DueDil's COO Denis Dorval says fintech disruptors need to understand granular company data to better understand consumers.
The last few months have seen an unprecedented acceleration of digital transformation – one that was forced by circumstances beyond the control of business, government and individuals. The reality, however, is that this transformation had been in progress long before Covid-19 made digitalisation essential. In the financial services sector, this transformation began years ago in the consumer space and over the last few years has taken hold within B2B.
This transformation was driven by two key shifts, one is the behaviour of the business customer, who increasingly embraces digital solutions. Research from Forrester shows that B2B e-commerce in the US alone is projected to reach US$1.8trn per year and will account for 17 of all B2B sales by 2023.
As SMEs embrace digital solutions in larger numbers, they want the same kind of service as their consumer interactions. As Forrester reports, B2B customers expect their brand experiences to have the same emotional level and impact as their personal lives, holding commercial partners to the same high level as the biggest consumer brands.
The second trend is that of hyper-targeting, meaning the ability to hyper-target specific segments based on behaviour. In the consumer space this means companies can interpret digital trails to understand the ‘behaviour’ of the consumer and then hyper-target. This creates digital consumer experiences which tie specific behaviours to specific propositions at the right time and in the right context.
This same approach is already well under way in the B2B market with small and medium enterprises. In a B2B context the concept of ‘digital trails’ is slightly different. Where the consumer is leaving digital trails through the consumption of free digital services offered by the likes of Google, Facebook, Amazon etc. SMEs are leaving digital trails through company websites, social profiles and other information that is captured digitally and made available through publicly accessible sources.
In this case, the idea of customer behaviour morphs into the concept of ‘company insights’ that can be tracked to specific SMEs. Building an insights-based view of what an SME does and how they are performing – in real-time – allows for the same kind of hyper-targeting that is successfully engaging consumers.
Meeting expectations with hyper-targeting
Where the real challenge lies for financial institutions is in how to both meet the evolving needs of SMEs, while taking advantage of the opportunity for hyper-targeting. The problem here is not only that the SME market is vast, but also extremely diverse in nature, varying massively in size, revenue, business activity and age. So how do you develop a complete real-time picture of SMEs at scale as part of a digital onboarding journey or while monitoring your book of business? And how can you build the capability to render that view at the right time and in the right context - i.e. make it easy to feed an existing workflow or process with that view; or render that view easily accessible by an employee?
In short, solving this challenge is frankly impossible using the kind of legacy technology that is prevalent in traditional financial services companies. It is not good enough to bolt a new user interface on top of legacy systems and expect to deliver a great experience. It’s also not good enough to rely on static datasets from third-party providers that are refreshed at a pre-digital cadence, when the existence of cloud-native technology allows for dynamic insights and a real-time view.
To properly serve B2B customers in the digital-first era, financial services companies need to prove their value to SMEs by understanding their needs and giving them what they want in a fast, efficient and streamlined fashion.
Embracing transformative technology
So how can this be achieved?
The answer lies in adopting technology that will not only make life easier for SMEs, but also help banks and FinTechs to better serve them. Key to this are application programming interfaces (APIs) that enable financial companies to communicate and collaborate with clients and partner companies. APIs allow company insights to be injected directly into workflows, not only automating much of the process, but also making it possible to deliver better products and reach a wider addressable market.
Being able to access a larger customer base is the holy grail for many companies, but this can only be effective if they have accurate insights on prospective clients. Innovations such as cloud technology, artificial intelligence (AI) and machine learning allow for greater interpretation of client insights and will make the difference between the winners and the losers.
Much like the consumer market, where brands target ideal customers by following behaviours and building profiles, the same can be applied to the SME market based on an analysis of different forms of company data. Essentially taking the crude oil – company data - and refining it into the fuel – company insights – that powers smarter processes.
At DueDil we work together with banks, Fintechs and other financial services providers to provide them with the company intelligence they need to offer fast, frictionless service while hyper-targeting. What we see in the market is that the companies most focused on transforming both their own technology and their ability to serve SMEs are going to win the battle for the B2B finance market.
Denis Dorval is the COO of DueDil, a company intelligence platform that generates unique insights on millions of companies and the people behind them.