Unmet Investing Needs – 3 Areas to Uncover New Growth Opportunities
Banks and credit unions are pursuing innovative approaches to attract and retain clients. Creating flawless omnichannel customer experiences and introducing new product innovations can evolve into a competitive advantage. But only if at their core, they meet the demands of the market and drive value for customers.
The key to successful growth takes this one step further. Not only do financial institutions need to meet the demands of the market, they also need to have a clear understanding of customers’ unmet needs … and meet those needs. In order to have long-term, sustainable growth, banks and credit unions need to continue to look for, evaluate, and execute new opportunities that solve their customers’ challenges.
Here are 3 areas to uncover unmet investing needs and find new opportunities to drive growth in the financial industry:
Financial Inclusion (FI)
Investopedia defines financial inclusion as “the pursuit of making financial services accessible at affordable costs to all individuals and businesses, irrespective of net worth and size, respectively.” It goes on to share that financial inclusion “strives to address and proffer solutions to the constraints that exclude people from participating in the financial sector.” In short, it seeks to fulfill the unmet financial needs of what is a large segment of the population.
In 2018, the World Bank state globally, 1.7 billion adults remain unbanked, yet two-thirds of them own a mobile phone that could help them access financial services. While in the US this number is lower with less than 6.5% of U.S. households without a bank account in 2017, an additional 18.7 percent of U.S. households (24.2 million) were underbanked, meaning that the household had a checking or savings account but also obtained financial products and services outside of the banking system.
Women disproportionately face financial access barriers that prevent them from participating in the economy and from improving their lives. As Melinda Gates, Co-Chair of the Bill & Melinda Gates Foundation, indicates “When the government deposits social welfare payments or other subsidies directly into women’s digital bank accounts, the impact is amazing. Women gain decision-making power in their homes, and with more financial tools at their disposal, they invest in their families’ prosperity and help drive broad economic growth.”
Promoting access and the use of high-quality financial services, particularly among these underserved populations, is crucial to achieving inclusive growth.
Identify global investment themes
As globalization continues to build the interdependence of the world’s economies, banks and credit unions can also find opportunities and emerging global investment themes focused on solving global issues. In its 6 Global Issues to Watch in 2019, the United Nations Foundation discusses a number of key issues ranging from climate change to the Sustainable Development Goals (SDG), and the investments needed to finance them.
The United Nations’ Sustainable Development Goals are a set of 17 global goals that cover social and economic development issues such as “poverty, hunger, health, education, climate change, gender equality, water, sanitation, energy, urbanization, the environment and social justice.” Notable from the past is that these Sustainable Development Goals do not distinguish between “developed” and “developing” nations, shifting investors to look at the market as one “one world facing multiple correlating issues but from different sides.”
Chris Roelofse, head of Alternative Investments, Stanlib multi-manager, believes that investors will take a broader view of such issues driving needs across the world and looking for opportunities to meet them. Financial institutions can help by developing products and portfolios that support the industries and investment this global market presents.
While the abbreviation of FinTech was first recorded way back in the 1980’s by Peter Knight, it wasn’t until the 2007 financial crash when ‘fintech’ became a common term outside of the finance world. The rush of investments into fintech businesses offered alternatives to ‘failed’ financial institutions and drew warranted attention. These fintech companies were able to address a number of unmet needs through their solutions.
There continues to be a growing demand for better financial products and services as customers become more engaged with digital platforms, including mobile devices. Fintech themes continue to offer valuable insights into the unmet needs of the financial industry. Often considered revolutionary, the core themes fintech technology address are often based on very simple ideas. The fintech ecosystem now ranges from savings, wealth and investment management, to payments and money transfers, to equity funding and lending, to insurance and beyond.
According to SG Analytics, fintechs are unlikely to replace traditional banking but do influence the operating model of financial institutions. The majority of the global banks view fintech as an opportunity to reorganize their business to adapt with digital customers and enhance customer value with the IDC finding that 1 in 3 (34%) open to collaboration.
Thinking of growth in the financial industry we agree with Marshall Goldsmith who said, “What got you here, won’t get you there.”
By uncovering unmet needs, banks and credit unions can prioritize innovation efforts to design unique products and experiences that will support sustainable growth. Where is your financial institution finding inspiration for growth? Share with us at firstname.lastname@example.org.