With All the Focus on Fintech Products, Consumers Are Often Left Out
Focus on products in the fintech industry is over the top, and, as a result, the majority of consumers struggle to find financial products that address their immediate needs.
This was the overarching sentiment from panelists during the Morningstar Fintech Forum yesterday.
“There is so much room to innovate in financial services, but nobody is designing products for the bottom 60% of the American population,” said Rachel Schneider, senior VP at the Center for Financial Services Innovation. “This is a group of people, who work, but feel insecure. Their financial life is often about the day to day income volatility, real ups and downs.”
Near-term liquidity and short-terms savings are the top of mind for this layer of consumers, Schneider said. “But instead, financial services design products for retirement savings and portfolio allocations,” she said. “This is a huge mismatch.”
Today, FIs already have the data necessary to identify this group of people, but they lack the predictive analytics capabilities needed to address their needs. “We need to deliver them a set of services and advice that help them get there, and that aren’t necessarily going to map to our existing product models,” Schneider said. “But we are a ways away from that. We haven’t connected the dots of the data we have yet, and we need to think what is the interim step you need to take to get closer to that.”
Consumers’ experience with financial services needs to be “incidental,” added Victor Pascucci III, managing partner at Lightbank, a venture capital firm. “People are worrying about paying bills, about savings, so when does financial services become incidental to their daily lives?” he said.
To figure that out, FIs should start with focusing more on customer needs, and less on millennials.
“I am sick and tired of seeing pitches on millennials — there is really no difference: everybody wants the same things,” he said. “Millennials want seamless online and mobile experience, but so do the rest of the generations. The mystical millennial has been over-romanticized.”
