Your Fintech Roadmap to Better Reach Consumers
January 18, 2023
Brett Allred, Chief Commercial Officer, Fintechs, MX
Crystal Anderson, Vice President of Product, MX
More than half of consumers say they would seek out a new financial provider if their current one couldn’t deliver on their most wanted features. Are you focusing on the right mobile and digital features to keep consumers for the long term?
Consumers want — and need — more from fintechs to meet rising expectations and money worries. More personalized. More proactive. More connected. More data. Register to hear key insights from MX’s latest research into what functionality matters most for consumers and how to drive higher customer engagement and loyalty in 2023 and beyond.
WATCH THIS WEBINAR TO LEARN:
- The features and functionality that consumers really want and expect from financial providers
- Meeting rising demands for data sharing and ownership
- Striking the balance of digital innovation and security
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Learn more about how MX can improve your customer's journey, uncover growth opportunities, and innovate faster.
00:00 - 00:42
Crystal Anderson: Hi and welcome everyone. I'm Crystal Anderson. And today we are going to talk about your Fentech roadmap to better reach consumers specifically. What consumers really want.
We're going to get started in just a few minutes.
If you have questions, please put them in the chat, or if you have discussion items, and we'll get to Q&A at the end of our session.
I am Crystal Anderson, vice president of product here at MX, and I am joined by Brett Allred. Brett, do you want to introduce yourself?
00:42.760 - 01:38:92
Brett Allred: Yeah. Sure. Thanks, Crystal. And thank you. Everybody for joining us for today's webinar. My name is Brett Allred. I'm the Chief Commercial Officer at MX, which is actually a new title for me. For the last 5 years or so, I've been running product at MX with with Crystal. And in this new role, I'm really taking what we were building in product and the strategy and helping fintech companies utilize those products and innovate together on those.
So it's exciting to be in this new role. It's exciting to have all of you on this webinar with us, and i'm really looking forward to to working with you and talking about innovation today, and going through some of the research that we've done, and how we think we can take that research and apply it to this this new year that we have. And look at really what the future of fintech holds. So again thanks everyone for joining and excited to get into the discussion.
01:38.92 - 03:57.7
Crystal Anderson: Great! Well, let's jump in.
Every quarter, MX publishes a report on consumer trends, and that helps us to understand how the industry should be thinking this quarter. Our topic was focused on what features and functionality consumers are looking for when it comes to financial services.
As we come through the data, we pulled out 3 key themes that fintechs should consider in 2023. You can go to the next slide for me, please.
The key insights and trends that we heard this year are that consumers are demanding more when it comes to data ownership, control, and sharing. And, we'll get into more of this here in just a moment. The second trend is automation. Features are going to become the norm, and then building trust with a consumer is going to be really top of mind.
If we just think about the consumer study itself, it was an audience of 18 years and older. It was an even gender split, and it was a representative sample across all U.S. regions and ethnicities, and it was around a 1,000 sample set.
So let's jump into the findings. That first topic, As I said, the first insight was data ownership and sharing, and one of the most common topics. I think we're all hearing this year is Open Banking and Open Finance, and we're not just taking notice. Our consumers are taking notice as well. Overwhelmingly consumers agree that they own their financial data, and they should be able to control who has access to it. And while this is the case, more than half of the consumers, 55% agree, that they aren't sure what companies or providers have access to their data, so they want control over over it.
They believe that they should, and yet they don't know who has access to it. We see this specifically start to emerge with Gen. Z at 80% and Millennials at 77%. Those respondents agree that they expect to be able to see all of their financial data in one place they want to be able to control it.
And as regulation continues to move forward, we really think that this is going to be a topic that comes up more frequently, and I know Brett is going to share a lot more on this as we get to how you should be thinking about this.
03:57.700 - 04:33:17
Brett Allred: Yeah, I want to add one thing. I think for the group that they own their financial data that historically hasn't been the case. When you look at this, this shift that's happening where we thought all this data that is produced by my credit card or by…
04:33.17 - 06:06.77
Crystal Anderson: We might be losing Brett. Yeah, Brett is breaking up. I'm going to go ahead, and move to the next session. Brett, we're losing you there. We have you again, I think.
Okay, I'm going to go ahead and move on to automation.
So the second item is, I'm: sorry, not automation, personalization. What we really see in terms of personalization is that consumers want personalized experiences, specifically related to financial wellness.
So they really want to be able to have financial wellness features that help to drive them to their intended outcome. They want it to be timely. They want it to be personalized, and they really want it to be actionable in the service of their financial wellness. And that's more than just education. It is those personalized, timely contextual insights that can really help them save more money, spend less than they make help with that spend to income, ratio, budget, etc.
And then, specifically, I want to make sure that we're calling out here because we see it as automation here in the future. And in the next slide is that proactive alerts specifically about their finances. Those are features that really start to emerge when we ask consumers what they want.
Brett, I think you might be back. So I think we we lost it for just a second. But I see him moving.
0:06:06.77 - 07:51.17
Brett Allred: Yeah, I switched my Internet connection so I should be on a better connection but with automation, I actually maybe tied that back into the the previous point that I was trying to make before where we're talking about 89 of consumers agreeing that they own their financial data, and that hasn't always been the case.
When we talk about financial data being my debit card transactions, my credit card transactions, bank account transactions, even like my account number and my routing number. That's always been like data that's just lived in the information system of the bank. But the sentiment is starting to change, and people are realizing this is a valuable resource that can really help perform other financial transactions.
And so the fact that the sentiment of the consumers is changing along with the sentiment of the financial institutions and even the government which we'll get into agreeing that yes, the consumer owns their financial data. This is an asset for them. This is a resource for them, and they should be able to use that resource in a way that benefits them and have access to them. That is, a major shift. That's what's happened. And so one of the things I think is, we look forward into the next year, and it as we look at sentiment shifting once we get access to the data.
That's where a lot of automation can come in, and that's what the consumers are wanting. And so I I didn't want that point to go unemphasized that as that sentiment shifts.
Then, there creates an opportunity for everybody that's on this call.
07:51.17 - 12:25.510
Crystal Anderson: Yeah, really great points.
Well, specifically, you know, you said consumers are demanding it, and we absolutely heard that in this research we did see a little bit of differences across the different generations. And so that was the piece of that I wanted to share related to automation. I mean, we'll just kind of talk through Gen Z, Millennials, Gen X, and Baby Boomers.
The automation really comes into those automated insights, and we talked about that just a moment ago. But it really is based on their financial data. So automation and personalization, they also think about automation as it relates to savings options. So round up and rounding up to the nearest dollar. You can do that at fast food restaurants even now, but they want that from their financial institution or their fintech provider as well. They want that for purchases, and they also want that money to be going into savings. And so the automation really comes into play into helping them take action toward like kind of the service of their financial wellness.
Millennials are, it's more about predictive insights, and so they want to know what their account balance will be on a future date based on their current spending habits. And so they want to see that prediction and for us to be able to as providers in this space to say you know you might not be able to afford that, you know. Given what we know, your spending habits are in the future, and then proactive reminders to pay bills and save money. And you said that 25%
When we get into Gen X, It looks it looks pretty similar on the top rated item which is automated insights created based on their financial data. They also want that automated savings option. And then Boomers is very similar, so they want predictive insights on what their account balance will be. And then those automated savings options. And so you see a little bit of variance across the generations. But you really start to see automated insights based on financial data predictive insight based on what my spending habits are versus what they know what it'll look like in the future. And then automating savings round up and depositing that money into savings.
The next topic we heard was becoming a trusted finance partner. So those stronger financial wellness tools — we talk about them related to personalization. But they really want that trust with their finance partner, and we think that that could become a key differentiator in 2023, and even beyond.
When you look at household finances, a growing share of consumers are falling behind on monthly expenses, especially with inflation. You know, in the past we've really heard that you have to have $400, or you need to have $400 in savings, and then we talk about the savings rate.
But we're now starting to see that become more about monthly expenses and being able to cover that. So it's not just about saving for the future. It's about paying for the now, and so that was one of the trends. We really started to see emerge just this year, and we also see overall credit usage is starting to creep up. Higher lines of credit are being held longer. Credit card debt on average, is sitting on the card for about a year, and we especially see that happening with lower income, adults, and single parents. So those are the groups that really emerged here, and that women are generally more likely to be worried about those day-to-day experiences — I'm sorry expenses.
And then 1 in 4 consumers feel that their financial providers don't do enough to support their financial needs. This is even higher with Gen Z at nearly half at 40%. And compared to just 18% of Baby Boomers. And so they don't feel like their financial providers are doing enough to support their needs, and they're also saying that they would be willing to change financial providers if they weren't. So, there is a higher expectation and a higher willingness to switch that we're seeing now
Educational programs to teach you how to become financially stronger is one of the most highly sought out feature requests. But we do want to make sure that you know what we see in the research. And then what we see in our everyday is that it's beyond education. It is also about offering the automated insights, the predictive tools as well as the education. 34% overall rank the Top 3 features that they most want are financial wellness.
So i'm actually going to transition over to Brett now, and he is going to share with you what this means from a fintech perspective and how you can think about all of this research for your business and the impact that it will make.
12:25.51 - 24:05.720
Brett Allred: Yeah. So we're gonna send out the research to all of you. You'll get a copy of it. You'll be able to dig in and start to draw your own conclusions. I wanted to share some of the conclusions that I drew from the research as we went through this, and I had the opportunity to study it.
One of the first things that really stood out to me was as you have this shift in sentiment. Now that people are thinking, that people are knowing, that they own their data, and they want to leverage that data.
We asked consumers how many of them had actually shared that data with a third party provider, and actually only 7% of the respondents indicated that they had shared their personal financial data with a third party in the last 12 months.
When you break that down even like siloing into Gen. Z. It only jumped to 15%. So there wasn't a a large gap between the different generations.
But where we did see, the gap was what we indicated, as the say do gap. They said that they're willing to share their information. They wanted to, but they actually weren't sharing the information.
And that made me start to think like, Why is it like this? Why do they say they want, or would be willing to share it but they're not actually sharing it in reality? Why is there this gap in what they say and what they do?
And, you know, I started thinking about actual financial transactions. And how do we build the case for sharing our data? And one thought was, well, maybe we don't think of, we don't use the term “data sharing” when we think about the cases where we're sharing data.
Let me give you an example. If I'm going to get a mortgage, or maybe a loan. A common question that I would get in the application process is that I need 3 months of bank statements.
So I have to go back, you know I go online. I download the statements, and I I get that, and I have to provide that to the lender as a consumer. Do I think about that as data sharing? Or is that more just a means, a requirement, of me getting the loan?
Now, in here, as we build the case for data sharing, obviously, I think we can all see a use case where this would be that we could use data sharing to solve this, which would be.
Why don't — instead of you going on your online banking system downloading PDFs and then emailing those over or putting them in a data sharing room — we just provide another option to do that automatically? And that really is the essence of data sharing. And I think that if we can provide consumers.. here's the old way. Here's the new way, and give them a choice, you know. You can go get 3 months of bank statements, or you can just connect right here, and we can do it automatically.
We can frame up this data sharing concept better and make the overall process frictionless. Make it easier, make it quicker and faster.
And that really is what we’re asking. Am I sharing my data with you like go get your data and share it or let's automate it, and everyone of you as you have your own businesses. There's going to be these cases where there's the old way of doing things. And then there, with financial data sharing, there will be a new way of doing it. And as that shift happens in the industry, I believe there's going to be a lot of opportunity created for fintech companies to upgrade the whole process of financial transactions, no matter what they are.
So when I think about how to win, how to take the changes that are happening in the industry, and win with them, let's frame up all ways of doing them in contrast to new frictionless ways. Here's how to automate automatically. Pull in your bank statements. Here's how to automatically pull in paste ups, and so you can authenticate those on the fly. There's how to streamline all of that process, and it will be really critical to make sure that it's easy.
Payments are getting easier but they're not quite easy yet, especially if we're looking at international payments onboarding a new account, whether you're opening on new account. It's getting easier, but it's not quite easy across the board yet, and so, if we can look at old ways, look at new ways, make sure we make it easy.
We see that is going to be a continued pattern on how fintechs can win, especially in contrast to old legacy technology providers and the financial space that are really tied to legacy systems that are hard to upgrade compared to the nimbleness, the quickness of execution for fintech companies.
I think, is a huge competitive advantage that we can continue to work together to leverage as we build innovation for the future. Now, of course, like we have to deliver value, and we've got to have that clear value proposition. Why are they coming to you over somebody else? Because there is a trust difference, and we'll get into trust in a minute.
But on the new technology we've got to make sure to build trust into the system. There's been a lot of trust in the banking system with financial institutions and credit unions, etc. But how do we, as we shift that to more of a digital experience, how do we build trust all along the way?
And as you're thinking about this, some of the patterns that I think are really interesting is going back into the late nineties and looking at how the Industry started building trust in online shopping. You know, we were going from shopping in person, paying in cash, maybe credit cards, 5 at a terminal. Now we're interacting with someone online, and we're giving them a credit card. We're trusting that they're going to ship us this stuff — that gap existed then. And we had to overcome that.
And I think it's a similar pattern that we can look at in moving from legacy ways of doing financial transactions that are very much in person to online with newer fintech companies that don't quite have the brand recognition as some of the legacy providers.
So when I think about, you know building the case for how to win, what can we do this year? What are some of the shifts that are being created that would allow us to win in 2023?
I have a tendency to look at everything that's shifting, so we we've talked about one shift which is this data ownership shift and the perception of that along with that data sharing regulation is really shifting, and it's a very interesting thing to watch and stay close to, because, as sentiment shifts in individuals, the data regulations are trying to follow that. And the data sharing regulations — specifically Dodd-Frank Section 1033 — and the implementation of that is really important.
And so, looking at the data sharing regulation and consumer sentiment, I think, is No. 1 looking at as we move from an expansionary period for maybe the last 10 years to recessionary period. What's going to happen during that recession? If you jump back to 2007 when we had the mortgage crisis. In the wake of that you had, Venmo was started. You had Square that was started, you know Bitcoin paper originally was released around that time, and so, as we shift from expansion to recession, a lot of innovation can come from this period.
And then also, as we go from a bull market of the last 10 years to a bear market that we're in right now for other opportunities. So looking at those big industry shifts, there's probably 5 areas that i'd give you to watch for.
So first is regulation technology. As regulation increases, there's going to be technology needed to manage and assist in that regulation. And we see, like regulation tech really increasing, especially in the financial technology space, and with 1033, With a few of these other regulations, as the government wants to expand their reach past banks and credit unions and into fintech and Big Tech. What's going to happen there, and that that change will create opportunity
The next one to look for, of course, is decentralized finance and blockchain. Obviously that there was a huge surge in these technologies, and right now we're in the wake of a lot of that industry falling apart. But I actually don't think it's all that different than the dot-com era boom. You know there was a shift to online shops. You know there was a lot of investment, a lot of speculation, a lot of growth in online shopping and comms. Subsequently there was a major crash. After that a lot of people got out of being a com. But you know, fast forward 20 years, there's no way that we could live without dot coms, without e-commerce, shopping online. And I actually think decentralized finance and blockchain will be the same way. You know, we we are going through a crash if you will, with that. But in 20 years I think it's going to be very similar to online shopping that it will be just integrated, and so I don't think we lose hope on decentralized finance and blockchain
Next to AI. I think AI is huge. If you look at ChatGPT. What Microsoft, in their proposed investment in ChatGPT, or acquisition of the technology, its AI's ability to generate content is absolutely amazing. If you haven't played with it, go, play with it. Is it really awesome? And mind-blowing and you take that for content generation.
Then you look at what AI is doing in this ability to generate art like. If you haven't checked out mid journey, I go look up mid journey, and just with a few key phrases, you can actually have an AI generate a picture for you, it can draw for you. It can create art.
We see AI in self-driving. It's huge, and I I believe the key to making AI work in finance is actually the shift as data becomes available. We need data to power the AI. But once that data is flowing in between institutions and in fintechs,I believe there's going to be some really amazing innovation in AI for finance, just like we've seen amazing innovation in AI for driving, or AI for art or AI for content, etc.
So now and then, of course, payments are big. Payments are continuing, shifting.
And then digital-only banking is another big shift as as people continue to get used to this all digital world and only banking online.
So as you look in the future. Those are some of the big shifts in the industries that we see happening. I think some big innovation areas with reg tech, blockchain, AI, payments and digital- only banking stuff to look into as well.
And so with that, I think we're going to move to Q&A. Crystal, I'll kick it over to you.
24:20.9 - 24:40:21
Crystal Anderson: Regulatory changes like Section 1033. You mentioned that you talked about reg tech and emerging technologies from there. But do you think that there are any other use cases that get powered with our approach to data sharing, and how that will be regulated in the future?
24:40.21 - 26:36.44
Brett Allred: Yeah. So one of the things that we're looking at, and I would just for everybody, watch closely is what data is required to be shared at like no cost. We'll say that has to be open. We shared. And then what data can be shared at a cost so like pay per access. I think that's a something that will come out of this.
And then the third area is what types of data are going to be are shared. So we're talking about. You know. We've talked about like an account number and routing number. We've talked about transaction history being out there, but even in different industries as they relate to finance. You know insurance information that's insurance is very related to finance what's going to be required. Their employment, information, investment, information, etc., and I believe more and more industries as a whole are going to join this movement of data sharing.
And especially when we can provide new ways of doing things when we can make those industries more efficient, more automated, more effective as a result of data sharing a lot of the industries are I was a hesitant to share data because they really haven't seen the value this really goes to. You know, one of the points I made earlier about building your case for data sharing.
And no matter what aspect of the the financial ecosystem you are working in, really building that case on why financial data sharing can help, and if we can lead with that like, if the market can lead, I believe that regulation will continue to like, they'll converge. And hopefully we don't get over regulated in this area.
26:36.45 - 28:06.20
Crystal Anderson: You see the market momentum and then the regulation, and then we heard it in the consumer research, and we hear from our consumers every day that they expect to be able to share. But in exchange for that sharing of data they're going to expect more as well, and especially seeing everything all in one place. And so what you can unlock with that — the products, the features, the capabilities, the insights, the automation that you can unlock with that is, you know that expectation is growing for consumers, as awareness around Open Finance and Open Banking moves from the market to consumers.
And that's actually that kind of leads me into one of the other topics that got brought up in the Q&A. What is just one of the most surprising things that we heard in the research. I'll I'll share mine, Brett, but I would love to hear what was so surprising to you, and you know a couple of things.
But I think, keeping on this topic of data, sharing just the level of awareness that consumers have around this and that. They're, you know, actually articulating this expectation that they can share — that they expect to share. But then also this kind of black box of “I don't know who has access to my data.” So that was, you know, I I think, one of the things for me that I know that, being in this industry, but that consumers are saying it is probably the most surprising. How about you? Is there anything in in this research that you found surprising.
28:06.20 - 29:32.41
Brett Allred: Yeah, actually build on on something that you said, just because it triggered a few thoughts that when we go out and we're doing. We're interacting with different systems that ask us to input our banking credentials. For example, in order to share that data, we expect the experience is simple. I think consumers have just gone and done it, and not realizing what's happening in the back end. So we jump back, you know, 10 years or so to like Mint, and they were saying, Look, put your credentials in, we will pull your data in, but they didn't realize they were actually sharing their credentials. The data was getting scraped that they were giving access to their online banking to a third party.
But there the consumers are starting to realize that more like. Well, i'm giving you these credentials. How do I? How do I take away that ability? And there there's not really a centralized user interface or experience that says here's all the places that I've shared my data with. Now let me switch it off and turn it off.
And we get things like you know, regulation over in Europe, and then you know, regulation that's in California that starts to push to make that more required. But it would be great to see some free market solutions to that. So consumers really feel more in control of their data and toggling it on and off.
29:32.61 - 30:29.96
Crystal Anderson: As you start talking about data and data access, I think one of the most likely next questions is about security. One of the questions we received is about consumer sentiment related to security. And again, I can share just what we heard in the research, and you'll see this when you get the research report. After this differs a bit across different generations. You have some generations that are really like. It has to have MFA, it has to have biometric screening, and for me to be able to access my account.
You have some generations that are saying, I want proactive alerts when there are all of my transactions. But more importantly, maybe the ones that seem to be fraudulent. And so you see security from a feature functionality related to their financial accounts.
But are you seeing anything related to customer sentiment or anything in the market brat related to security and specifically data security that you think is interesting to share with this group.
30:29.96 - 33:42.03
Brett Allred: Yeah, one thing, and it's more of a just a question back or more of a thought to consider — when it when it comes to security, I think you have to tie liability to that question. So if there is an issue like a breach of security, or if there's fraud, who then takes the liability?
And if you, if you think about the credit card industry, the loss of credit card numbers stolen credit cards. There, there's a bunch of security problems there, right you have. You know that time where you have your physical card. Somebody takes it to the back, and then they, you know, strike all the data off of it. And then they're selling that transaction or that card data online, and then it's used for fraud.
I don't think the security became, as far as the mind of the consumer, as big of an issue, because when there was a problem, the provider would step in, and they would resolve it at American Express. I mean amazing at resolving fraud concerns other credit card providers. You surface an issue, and they like credit your card back almost immediately. And so, in thinking about the sentiment on security, we need to tie security and liability together. And as we're providing the solutions, we have to really think through that, and not to skip ahead too much. But I,
Crystal, I do see another question that's kind of related to.. I think Ricardo had asked about: We're starting to see fraudulent cases in Buy Now Pay Later. So this is a a great example. And do we think that embedded finance and by now pay later will continue to be the trend this year? And if so, how does protection become a barrier?
You look at financial institutions who have been in this industry for a long time that are very risk averse. They've been burned. They deal with fraud cases all the time, and they have sophisticated models around it, and and they've become, in large part, very conservative around this. Then you swing the pendulum over to fintech that are brand-new startups. They're just trying to make the best experience ever, and they're like, and they're trying to get scale. Let's go out there and let's just build something that's like really easy to use and really appealing to customers.
Not so much on it doesn't have so much on the security or the fraud side as far as protections. So I I think you see, like two ends of the spectrum, and like all ultra-conservative and maybe ultra risky, if you will, and I believe you'll you'll, you'll start seeing fintechs as they've been burned kind of move back to not quite as conservative as the financial institutions, but start having to do more checks, and the challenge will be to run enough tests and to test where is that point where it's just enough security — a good blend of security to make sure that there's no fraud involved but user experience to make sure that conversion rates are high, and one of the big learnings that I think will come out of out of the last couple of years and moving forward is, where is that right? Balance? And companies who dial that in, I think, are going to win?
33:42.030 - 34:18.26
Crystal Anderson: one of the last, the last topic. We're almost at time. I'm sticking on that topic of fraud. Another question came in, so we heard the question about BNPL, about crypto, is there anything from a brand perspective? So you mentioned experience? Is there anything from a brand perspective, maybe for the lesser known brands, that they could do to help build that trust? Maybe as they're entering the market? Or again, as they're not, you know they're not a big brand name, so they don't kind of have that trust associated with their brand.
34:18.26 - 35:10.45
Brett Allred: Yeah, this is tough because we're in the weight of a lot of trust being lost as brands that seem to have been reputable. People put their money there.
You know they they lose, they fall, they lose their money, and so I would say right now that it's tough, because it's going to be hard to do that. Quite frankly. I don't have a silver bullet answer for you.
I think it's going to be tough for everyone in rebuilding that trust as especially with newer technology, especially if you're in the blockchain space. It's going to be challenging, but it's a great question.
I think a lot of people are going to be trying to figure this out this year because of the major headlines of everything that's happening.
35:10.450 - 35:35.37
Crystal Anderson: Yeah, agreed.
Well, thank you so much for chatting with me, Brett. I always love our conversations and love, hearing your thoughts on everything related to our space, and we thank you all so much for joining us today, as we mentioned earlier. We will send out the research report and the link to this recording, which will include the slides that we went over.
and we thank you so much for joining us.
Have a great day.