As companies look to the future in these fraught economic times, the ability to make crisp decisions is absolutely fundamental to business.
In a world of rapidly changing technological innovation, choices made now establish a firm’s future competitiveness and resilience.
Assessing the opportunities presented by any business choice has always been complex, as firms must not only weigh up any immediate return on investment—or the value add of a new product or service—against the much harder-to-quantify value of future-proofing the company.
The current costs of inaction and lost opportunities in financial services
With the pandemic underscoring the need for operational resilience in the face of disruptions, companies must more than ever consider a wide range of factors in their decision-making process.
Currently, financial businesses big and small ponder whether they should start using financial data connectivity to power their digital services.
As with any emerging technology, decision-makers face a degree of uncertainty—but very few are able to account for the costs associated with inaction and lost opportunities.
Here’s a breakdown of 6 key factors to understand the trade-offs of taking or missing an opportunity and drive more informed decisions.
6 key factors decision-makers should consider
As open finance becomes the default infrastructure of digital financial services, late adopters risk lagging behind the rest of the industry. This means they will spend less time experimenting with financial data to make key learnings that can lead to substantial savings and greater speed to market.
1- User experience
Learning when and how to integrate financial data connectivity in their user experience, so their customers can successfully adopt it.
In practice
Delivering a better user experience for account connectivity reduces your cost of acquisition.
On one level, it leads to higher conversion rates—which means marketing budgets are spent more efficiently.
On a second level, a lower drop-off rate means your employees spend less time in manual reviews, increasing productivity. Flinks’ intuitive UX has been proven to improve adoption by 20 to 30% compared to other providers’ account connectivity experiences.
2- Smarter data usage
Learning how to leverage financial data to improve fraud prevention, credit risk, or customer segmentation models.
In practice
The positive impacts of using financial data to power business processes are wide-ranging, and mostly depend on a business’ specific goals.
For instance, our client PayBright uses financial data connectivity to activate users in seconds. They have updated their fraud prevention model to run on insights extracted instantly from their users’ bank account information and transaction history, allowing them to determine the legitimacy of a transaction in real-time and with more accuracy.
3- Automation
Learning how to automate repetitive tasks that, by themselves, add little value to the customers’ experience. For instance, financial businesses no longer need their agents to sort through PDFs themselves to find the data points they need—this can automatically be done by the right data enrichment tools.
In practice
Data connectivity helps your staff process and use information faster, reducing front- and back-office costs even as your business is growing.
All financial businesses use data in one way or another in their operations.
Collecting documents and proofs of ID, looking through bank statements for specific information, and inputting those data points into a database—those tasks can all be automated with data connectivity and enrichment. With the proper tools, your staff becomes more efficient and can serve a larger client base faster.
Ready to go further?
We touched base with digital consultant and blogger Marcel Britsch about how companies can optimize their chances of achieving good outcomes from important choices.
His simple framework can help you drive more informed decisions in complex situations.
Even when actively selecting a data connectivity provider, there are potential costs to consider:
4- Reliability
Users want to connect their financial accounts quickly and only once—and never have to think about it again. Poor performance in terms of account connections and data retrieval affect their experience and can lead them to drop off altogether.
In practice
Low reliability negatively impacts a financial business’s ability to deliver its services and realize the customer lifetime value.
When considering a data connectivity provider, decision-makers should inquire about their success rates when connecting to financial institutions, service failures, and customer support service. Saving on costs at the price of reliability can mean forfeiting potential gains from a more robust solution.
If new users can’t readily connect their financial accounts because connectivity is unavailable, then they might not be able to start using your service at all. Additionally, a percentage of current clients will not bother reconnecting their accounts—especially when asked repeatedly because connections keep breaking.
5- Data quality
When it comes to the breadth and depth of the collected data, not all connectivity providers are equal. Having to work with a limited scope of data points or being able to connect only to certain financial institutions can seriously affect your business’ ability to grow beyond its current offering.
In practice
Choosing a data connectivity provider has both short- and long-term implications. After all, financial data connectivity is a relatively new service and providers are still in the process of developing a full suite of products.
During the selection process, decision-makers should consider the product vision and roadmap of different connectivity providers—and make sure it aligns with their own vision for the future of their business model.
6- Data security and privacy
There are also potential costs associated with a data connectivity provider whose security and privacy practices are below industry standards— such as greater risk of being exposed to a breach or the consequences of working with a provider that monetizes your customers’ data in less ethical ways.
In practice
Data security and privacy is a major concern for consumers—even if a breach of their trust is due to a vendor, they are likely to pin it to the service provider they’re engaged with. Hence, only choose trustworthy data connectivity providers with acknowledged expertise in the industry.
Poor practices on the part of your data connectivity provider expose you to higher risks of financial loss, operational disruption and reputational damage.
Start making more informed decisions
As businesses across the economy turbocharge their digitization efforts, delaying action can have major consequences down the road. Companies would do well to approach all choices—whether related to onboarding Flinks or not—carefully, consistently and with a clear strategy.
While the cost of integrating new technology such as Flinks’ financial data connectivity may seem onerous, this expense can pale in comparison to the toll of building your business on top of an outdated or non-performant technology stack that stymies growth.
As growth specialists have long pointed out, a willingness to fail, regularly, means to learn fast. Companies that do not practice regular and informed decision-making can ultimately shoulder much higher costs by remaining stuck in their ways, and a bad outcome from a measured decision-making process is better than no new learnings at all.
At Flinks, we frequently urge clients to embrace a leaner approach to decision-making. But at the same time, we’re fully aware that the opportunity costs can be hard to measure and often go unseen until much later on. This is why we routinely perform costs of lost opportunities analyses for our clients.
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