The once ironclad financial services (FS) sector is facing unprecedented innovation and disruption. Navigating these changes and remaining competitive require a heightened focus on customer experience (CX).

As competition spikes, FS organizations should consider these four promising areas of innovation.

Tech-Driven Frictionless Payments. FS firms should strive to make payments hyper-relevant to consumers. There are new payment solutions everywhere, including digital/mobile pay services (PayPal, Square, Venmo), cashless services (Lyft, Uber), and real-time payments (BNY Mellon, The Clearing House, US Bank). These platforms reduce transactional friction, a major experiential goal that is fueling competition for market share. FS and payment providers must evolve their offerings to keep up with customer expectations and compete with these emerging frictionless offerings.

Venmo is among the companies that offer a slick user experience, forcing financial institution's to up their game, according to North Highland's Chris Millner. Bloomberg News

Streamlined Digital Lending Services. Digital lending, marked by speed and seamlessness, has taken hold. Companies such as Kabbage offer simple onboarding and unsecured loan approvals in as little as 10 minutes with a 24-hour cash disbursement. Marcus, which charges no fees and earns revenue only on competitive interest rate loans, achieved the $1 billion loan origination milestone in eight months, making it potentially the fastest-growing online lending platform in U.S. history.

Personalization Through AI and Machine Learning. According to Dr. Swami Sivasubramanian (VP Amazon AI, AWS), we are experiencing a “Machine Learning Renaissance,” and AI is emerging as a key enabler of seamless customer experiences.

Financial institutions are applying AI at increasing speeds and with greater sophistication to the massive amounts of data they manage. Whether developing conversational chatbots to replace costly call center processes or hybrid applications like Cogito that blend machine learning and behavioral science to improve phone-based customer care interactions, FS firms must leverage the breadth of AI capability to deliver a holistic experience.

Partnering to Accelerate Innovation. Industry incumbents and Fintechs are partnering at unprecedented rates. Fintechs benefit from a partner that can aid them in scaling quickly while also helping them navigate risk, compliance, security and privacy. Incumbents gain access to agile and innovative partners whose solutions can radically improve customer experience, an essential element in competing for customers that have come to expect this level of experience.

Financial services organizations increasingly need an unwavering commitment to customer experience in order to compete, or the competitor down the street will do it first. Firms that use a customer lens to view new, internal culture and collaborative designs and solutions created through partnerships, will be the first to find success.