Out with the old, in with disruptive innovation
The financial services industry has traditionally employed a highly traditional business model. It is only in recent years that we have begun to see significant changes in impactful innovation within the sector, which has impacted the way in which financial services are provided to customers. According to a recent study by the World Economic Fund, […]
The financial services industry has traditionally employed a highly traditional business model. It is only in recent years that we have begun to see significant changes in impactful innovation within the sector, which has impacted the way in which financial services are provided to customers.
According to a recent study by the World Economic Fund, Innovation in financial services is deliberate and predictable and have the greatest impact where they employ business models that are platform based, data intensive, and capital light.
Furthermore, the implementation of what they refer to as disruptive innovation, will not be a one-time event, rather a continuous pressure to innovate that will shape customer behaviors, business models, and the long-term structure of the financial services industry.
While financial technology providers are working hard on R&D developing new products, improving platform technology, etc, Forex brokerages across the world remain dormant when it refers to implementing changes in their acquisition and conversion methods.
The acquisition process, though now relying on digital media, hasn’t changed much. Brokers pay affiliates for traffic, receive a list of leads and proceed to blindly call them to attempt conversion.
This modus operandi may have worked 20 years ago, but in today’s fast-paced information era, in which users are accessing their information through multiple channels and expect a response within a fraction of a second and in which multi-tasking is an everyday verb, those methods are no longer in line with customer’s expectations and lifestyle.
Imagine this: a salesperson picks up the phone and calls Mr X, a potential customer who about 14 hours ago clicked on a banner and filled out a form requesting more information. Mr X Is on the phone with his wife, just minutes before going into a meeting.
He tells his wife he has another call, hangs up with her and picks up the phone. “Hi Mr. X, my name is Joe from XYZ trading and I’m calling to….” [yawn/annoyance]. This is clearly not a good time for Mr X to talk, he is busy about to start a meeting, he hung up on his wife and he has most likely forgotten that hundreds of minutes ago, he showed a moderate interest in investing in Forex.
Disruptive innovation is just what the word says. Innovation that disrupts.
Clear and simple. But why is it so difficult for brokers to implement it? Tech providers who understand that the financial world is changing its patterns, are developing tools to reach customers in a more effective way. Automation for example is one such tool.
Imagine if 14 hours ago, when Mr X was sitting at his computer, truly interested and engaged, the automated trading platform would have guided him through the onboarding process and converted him. Imagine if a few hours later, the system sent him an automated e-mail or an SMS offering him to download the trading app into his phone so he can trade anytime, anywhere.
Imagine if now that he is registered and has the app, just as he is about to walk into the meeting, the system sends him a push notification advising him of the drop in the price of Gold and directing him directly to the action of the trade in a simple, not-intrusive manner. Is this not a much more effective, less disruptive way of converting and retaining clients?