Here’s why an ecosystem approach is crucial to the future of fintech

Here’s why an ecosystem approach is crucial to the future of fintech
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Key Takeaways
  • Consumers today are craving financial apps that provide added value & memorable experiences.
  • Fintechs have a unique opportunity to grow and succeed with an ecosystem approach.
  • The right preferred risk insurance solution can lead to increased fintech revenue and customer retention.

The fintech industry is on the rise, and the space is getting more crowded than ever.

Global use of fintech apps has risen over the past five years and particularly since the world changed in early 2020. In fact, fintech companies acquired $25.6 billion in investments in H1 2020 - and more traditional financial companies are starting to think twice about fintechs.

“Over the past five years, the financial industry has been buzzing about the disruptions fintechs are causing by providing consumers with alternatives to traditional options. Statistics show that the tide is turning. More than ever, established companies realize the potential and necessity of these new technologies.” - Fortunly, February 2022

Consumers can’t seem to get enough valuable financial apps like MoneyLion, Kangaroo, Mint, and more. They’re quickly and easily able to make payments, invest in stocks, purchase insurance, apply for loans, and manage their wealth. That’s all while benefiting from seamless and engaging in-app experiences and snatching up unique opportunities to save as their cost of living soars.

One of the biggest opportunities fintechs have today is the ability to create these must-have user experiences by delivering value and innovative solutions to their customers, while finding new opportunities to generate revenue in an increasingly saturated market. Here’s where taking an ecosystem approach comes into play.

A unique opportunity for growth: The ecosystem approach

Creating a great customer experience in the fintech space is more important than ever, particularly as it relates to customer retention and loyalty. 

According to a 2021 research paper, “Customer Experience in Fintech,” published in the Journal of Theoretical and Applied Electronic Commerce Research, two crucial elements of customer experience in fintech – which is positively associated with the loyalty intentions of the customer – are perceived value (“a customer's own perception of a product or service's merit or desirability to them, especially in comparison to a competitor's product”), and perceived firm innovativeness (“the consumer's perception of an enduring firm capability that results in novel, creative, and impactful ideas and solutions”).

In the next three to five years, 77% of incumbent financial institutions will increase their focus on internal innovations to boost customer retention. - Fortunly

To deliver value and innovation, fintechs should consider investing in an ecosystem approach – that is, investing in solutions and partnerships that allow fintechs to connect to a network of other market players, traditional financial institutions like insurance companies, brokerage firms, and major consumer brands. 

This approach allows them to not only innovate on and improve the customer experience, but also leverage valuable new sources of data, reach new audiences, and add new revenue streams beyond traditional in-app advertising. 

How fintechs can leverage a preferred risk insurance ecosystem 

When you think of the ways in which fintechs can improve customer experience and generate new revenue, you may not immediately think of mobility data. But herein lies a huge opportunity.

Zendrive’s preferred risk insurance ecosystem uniquely connects fintechs and other popular brands with its Mobility Risk Intelligence (MRI) platform, which includes massive amounts of global driving data, and a network of insurance company advertisers.

Zendrive's preferred risk insurance ecosystem

How the ecosystem works

Here’s how it works: App publishers, including top fintechs, provide their users with a new experience: the option to complete a 30-day test drive that would allow them to potentially save big on auto insurance. Users can sign up for this experience directly within the fintech app - they simply need to keep their smartphone in the car while driving.

Zendrive’s MRI platform then tracks these users’ driving behavior for the duration of the test drive experience and scores users based on how they drive (factoring in events like speeding, distracted driving, hard stops, and more).

If users qualify at the end of the 30-day period, they’d immediately receive a quote from a participating auto insurer – helping them save via a policy premium based on their actual driving behavior, and not on less relevant insurance pricing factors like credit score, gender, age, and location.

Key benefits to joining a preferred risk insurance ecosystem

This ecosystem approach creates a win-win-win scenario in which:

  • Fintechs earn high-margin revenue while helping end users save 10-40% on auto insurance(a potential savings of up to $1,000/year)
  • Consumers get better priced policies that match their driving behavior
  • Insurance companies get efficient acquisition of preferred risk drivers

As part of this exclusive network, fintechs can also combine Zendrive’s mobility data with other financial data to more effectively segment and target users. Furthermore, they can use this data as well as risk scores to target other products and create additional in-app experiences.

Innovating and adding value beyond customer savings

In offering a unique test drive experience to their users, fintechs can go beyond simply surfacing attractive auto insurance savings to customers: they can also leverage trust and frequency of communications to create multiple positive touchpoints. 

Throughout the duration of the test drive experience, app publishers can provide direct, valuable insights on how their users are driving and how they can improve via an engaging driver dashboard building loyalty and trust among safety-conscious users. 

Zendrive’s SDK also allows fintech apps to take this experience a step further – businesses can provide their users with important safety features like:

  • Collision detection: Detect collisions and dispatch help to drivers within seconds.
  • Family driver safety: Ensure your users know how their loved ones are driving.
  • Safe driving insights: Provide important feedback about how drivers handle the vehicle, how often they speed, nighttime vs. daytime driving, and more.
  • Reward programs for safe drivers: Increase customer loyalty by rewarding those who drive safely with gift cards, discounts, and more.

Gaining access to the preferred risk insurance ecosystem

Consumers around the world continue to demand innovative financial apps that help them save via seamless, memorable experiences. Fintechs are simultaneously feeling the pressure to innovate, create customer experiences that strengthen loyalty and retention, and generate new revenue streams to stay competitive amongst legacy financial institutions.

Take it from us: Zendrive worked with a top-five insurer and a leading US fintech provider with tens of millions of users to launch a test drive program directly within the fintech app. We quickly helped our fintech partner scale this program, bringing added value to their users, while our insurance partner benefited from hundreds of thousands of personalized quotes delivered and policies sold.

Seizing the opportunity to become part of an exclusive ecosystem like Zendrive’s preferred risk insurance solution helps fintechs tackle all of the above-mentioned challenges in one – while opening doors to new industries, partnerships, audiences, and products.

Want to learn more about Zendrive’s preferred risk insurance ecosystem and how we can help fintechs grow? Contact our team directly below.

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