and expansion of the subscription business be achieved technologically? With market-leading subscription management and recurring billing software like billwerk, financial and insurance companies have a standards-based solution for business transformation at their disposal.
- billwerk ecosystem: Numerous integrations with payment providers, ERP solutions, financial accounting programs, business intelligence and marketing software make subscription management a holistic process flow from the very beginning. The REST API puts no limits on how you can develop your own ecosystem.
- Manage recurring billing: Whether consumption billing, upgrades, credit notes or cancellations: billwerk automates these recurring processes and ensures that they are carried out in a customer-friendly manner and mapped correctly in financial accounting.
- Customer self-service: address changes, order management and invoice archiving: billwerk includes configurable templates, adapted to a company’s corporate identity.