Introducing the Digital Now

All your customers are digitally demanding 

Digital transformation has been on the collective agenda for years. 

The concept is not new - it’s been impacting the world and driving growth and innovation long before COVID-19. Contrary to popular opinion, the pandemic hasn’t been so much of a catalyst for digital transformation as the ultimate test of business buoyancy and agility in unsettled times.

The transformation that was already happening may now, thanks to the pandemic, be happening even faster. Businesses that failed to prioritise digitisation before 2019 haven’t just lost the race, they aren’t even in it. The impact of the pandemic is undeniable. It has, according to the 2020 McKinsey Global Payments Report, not only compressed a half-decade’s worth of change into just a few months but also had a profound effect on areas that are typically slow to evolve, such as consumer behaviour1. But this is not just another piece of research dedicated to its accelerating effect. 

The reality is far more interesting.

As the results of this new survey reveal, the pandemic has served to increase the adoption of behaviours that were ALREADY gaining traction. The fact is that your customers’ behaviour isn’t changing, it’s already changed.

Gone are the days of analogue consumerism. The digital consumer is here and (SPOILER ALERT) we’re not just talking about digital natives (those who were surrounded by technology from their birth in the new Millennium). The survey shows that older generations have broken free of the digitally dismissive stereotype and the results have uncovered overarching, intergenerational behaviours and expectations.

Our research shows that your customers already have high expectations around the speed and delivery of payments. Digital payment experiences are already an intrinsic part of everyday life, with 44% of people surveyed using mobile or online banking services on a daily basis.

Customers of all ages now expect instant payments, instant receipts and super-easy processes. In fact, the majority say there’s no excuse for brands not to offer the same kind of instant services they enjoy in other areas of their life, as slickly delivered by the Ubers and the Amazons of the world. Even the most technologically sceptical among us are now open to using new financial services or payment methods that make things quicker and more convenient.

These expectations are high across the board, spanning both gender and age. Attitudes that many of us might expect from 18-25 year-olds are shared (and in some cases more widely held) by 40-65 year-olds and those in the 65+ bracket. The overwhelming consensus is that the digital world needs great digital experiences. And that’s a view held by young and old alike, regardless of whether they consider themselves sceptical or enthusiastic adopters of technology.

But while an amazing CX nowadays invariably means a digital one, digital doesn’t always mean a good CX; it’s simply the latest iteration in the customer experience evolution. The stickiness of these behavioural changes will depend entirely on the satisfaction of these new experiences. At the moment, only a third of people surveyed see any type of online service provider fully meeting their expectations when it come to the processes that make or break the customer experience - the payments. Optimising this experience and taking full advantage of the considerable opportunities that this new normal presents is the next digital transformation frontier.

In this eBook, we’re going to help you to navigate this new digital landscape. We enlisted the help of research house, Insight Avenue, to run our survey to over 2000 adult consumers in the UK. And, while the survey showed that more than half think we’ll have an almost cashless society within five years, we’re not just jumping on the ‘death of cash’ bandwagon (possible but not probable in the immediate future in our opinion – think less-cash as opposed to cashless). Instead, we’ll look at what we know now about the digitally demanding audience, who they really are, what they really want and how to attract and keep them. We’ll also explore the very different obstacles and opportunities that the Digital Now offers to both challenger companies and more traditional, incumbent organisations. And we’ll give you the recommendations you need to please your digitally demanding customers.

It’s time to stop thinking of the digital future and start catching up with the Digital Now.

Click the image above to view in browser. Or access the entire survey results here.

Your challenges will depend on how digitally evolved you are.

COVID has exposed the risks to businesses of neglecting investment in digital technology. Those who started the digital transformation process pre-pandemic were better able to pivot and adapt to a world in which digital was central to every interaction and transaction – those who didn’t lagged behind customer expectations.

How brands navigate the Digital Now will largely depend on where they are in their own digital evolution.

While the digitally-native challengers may have less work to do in terms of their critical infrastructure, the post-pandemic world holds challenges for all.  The results of this survey blow many commonly-held assumptions about consumer expectation and digital readiness out of the water. It shows that the digital revolution wheel has well and truly turned and it’s no longer just the young that are in the driving seat.

Traditional incumbents who may have been cautious about a digital-led proposition for fear of losing wealthier older audiences or fear of compromising their services need to rethink their strategies. The results suggest that customer resistance to digital is no longer a barrier to change, SO LONG AS it increases customer convenience and/or control. These audiences have digitally evolved and the chances are they are already one step ahead. There is a collective appetite and interest around digital payments with almost half seeing themselves as innovative or enthusiastic in their adoption. 

Click the image above to view in browser. Or access the entire survey results here.

41% have opened a new bank account or started using a new financial service app in the last 12 months. Yet, despite this willingness, the majority still only have a traditional bank or building society account (65%) and issues of trust are high on the collective agenda, with most feeling more at risk from online fraud today.

Traditional companies wanting to compete in the Digital Now need to be as innovative as the start-ups, and the innovators as trusted as the incumbents. And everyone needs to rethink what they know about their customers.

For businesses across the board, this new reality presents both opportunity and risk. This eBook will give you the formula for success while outlining the key actions you need to take depending on where your organisation is in terms of its own digital evolution.

Key Findings – what we know about the digital now

There is a generation that no business can afford to ignore.

There may be commonly held assumptions that the younger digital native generation is generally more connected, more switched-on and more tech savvy than older age groups but is this really the case in this digital age?  Afterall, digital technology has become an integral part of everybody’s existence.

So, we decided to dig deeper into the world of consumer behaviour to see what people really felt about the payments experience and to challenge or substantiate our own assumptions about who the digitally demanding customer really is. We commissioned a quantitative survey of over 2,000 people, of all ages, and there were certainly a few surprises. We also asked them to tell us about their level of digital enthusiasm, to make sure we weren’t only interviewing those who were enthusiastic. The results confirmed that attitudes to digital finance and customer experience expectations no longer run along such pronounced generational lines.

And who has closed the generation gap? Look no further than the Boomers, those born between 1946 and 1964.

In our survey, the 65+ cohort is now most likely to expect digital payments to be instant and convenient. They are also the demographic who most felt that outdated and inefficient payment processes undermined their experience as a customer. And they most strongly agreed with the statement ‘there is no excuse for online brands to have outdated, inefficient payment processes’.

Click the image above to view in browser. Or access the entire survey results here.

What’s more, the majority of those aged 65+ said there had been no change in their expectations in the last 18 months, meaning that this discerning demographic has been setting the customer experience bar high, for quite some time. But perhaps this isn’t really so surprising. After all, this was the first generation to experience the radical changes brought about by computerisation. We’re talking about the people who were in their 30s when Amazon launched. They’ve gone from cheques to debit cards to online payments to contactless payments, and they know what good service looks like.

As a recent white paper suggests, Boomers combine formidable spending power with a thirst for fresh life experiences2. A Financial Times article shows the extent of the intergenerational wealth inequality, with the Boomers being the group that have experienced the greatest increase in their household wealth during the 2006-2016 period, with a rise of 96 per cent, and one in five being millionaires. 3

At the start of the research process, we set out to look for the ‘digitally demanding’ customer. What we found was that all age groups were digitally demanding, but with the more youthful being more ‘digital’ (as they’ve grown up in a digital world) but also less financially aware/interested. Meanwhile, the older generations are more ‘demanding’, with stronger financial awareness and expectations as a result.

With money to spend and high expectations, those aged 65+ are the generation that no business, FinTech or otherwise, can afford to ignore.

Less cash; more digital

ATMs and wallets may well be losing their currency with more than half of those surveyed (56%) who think we’ll have an almost cashless society within five years. We believe the reality is likely to be further away than this statistic would suggest, but we do think it’s significant. What we think is more likely, in the immediate future at least, is considerably less cash as opposed to cashless, as cash continues its lengthy handover to digital payments.76% are using ATMs to withdraw cash far less frequently than a year ago and two-thirds (65%) say they often have no cash on them or at home. While the 65+ age group are the cohort most like to have cash, they are also not shy of a digital wallet - 67% have used a digital or mobile wallet in the last 12 months or would consider doing so.

More than half of those surveyed said they enjoy or would enjoy being able to leave the house without a wallet or purse because they can pay with their mobile (58%). And 76% would prefer to repay a friend £500 digitally than with cash, 57% say the same to repay a friend £5.

Click the image above to view in browser. Or access the entire survey results here.

Contactless has been widely embraced by consumers of all ages, but most notably amongst the 65+ demographic. An impressive 93% of those aged 65 or over have used contactless in store in the last 12 months or would consider doing so.

And, 70% of people say that, due to the convenience, they plan to continue shopping online even though shops have re-opened which suggests that these intergenerational consumer behaviours will outlast the pandemic. 

So think less cash, more convenience. Less cash, more control. Less cash, more digital. And more opportunities.

Digital payment expectations

We live in a world of instant gratification. We've all been Netflix'd, Amazon Primed and Uber'd and have all come to accept ultra-seamless, on-demand, real-time experiences as the norm.

The Instant Economy, a world of instant experiences driven by instant services and instant information, is increasingly becoming the benchmark for customer experience.

Even before COVID, the lines between our personal and professional lives were becoming increasingly blurred. Our work life and home life are no longer two separate entities - 73% of those surveyed expect the same instant and convenient payment experiences both at work and in their personal life.

And 61% say these expectations have increased in the last 18 months. When asked why, 47% of those aged 65+ cite the accelerating effect of COVID, while the 18-25s were most likely to say that they were lazy with payments and wanted things as easy as possible.

While the overwhelming majority of people (82%) say they expect digital payments to be instant and convenient, those over 65 have the highest expectations for an instantaneous payments experience.

When sending or receiving money nowadays, nearly half (49%) expect payments to be processed instantly.  Those in the 18-24 age bracket were most accepting of longer processing times.  And, when it comes to confirmation of receipt, 37% expect to get confirmation of payment instantly, and 14% within 10 seconds.

Click the image above to view in browser. Or access the entire survey results here.

And who’s meeting these payment expectations to the greatest extent? Interestingly, it’s the online communities like Amazon, Ebay and Deliveroo, with their embedded financial services offerings, that are pipping the banks at the payment post. While the tech giants such as Google and Apple get only 26% of the collective vote.

Click the image above to view in browser. Or access the entire survey results here.

Either way, no more than a third of people see any online service provider type fully meeting their expectations around payments or money transfer.

Which means providers either need to encourage consumers to downgrade their expectations or they need to up their game. And good luck to anyone who tries the first approach.

Digital payment problems and pain points

Payments are the ‘last hurdle’ in the online customer experience with problems here causing much frustration, with 65% of those surveyed agreeing that digital payment problems create unnecessary stress for customers. Problems range from having to wait for refunds, needing to find additional information or a card to pay with and being transferred away from a website to make payment. More than half have stopped buying from a specific brand because of poor payment experiences

Top 5 digital payment issues

  • Having to wait for a refund (64%)
  • Having to find additional info or a physical card to pay (59%)
  • Transferred away from website to make payment (57%)
  • Payment process has too many steps / feels clunky (54%)
  • No / delayed notification that payment has gone through (51%)

Click the image above to view in browser. Or access the entire survey results here.

And what’s the consumer response to these payment pain points? 44% of people say they simply abandon the transaction.

53% say they have stopped buying from specific brands because of problems or poor experiences with the payments. While 65% say digital payment problems create unnecessary stress for customers.

Click the image above to view in browser. Or access the entire survey results here.

Most (60%) feel that the responsibility for digital payment problems lies with the consumer-facing brand as opposed to the payments provider, so if you’re not partnering with the right provider, it’s your brand that will pay the price.

While paying that price may not be instant, you could be feeling the effects for a long time.


Payments: Pain points or people pleasers?

Payments are critical to customer experience, occurring at the time when the customer, having evaluated your proposition, acts on the buying decision. Failure to recognise the importance of these processes may result in businesses losing customers and cash flow at this critical juncture.  44% of those surveyed said they would abandon the purchase or payment and use another App or website when payment issues occur or processes fail.

Click the image above to view in browser. Or access the entire survey results here.

But it’s not just losing customers in the buying journey that brands should be concerned about. Our survey shows that digital payment problems have an emotional impact; with 71% of consumers surveyed saying the payment experience can ‘make or break’ their future relationship with a brand. 72% say outdated and inefficient payment processes can undermine their experience as a customer and the tolerance threshold is low, with 78% agreeing that there is no excuse for online brands to have outdated, inefficient payment processes.

Having to wait for a refund is most likely to make people feel frustrated or angry (40%), having their preferred payment method not accepted is most likely to make them feel disappointed or let down (34%), and they are most likely to get anxious or stressed when a payment method doesn’t feel secure (46%)

Click the image above to view in browser. Or access the entire survey results here.

Issues of security and trust are high on the collective agenda. As the world becomes more reliant on digital services, 71% personally feel at greater risk from online fraud than 18 months ago. This sentiment is felt most acutely by the younger demographics (although this may have as much to do with their heightened general awareness of digital threats as opposed to deep-rooted concern). Although it is notable that those in the 18-24 age bracket were also most likely to describe themselves as ‘average’ in their adoption of digital payment services – stating that they tend to use them when most people they know already use and trust them; a statistic which has further served to level the playing field when it comes to intergenerational attitude.

And what are the top three situations that lead to those surveyed feeling vulnerable to online fraud and identity theft? The most cited reason was a lack of security certificate (77%), followed by no clear indication of a payment provider (74%) and being transferred outside the App or website to a third-party payment provider (72%).

Click the image above to view in browser. Or access the entire survey results here.

Trust is the cornerstone of any customer relationship and there is much to be gained from investing in your payments platform - 77% say they are more likely to trust a brand that invests in modern, customer-friendly payments processes. And 53% say that a trusted payments experience would encourage them to use the online service provider again and reward them with their loyalty.

The Obstacles and Opportunities for Challenger Organisations

If your organisation has a digital-first proposition, then now is a time of huge opportunity for you. After all, start/scale-ups are often in a better position to adapt quickly than larger, older organisations. But taking full advantage of that opportunity still brings its challenges, and they may not be the ones you were expecting.

If, like many FinTechs, you’ve been concentrating on a customer base of digital natives and innovators then, as these results show, your audience is potentially much wider and you’re missing out by ignoring older generations.

18-25 year-olds are the easy wins. They are the first adopters, the low-hanging fruit. Challengers will have to work harder to develop their proposition and appeal to older generations. But, as this research shows, consumers of all ages will gravitate toward brands that provide the most convenient and trusted user experience. So if your social plan is limited to TikTok, you probably need to rethink your strategy at the very least.

FinTechs are uniquely placed to address the issue of lack of trust, based as they are on the premise that they can make finances simpler and more transparent for all. But there are less clearly-defined trust factors such as issues of perceived authority and social proofing that could also be incredibly helpful to you while you grow your audience.


The Obstacles and Opportunities for Incumbents

Whereas innovators have the benefit of digital responsiveness, many incumbents enjoy the institutional advantages that years of having a physical high street presence bring.  But, while this familiarity may have led to more trust amongst some audiences, this is a legacy of a bygone, more bricks-and-mortar era. Having an impressive edifice is less relevant in a digital world (unless we’re talking about Minecraft). Nowadays, we have all become far more familiar and comfortable with downloading apps and linking to our bank account. As our survey reveals, every age group is now open to using new financial services or payment methods to make things quicker and more convenient- even those who are older or describe themselves as technologically sceptical.

Many incumbents are struggling to keep up with the pace of technological change and rising customer expectation; hampered by a legacy of costly and cumbersome technology. They are dealing with the significant overheads of running their own payments infrastructure together with all the associated project costs, resources and time required to build, manage and operate either indirect or direct payment scheme access. So being behind-the-times isn’t just off-putting to customers – it's probably a more expensive way to run your business as well.

Without the modern API platforms that drive the Instant Economy, they are being left behind in the wake of more flexible, responsive, technologically switched-on FinTechs and challengers whose disruptive solutions have raised the bar when it comes to customer expectation and experience.

Traditional financial institutions need to build innovative and instantaneous customer experiences into their proposition but, choosing the right digital infrastructure to support and enable these experiences is critical to success.

Embedding custom-built solutions into core banking systems enables such organisations to reimagine their technology stack without paying to reinvent it. Switched-on incumbents realise that they’ll miss out on new features if they try to retrofit current practices and processes, and later we’ll tell you more about how working with the right partner can help you to enact this change (cough, cough Modulr).


The Formula for Success

So, whether you’re a challenger or an incumbent, if you’re looking to build payments experiences based on consumer attitudes to digital finance and customer experience then, based on our research, there’s a clear formula for success:

Ideal payments experience = instant + convenient + responsible + trust + control 

Read on to find out how to solve this formula and reap all the rewards that the Digital Now brings.

What your customers want

We asked, and your customers have spoken. Consumers in the Digital Now demand a trusted payment experience, with 81% saying that online brands have a responsibility to keep money safe and flowing in the economy. And what are the elements of a convenient yet trusted payments experience? Our research shows that these include instant payments (53%), instant notifications (51%) and ease of use (45%). These fuel loyalty and increase both spend and the likelihood that your customers will recommend you. 

Click the image above to view in browser. Or access the entire survey results here.

The general consensus is that current accounts should include, at a minimum, balance updates (61%) and instant payments (60%), ahead of savings pots (33%), budgeting tools (28%) and spend categorisation (22%).

Meanwhile, embedded payments give peace of mind (45%), save time and effort (45%) and build trust (40%); with 39% appreciating not being sent to another site to complete a transaction.

Click the image above to view in browser. Or access the entire survey results here.

Top 5 elements of an ideal payment experience (and how to deliver them)


1. Instant In, Instant Out

82% of those surveyed expect the digital payments experience to be instant and convenient, and instant payments and real-time notifications were cited as the top two elements of a trusted payments process.

The key to increasing speed and efficiency is to make sure your systems are properly joined up, automated and in-sync, and to replace manual, error-prone and time-consuming processes with real-time, responsive digital ones. As our 2020 research study found, there is a direct correlation between backend inefficiencies and poor customer experiences at the front – it’s what we now call the butterfly effect of payments.  In that study, 62% of businesses said that the hidden costs of payment inefficiencies actually outweighed the hard costs of payment process, and the top hidden cost was the impact those hours could have had on customer experience and satisfaction.

You only need to look at the traditional transactional banking model to see how poor behind-the-scenes processes impact the customer-facing experience. The current system is riddled with inefficiencies, not least the batch payment processing on which it relies for making, receiving and reconciling payment flows. All of which is time-consuming, error-prone and incurs administrative cost. Inbound payments are slow and can take 8–12 working hours before they appear on customer accounts (even longer at weekends and bank holidays!). Outbound payments are also managed in batches and the execution of payment files typically only takes place three to four times per working day. Traditional banking batch payment processing may well be the established method, but it’s everything that the Instant Economy is not. In terms of customer experience, it’s like they’re on Whatsapp while you’re writing them a letter.

Banks and other businesses that recognise the metamorphic potential of payments and optimise them for maximum effect will have the ultimate advantage in today’s demanding business climate.

With modern processes like real-time APIs, brands can incorporate intelligent payment flows, eliminating the manual transaction processing of legacy payment solutions. Outbound payments can be made 24 hours a day, all year round and often fulfilled within seconds via the UK payments scheme Faster Payments. Inbound funds can be automatically reconciled and cleared quickly, with balances updated in real time; allowing them to deliver a superior customer service and affording an important competitive advantage.

Innovations such as Confirmation of Payee also help to keep money flowing; protecting customers from fraud without delaying accurate payments by validating account details and checking they are going to the right recipients.

Think of it like this: Seconds can feel like an eternity while waiting for an advert to finish before a YouTube video. If you’re keeping your customers waiting, that’s the feeling you’re giving them. That itchy ‘skip ad’ feeling.

2. Convenient, Easy-to-use & Embedded

Digital technologies have changed the game when it comes to customer experience. The increasing digitisation of the customer experience has led to a convergence of physical and digital touchpoints in the personal banking and financial services journey. Many organisations now need to revisit their existing provision to ensure they’re delivering an optimal and integrated customer experience, at every interaction.

Incorporating embedded financial services can go a long way to delivering a payment experience that is both convenient and easy to use. The concept of embedded financial services has kicked off an exciting innovations race and one which, as this research suggests, the non-traditional financial services providers and online marketplace innovators such as Amazon, eBay, Etsy, Deliveroo and Uber are winning. They have acquired an edge over traditional businesses by offering payments and other financial services within their platforms as a core capability; allowing customers to leverage a greater range of functionalities without ever leaving their brand.

If old, legacy systems are holding you back from making essential strides into the world of embedded financial services then fear not. In the new era of real-time APIs and Open Banking, traditional banks no longer have ownership and control of payment processes. Partnering with the right FinTech can help you to integrate innovative and secure payment services into your proposition that will deliver an unbeatable experience for your customers. A full suite of financial capabilities awaits ambitious businesses of all sizes, including digital payment accounts, cards, Faster Payments, Direct Debit transactions, Payment Initiation via open banking, Confirmation of Payee and 24/7 access and notifications. This collection of new services has the potential to radically transform financial services across industries and deliver the convenient, easy to use experience of the digitally demanding's dreams.

Think of it like this: Embedded financial services are like the muscular cybertronic arms of a T-Rex’s dreams. They only make it more awesome.


3.Credible, Accountable, Reliable & secure

There’s no getting around it: even the techno-optimists must concede that the digitising of financial services has created opportunities for fraud, theft and other crimes.  And, as this research shows, today’s digitally switched-on consumers know this. They don’t only expect authentication steps and other necessary evils for security, they’re reassured by them.

So, it’s a good idea to put any security requirements front and centre of your UX. You have an opportunity to make a virtue of necessity and use it to build trust with your customers.

If there’s a need to interrupt their journey for a security stage, be clear and transparent about what you need and why you need it. That way, you can get around any potential discomfort prospective clients may have around providing you with their private personal data.

Keep your security credentials up to date and display them, and details of your payments partner, proudly. Our research shows that 74% of those surveyed feel more vulnerable to fraud when there is no clear indication of a payments provider.

But choose your partner wisely.  For Open Banking-enabled payments, selecting API powered platforms will enable you to offer a seamless and reliable end-to-end payment experience, all while keeping you customers’ information safe and secure. That’s because the user’s accounts are never in direct contact with the bank’s servers, meaning that APIs offer an extra level of financial security compared to traditional payment methods. Customers want to be proactively reassured their money is in good hands. But make sure that perception is backed up by a highly reputable payments partner!

Think of it like this: If you’re going to have someone going through your bag on the way into a gig, you want to know that they’re the security team and not just some random person who wants to steal your phone. (We would have said ‘and cash’, but clearly nobody’s carrying that these days).


4. Speedy & Transparent

Sub-par customer experiences typically arise from slow, manual and fragmented processes, and a lack of confidence that transactions have taken place as expected – because of a lack of real-time capability and/or poor traceability. Solving this problem is a great place to start in removing friction and delivering a great customer experience.

Having Faster Payments plumbed into your tech stack allows you and your customers to send and receive money in near real-time, with webhooks providing immediate confirmations; delivering  both speed and transparency. 

By partnering with a provider who is a direct participant of the Faster Payments service, you’ll be able to process payments securely and efficiently, while they take on the regulatory and operational task of plugging into the scheme.

While Payment Initiation, available via Open banking, enables brands to redirect end users to their bank or building society so they can make one-off payments, e.g. top-ups and other purchases, smoothly and efficiently. This functionality, when combined with easily-reconciled dedicated customer accounts, can also be reversed to send payments back to the customer's account in real-time, for easy refund processing. This not only improves the ongoing relationship with customers by building loyalty and trust, it also addresses the most commonly-cited payment pain-point frustrating 64% of those surveyed - having to wait for refunds.

Think of it like this: You can’t just get great at the bits where you take. You need to be great at the bits where you give back as well. And yes, we know this sounds like we’ve copied it from a relationship advice column, but it apparently works well for both.


5. Easily Controllable

The widespread adoption of smartphones, tablets and other devices has made new customer interactions possible and allowed for more innovative ways of delivering financial services (like gamification in savings apps or crypto-reward wallets). Today, mobile internet traffic accounts for more than 55 percent of total web traffic4 and App-based user experiences are fast becoming the digital norm. Mobile banking apps appeal to those who appreciate the convenience of being able to check their money in real time 24/7, and of having finger-tip control over how they manage their finances, pay bills and transfer funds.

But your mobile or online offerings are only as good as your UX, and your UX is only as good as the platform on which it’s built - if you don’t have an infrastructure which supports intelligent payment flows behind the scenes, the customers at the front-end will feel frustrated as opposed to in control.

The modern customer journey goes beyond user experience; you need to consider hidden processes, bottlenecks, data flows and how your technology and supplier ecosystem underpins this.  Luckily, there are tools available, like Modulr’s Payments Map Analysis, which can help you identify the customer journey sinkholes and the steps you need to take to ensure your customers experience of your brand is a unified, integrated and ultimately empowering one.

Think of it like this: Much like in classic video games, platforms are important. And everyone hates the levels where the platforms crumble under Mario’s feet. They’re the worst. Solid platforms. That’s what we want.


Solving the Challenger Company Obstacles

Rethink your customer profiles

As the innovator start-ups scale up, it’s time to rethink the target audience because, as the results of this research show, digital tools are no longer the exclusive preserve of the young millennial. The older demographics now represent a massive market opportunity. In 2019, there were over 14.28 million baby boomers in the United Kingdom, making it the largest generational cohort at that time, with the millennial generation a close second at 14.22 million people.5

But, as with many new propositions, especially disruptive ones, it can be hard to get older generations on board. Only 3% of those in the 65+ bracket and 9% of 45-64 year-olds currently have a challenger bank account as their main personal account. But this is the cohort that’s also most demanding of the kind of instant experiences that digitally-native FinTechs can bring, and least tolerant of inefficient payment experiences.

Familiarisation, personalisation and trust are key to getting this discerning demographic on board (don’t forget that this is the cohort most likely to have appreciated the then-convenient face-to-face interactions and reassurance of a physical high street presence). Once you have their trust, you’ll be rewarded with their loyalty.

And don’t forget the processes that underpin your brand, particularly the payments. Older generations are most likely to trust a brand that invests in modern, customer-friendly payments processes and 92% think that there is no excuse for online brands to have outdated, inefficient ones. If a customer can track their takeaway right to their doorstep, surely the same technology should be available to track their £40,000 house deposit through the payments ether, right!?

Create an online payments experience that is clear, transparent, secure and efficient and you’ll find that, as your fintech brand matures, so too does its user profile broaden.

And we’re not saying to start thinking of enjoying Frank Sinatra, cardigans and gardening. Firstly, those things are awesome regardless of age. And secondly, your more mature audiences are just as individual as your younger ones, so you’ll need to figure out what your audience base in that grouping looks like.

Building authority

While older audiences might seem initially more sceptical, they do tend to jump onto new tech bandwagon if it’s clear that it offers a better solution. But they’re not typically risk-takers and that’s what sets them apart from the digital native millennials. Customers in their thirties through to their sixties have almost certainly been burned before and are less likely to be susceptible to flashy new ideas.

To put it simply, if they don’t know who you are, they’re not going to take the risk. But if they feel more comfortable with youand your service providers, they may well do so and they’ll bring you their substantial business.

Familiarity is one way for people to become more trusting of brands. The exposure effect alone can make all the difference. So, widening the advertising net could go a long way in increasing the chances that potential customers have at least heard of your brand before they consider your solution. Increasing your brand authority will also help. Is your online presence bolstered by a wealth of rich, straight-talking content? This can be especially useful when it comes to converting mature customers who are likely to need more convincing.

Digitally demanding customers expect and celebrate stand-out, share-worthy user experiences from brands now more than ever. As this research shows, while audiences of all ages may not want to be the first to try something new, they are more inclined to when they see that others are doing so. It’s why the Facebook feature telling you which of your friends likes a page is so compelling. And 32% of those surveyed said they were likely to recommend a brand if the payments experience was a trustworthy one, so to reap all the benefits that word of mouth can bring, make sure that your payments processes are something to talk about.

This isn’t the time to be shy and retiring. It’s the time to get out there and be known by everyone. Because if they know you, they’ll be more likely to trust you.

Partnering with the right providers

Of course, delivering pure payments power seldom happens unaided and the infrastructure needed to support and enable this has become a basic business building block and as critical as any other transport network.

Even the most agile innovator can benefit from outsourcing its payments processes (and the associated compliance and regulatory requirements) to infrastructural FinTechs like Modulr. This gives them infinitely greater scope and flexibility to respond to new technological developments and shifts in customer behaviour. Surrounding their core systems with microservices and third-party APIs to access functionalities like Faster Payments and Open Banking innovations provides the scale and ease of access that the innovators need to keep on innovating and build new digital financial services propositions for end-users.

Solving the Traditional Organisation Obstacles

The challenge for more traditional organisations is markedly different to that for innovators. It’s not about refining existing offerings or changes to brand and marketing. Frankly, if you’re not already offering a standout digital customer experience, you’re in danger of losing customers to organisations who do.

We’re not just talking about one-off digital projects, we’re talking about a full, all-encompassing digital-first strategic approach.  And that’s not an easy ask for incumbents. Smaller start-ups have the advantage of agility. When you have fewer moving parts and processes, change can be easier to implement. But when your legacy processes have been in place for years and you have multiple stakeholders in the mix, change is decidedly more difficult. It’s like trying to do a U-turn with an 18-wheeler truck rather than a motorcycle.

Taking a long hard look at the hidden inefficiencies and customer experience sinkholes in your proposition may be a painful endeavour, but it’ll be far less painful than your customers identifying them for you.

It is well understood that digital reinvention means getting organisational buy-in, from the top-down, and it’s not about doing just the minimum – while that might work for right now, it won’t help with the next step-change, or the one after. An overriding issue for many traditional financial services companies is the speed with which they can create new services in such a highly regulated industry, be that a customer experience, back-end operation or anything in between.

Finding the right partners to help you with this ongoing transformation will be vital. Taking a collaborative approach to modernising legacy systems and applications can help tyou to compete with the challengers by improving user experiences, offering innovative services and leveraging external expertise without making drastic internal changes.

While you’ll need to take digital change seriously, it doesn’t need to mean reinventing the wheel each time.


About Modulr

Modulr is the fastest growing B2B payments company in the UK. Backed by global industry leaders including PayPal and FIS, Modulr’s Payments as a Service API platform enables businesses to automate payment flows, embed payments into their platforms and build entirely new payment products and services themselves. All managed in real-time, 24/7 from one API. Together with major partners Intuit (QuickBooks), Sage and Revolut, Modulr is leading the transformation of the corporate payments sector, making it faster, easier and cheaper to move money.

Based in London, Edinburgh and Dublin, Modulr has raised £63m to date. Investors now include Blenheim Chalcot, Frog Capital, Highland Europe, PayPal and FIS. Modulr Finance Limited (FRN: 900699) is registered with the Financial Conduct Authority as an EMD Agent of Modulr FS Limited (FRN: 900573). Modulr FS Limited is an Authorised Electronic Money Institution, regulated by the Financial Conduct Authority. Modulr’s Dublin-based entity, Modulr FS Europe Limited (FRN: 638002) is registered as an EMD agent of the Central Bank of Ireland.