Learning from the nimble – what businesses can take from startups’ success

The value of customer-centricity is central to the growth of Australian financial services technology startups (‘fintechs’). Even during the 2020 pandemic, their numbers swelled by nearly 100 to almost 750¹. And when compared to global peers, Australia’s broader startup ecosystem is the fifth fastest-growing², with an increasing number of local ‘unicorns’ valued at more than $US1 billion each. Those such as Airwallex (payments) or Envato (marketplace) are following in the footsteps of software tools maker Atlassian (market cap approximately $A88 billion in June 2020) and design platform Canva ($A20 billion).

Observing these customer-centric startups — who are using change to create business value — is one of the ways Macquarie’s Banking and Financial Services Group has identified opportunities to streamline.

For instance, recognition of startups’ use of the cloud and its almost limitless capacity and responsiveness to deliver exceptional customer experience has contributed to the bank migrating half of its IT workloads to the cloud. A level that will increase to 90 per cent in 2022, says Luis Uguina, Chief Digital Officer at Macquarie Bank, and has been accompanied by a shift to Agile methodologies — small projects run up quickly, tested, implemented and iterated — that are essential to serving its customers and partners.

“We have a vision of how the banking industry is going to be in the next five to 10 years, and we must move fast and mimic the best practices of startups like fintechs,” says Uguina.

Three insights from startups that you could leverage for your business

1. Digital services like smart and augmented apps create exceptional customer experiences every day

Fintechs use data to meet their customers’ aspirations.

Cognitive computer systems such as artificial intelligence and machine learning empower businesses to interrogate customer datasets to create compelling services while streamlining processes to deliver on them. With technology’s increasing affordability and accessibility – thanks to low and no-code platforms – any size of business can now access advanced data capabilities off the shelf.

The opportunity lies in moving from representative models of what a business owner believes customers want and need, to hearing and responding to what they are telling them they want in the moment, Uguina says.

“Customer experience has always been unique to each individual, but expectations are now higher than ever. With new cloud-based machine learning algorithms and the power of speed to deliver a unique and beautiful experience, we’ll be able to tailor new products and offers to individual customer needs.”

“And our business partners may eventually tap into our cloud platform to extend their own reach and capability,” he adds. “Picture a smartphone or smart speaker asking your customer to schedule payments because it inferred they made similar repeated transactions or, based on a range of data, alerting them to upcoming events that require your trusted advice.”

2. Engage customers and inspire their advocacy in a virtuous circle

Customers tend to form a “holistic” view of a business beyond simple customer service. So as positive interactions multiply, they are more likely to form emotional bonds and so may become advocates for favoured brands.

Up to 80 per cent of a customer’s satisfaction is based on how they feel when interacting with a company — even more than how easily or well they could get a job done, says Rosalind Coffey, Head of People, Culture and Client Experience at Macquarie Bank.

“Business owners and their teams therefore need to think about the experience they're delivering through the three lenses of success, effort and emotion,” Coffey says.

A Bain & Co survey conducted by Frederick Reichheld (inventor of the Net Promoter System) found that although 80 per cent of CEOs believed they delivered great customer experiences, just 8 per cent of their customers agreed³. And the few companies that aligned treated their customers so well that customers spent more and became advocates. This disparate statistic speaks volumes for the risk of complacency, the opportunity to be realised and how willing consumers are to embrace change when the chance arises.

“That study showed a real gap between the corporate intent and client perception” says Coffey, adding a human-centred design leads to a “deep understanding” of the things that matter most to clients.

Fintechs and other startups are well versed in such drivers, often creating challenger services that bridge gaps, like the ones hinted at above, in big business’ customer understanding.

“Human-centered design takes a step into the customer's shoes and starts with a deep understanding of what the clients are trying to do and the way they feel when they're doing it, and re-imagining experiences to make them positive for clients and customers.”

Any business can initiate human-centred design, even starting with something as simple as reviewing standard customer emails and forms — the way a company communicates has a cumulative effect on how a customer feels about a business.

Other tools include empathy interviews (observing how a customer operates in their own environment), and journey maps to learn what a customer does and feels as they progress through an interaction with a provider.

“The important part is mapping how they feel when undertaking different activities. So we can see the opportunity to address pain points in the experience for a customer,” says Coffey.

3. Platforms, participation and ecosystems influence enduring success

For Australian businesses, much can be gained from keeping up with what startups are doing and considering the broader applicability.

Tech giants Google, Apple, Amazon and Facebook are keen to make their customers’ lives easier, enhance and expand experiences on their platforms, boost loyalty and retention, and grab a greater share of their consumption patterns. Collectively, they invested $US2.2 billion last year in fintechs⁴ in bids to offer family credit cards (Apple), SMB merchant facilities and loans (Amazon, Facebook), and payments and personal finance (Google, Facebook). Well placed to exploit this global trend, Australia is the third-strongest region for e-commerce and retail technology, according to a 2021 survey of 1000 global ecosystems⁵.

But the financial sector’s highly regulated nature has also led tech companies to piggyback on established financial businesses, to build trust and credibility. The evolving interplay between platforms and ecosystems is an important dance to watch, says Uguina.

“The big tech companies and emerging fintechs aren’t aligned to the complex and shifting regulatory requirements, but they will partner with existing businesses — and our partners — to deliver beautiful, shared customer experiences.”

Locally in Australia, the startup culture is one to watch. In 2021, it ranks ninth in the world (ahead of Singapore) and second of 161 startup ecosystems in Asia-Pacific, while Sydney and Melbourne rank 36th and 39th, among global cities (13th and 14th in Asia-Pacific), respectively.⁶ So there is opportunity for Australian businesses — already at the heart of the action — to observe local innovation and startups as they scale-up to take on the world.

Macquarie Bank’s focus on delivering the next generation of banking to customers – today

While startups such as fintechs tend to focus on particular components of financial services, incumbent providers are assembling one-stop shops upon which businesses can layer their own customer experience.

“The past 50 years has been about banks teaching customers to speak our language; the next five years will be learning the language of our customers”, says Uguina.

“Businesses that maximise the customer experience by using technology for greater personalisation, simplicity and ease — but still in a trusted environment — will dominate business and serve happier and more vocal customers.”