Innovation

EY’s Nikhil Lele on why banks, wealth managers and tech companies will soon offer financial subscriptions

  • Consumers are moving away from owning assets.
  • This rental or subscription economy will also appear in financial services, changing products into services.
close

Email a Friend

EY’s Nikhil Lele on why banks, wealth managers and tech companies will soon offer financial subscriptions

As financial services undergo some transformative changes, we talk a lot about where the puck is headed. The company, product or service or set of technologies that can answer this question is at a huge advantage as incumbents invest in their digital future and tech firms are gunning for their markets.

Nikhil Lele has been thinking about the future of finance a lot. The EY partner leads digital business for the firm’s financial services sector. And for the last nine months, he was the lead author and architect of a research study the firm recently published called The Next Wave of Consumer Financial Services.

Nikhil and I discuss how he sees consumer financial services being reframed over the next few years and why the move to subscriptions — like we see with Netflix or other popular consumer services — will likely make a big mark on the industry.

SubscribeiTunes I SoundCloud I Spotify
The following excerpts were edited for clarity.

Skating to the financial puck

Over the past ten years, we’ve seen the financial industry make great strides in offering new and enhanced digital experiences. But what we keep running into across our clients, everyone is thinking about where the next wave of value is going to come from. How do you really deepen relationships with clients? How do you really attract and acquire net new customers? Our clients struggle with these questions.

That prompted us to take a step back and look at factors beyond the narratives of digital transformation that will change the ways financial companies deliver value. We approached our research by speaking to dozens of clients to understand their perspectives on growth and where they see their businesses were headed. We also undertook a piece of primary research that was very quantitative in nature.

Reframing consumer financial services

Reframing is about how value creation and capture will fundamentally change in the years ahead. It’s not about core disruption or incremental change. Consumer behaviors are changing and so are the ways they engage their financial lives. The smartphone didn’t just offer a better phone, it fundamentally reframed the expectation of value around access at your fingertips. The fact that in ecommerce we expect two day free delivery didn’t exist years ago.

That reframing concept is fundamental in financial services — it’s about creating an entirely new ecosystem of value around how consumers engage their financial lives.

The move to financial subscriptions

The evolution to subscriptions is really the final leg of a set of building blocks. The first block is a different way of instilling trust and serving consumers through a new definition of trust. The second is really rethinking what a platform-based ecosystem is in financial services. Finally, virtually every aspect of consumer behavior is evolving toward renting, pay for use, or subscriptions to whatever the consumer wants to access or consume. So, the notion of owning core assets is waning as a core consumer context.

When we think about financial services evolving in this direction, it’s really following a trend that’s being set in every aspect in a consumer’s life. Institutions are starting to think about moving beyond the current product-based, a la carte model into bundling solutions. Early on, we’ll see convenience bundles that bring together a couple of products like investment access and advice into a fixed fee arrangement. Over time, we see bundles becoming more complex and oriented around a life-event framework. Institutions that can bundle access to curated products and services with marketplace access is where we see things headed.

Who will offer financial subscriptions?

When we did the research, we uncovered that the biggest impact will come from three directions. In banking, we saw consumers, especially younger ones, show a strong preference to their banks offering more holistic and lifecycle-based bundles. In wealth management, we see clients ascribe value to the human relationship with their adviser. We’re also seeing that wealth management customers still navigate many complex life and financial decisions on their own.

Lastly, a large technology player can come in and offer access to holistic services and bundles — even if it’s just an offering of the experience that sits on top of the bundles themselves — that can be significantly disruptive. Customers show a willingness to engage tech firms for bundles.

0 comments on “EY’s Nikhil Lele on why banks, wealth managers and tech companies will soon offer financial subscriptions”

Innovation, Member Exclusive

Slack and Salesforce launch industry-specific digital solutions – what’s in it for FIs?

  • Slack and Salesforce have built solutions to help their customers make the most of their digital tools.
  • How will these solutions benefit financial firms?
Sara Khairi | September 26, 2022
Innovation

How business process automation could make FIs more agile

  • Rather than taking away jobs, automation has the capability to increase job satisfaction and make things go faster for everybody involved.
  • The road to fully automated business processes is winding and long. However, firms that focus on employees' needs and deliver easy-to-use interfaces have a head start.
Rabab Ahsan | September 15, 2022
Innovation, Library, Sponsored

Tomorrow’s banking: The digital transformation of financial institutions

  • For FIs, the vulnerability of both front- and back-end systems and processes was proven in the wake of the pandemic. But with these challenges comes unprecedented opportunities.
  • In our latest whitepaper with Plaid, we break down how FIs are tackling the challenges of digital transformation and implementing the technologies driving it.
Plaid | February 10, 2022
Innovation

Tearsheet’s top stories in 2021

  • Over the last 12 months, the pandemic has acted as a catalyst for the digitization of financial services.
  • Here's a roundup of our biggest stories over the past year.
Zachary Miller | December 30, 2021
Innovation

Adding new partners and members, Visa’s Fast Track Program propels growth of the fintech industry worldwide

  • Visa's Fast Track program helps fintech startups to get up and running quickly on its rails.
  • New members are focused on helping customers financially navigate the pandemic.
Zoe Murphy | May 07, 2020
More Articles