Digital finance services will become increasingly tailored to the digital channel and will play a significantly larger role in 2015, as more and more South Africans look outside of mainstream financial institutions to meet their financial needs.
This is according to Craig Whittaker, Head of Product at Wonga.com South Africa, who says that the digital finance arena is changing the way financial service providers interact with their customers. “Companies are shifting to digital platforms to improve convenience, access and scale faster than more traditional means, which is incredibly beneficial for the evolving needs of their customers.”
Whittaker says that the Generation Y (also known as Millennials, born between 1980 and 2000) factor is also driving digital finance services in South Africa. “As early adopters, this generation is not only more tech-savvy, but also more accustomed to convenient and transparent self-service digital channels, preferring to take more active control of the transaction process. Mobile, smartphones and tablet devices are increasingly this generation’s preferred means of online engagement.”
“The increase in internet usage and mobile adoption has encouraged financial services providers to expand their service and create bespoke product offerings in the online space,” he explains. “One of the fundamental shifts that has taken place within the financial services industry, both internationally and locally, is the convergence of the offering with the distribution channel to become the product itself.”
Whittaker says that, in doing so, companies are adopting multi-channel strategies that understand the shift in customer behaviour in which multiple devices are used throughout the day for online transactions, such as mobile phones and PC’s. “This has resulted in a greater focus on user experience, functionality for specific devices as well as session continuity across devices.”
According to the Adobe 2014 Mobile Consumer Survey, more than 3000 respondents across North America and Europe indicated that they spent more than three daily hours on average using finance based applications on their smart devices (mobiles and tablets).
“Mobile and smartphone apps are leading the way for digital banking and finance.” Whittaker says that customer demand for a convenient 24/7 service from digital finance providers has changed the game and the best way to cater to these needs is through accessible digital platforms. As South Africans’ preferences for using smartphones and tablets continues to increase, digital finance companies need to quickly evolve their distribution channels into multi-point customer experiences, powered by innovative eCommerce platforms, if they are to keep up with this shift.”
However, he points out that the biggest challenge that financial institutions face is that they need to ensure that the digital platforms created are simple and intuitive; otherwise customers are more reluctant to use them.
“In addition to this, ensuring adequate security and privacy have been big challenges for financial service institutions expanding their business into the digital realm. However, with a continued focus on improved security features such as data encryption and authentication protocols more people will be willing to transact online in the future,” concludes Whittaker.