The fintech revolution is transforming the banking and financial sectors through AI, agile methodologies, and embedded finance. This transformation is dramatically improving the customer experience (CX), while increasing operational efficiency and driving innovation across the financial services industry.
The rise of investments in fintech
In recent years, investment in fintech has increased significantly, fueled by the potential of AI and agile practices to transform financial services. The global AI market in fintech is currently worth just over $44 billion and is expected to reach nearly $51 billion by 2029.
The global financial services sector is a significant part of the S&P 500, with financial services accounting for 13.12% of the index as of April. Major players such as JPMorgan Chase, Mastercard, and Berkshire Hathaway illustrate the sector’s considerable influence on the market. McKinsey’s analysis reveals that between 2017 and 2022, payment providers and investment banks have significantly increased their earnings per share, highlighting the value creation and total shareholder return in the fintech sector.
To subscribe to Kiplinger’s Personal Finance
Be a smarter, more informed investor.
Save up to 74%
Sign up for Kiplinger’s free e-newsletters
Profit and prosper with the best expert advice on investing, taxes, retirement, personal finance and more – straight to your inbox.
Benefit and prosper with the best expert advice – straight to your inbox.
Financial institutions are investing heavily in AI to improve customer experience and streamline operations. These innovations include digital payments, automated invoicing, and seamless integration of customer relationship management.
Leveraging AI for an Improved Customer Experience
AI is a key component of the modern fintech strategy, enabling financial institutions to deliver tailored and efficient services. According to McKinsey, “AI high performers”—organizations that derive significant value from AI—are integrating AI into various business functions, including product development and risk management.
AI applications in fintech include chatbots, biometric verification, and automated self-service portals, all aimed at improving the customer experience. For example, AI-powered chatbots provide 24/7 support, instantly resolving simple queries and routing complex issues to human agents. This improves the customer experience and also boosts operational efficiency.
Agile methodologies are essential for financial institutions to respond quickly to market changes and customer needs. By adopting agile practices such as Scrum, Kanban, and Scaled Agile Framework (SAFe), banks can deliver incrementally and iteratively, accelerating the product development lifecycle. This is particularly effective in large-scale business transformations.
Kiplinger Advisor Collective is the leading criteria-based professional organization for personal financial advisors, managers and executives. Learn more >
1. Assess your organization’s Agile maturity. Conduct regular assessments to identify gaps in Agile practices. Consider assessment factors such as responsiveness to change, Agile tools/practices followed, and iterative delivery.
2. Create Agile coaching and training programs. Implement personalized coaching to upskill your teams in frameworks like SAFe, Scrum, and the Spotify model. At TCS, we have designed Living Agile, a working methodology to help employees adopt Agile as a way of life. This approach involves short, experiential mini-projects that can last up to three days. Agile coaches help groups of learners break down real-world problems and work in sprints as Scrum teams to achieve their goals.
3. Drive your program. Identify pilot teams to implement Agile practices, then scale the programs across your organization.
4. Measure your efforts. To assess the effectiveness of your efforts, establish key performance indicators (KPIs) to measure the success of Agile initiatives. These may include mean time to recovery, mean time to market, customer satisfaction scores, user and employee engagement, and workflow efficiency.
Create an Agile Center of Excellence
An Agile Center of Excellence (CoE) plays a crucial role in transforming teams to an Agile way of working, with a focus on improving customer satisfaction and employee experience. Creating a CoE can help guide your teams and projects.
In my own experience, establishing a Center of Excellence within TCS Guadalajara has been instrumental. We have focused on empowering our people, work centers, and departments to drive agility. The Center of Excellence has improved our organizational efficiency and accelerated time to market. We have met 80% of business requirements at 20% lower cost, with high customer satisfaction.
Benefits of investing in customer experience
Investing in customer experience has many benefits, including the potential to improve customer loyalty, increase revenue, and strengthen competitive position. According to McKinsey, banks that prioritize customer experience transformation can see improved lifetime revenue and increased upsell and cross-sell potential. Additionally, agile, AI-driven CX strategies enable banks to anticipate consumer demands and deliver personalized solutions.
The global financial services sector is expected to continue growing driven by emerging markets such as India, which is expected to grow by 6.3% in 2024.
Focusing on customer experience can help financial institutions maintain a competitive advantage in this changing landscape.
Integration of integrated finance
Embedded finance integrates financial services such as payments, loans, and insurance into non-financial platforms. By integrating financial services directly into platforms that consumers use every day, such as retail apps and online marketplaces, businesses can offer seamless and personalized financial services, improving the customer experience and making financial services more accessible and efficient. This generates significant value for consumers and businesses, ultimately leading to increased revenue and stronger customer relationships.
Challenges and future prospects
While the benefits of integrating AI, agile methodologies, and embedded finance are clear, financial institutions face challenges in scaling AI and agile initiatives. Key issues include data security, regulatory compliance, and the need for robust infrastructure to support these advanced technologies.
AI and agile methodologies also pose a challenge to maintaining the human touch that is essential to customer relationships in financial services. According to Deloitte, “the most successful CX leaders will likely be those who can use AI to improve a human-centric customer experience.” This means providing customer-facing professionals with data to deliver more human interactions, personalizing service interactions, and being transparent with customers about the use of AI.
Despite these challenges, the future of financial services will be shaped by the integration of AI and Agile practices, which will drive unprecedented levels of innovation and customer satisfaction. As digital transformation continues to evolve, AI and Agile methodologies will remain at the forefront of financial services leaders’ strategic priorities in 2024 and beyond, enabling them to meet evolving customer expectations and maintain a competitive advantage in the marketplace.
Related Content
The information provided here does not constitute investment, tax or financial advice. You should consult a licensed professional for advice regarding your particular situation.
