Hilary Stephenson, managing director of digital user experience (UX) agency, Sigma.
Recent changes in the financial sector, such as the upsurge in digital-only banks and the implementation of open banking, have greatly increased competition between financial services providers. In the wake of this sea-change, forward-thinking organisations have begun to realise that, for many customers, user experience (UX) is as much a differentiator as price or brand loyalty.
Until now, digital UX has largely been somewhat overlooked in the banking market, with established brands dominating solely through the power of their name. However, the prevalence of ‘disruptive’ service providers like Uber and AirBnB, has led to an increased demand for consumers to manage their finances digitally, highlighting to banks the importance of optimising their online and mobile offering. As a result of this we’ve seen a sharp rise in digitally-focused challenger brands, such as Monzo and Tide, disrupting the financial services sector.
The influx of these new players, which deliver products and experiences with the customer at front of mind, has cast new light on the benefits of the banking sector adopting sleek, user-centred, design principles.
The rise of user-centric banking
At its heart, UX design is about the improvement of products and services to enhance user satisfaction and deliver a better experience. Applying this to the banking sector, positive user experiences can be achieved by matching customer’s distinct financial and customer service needs with systems that are intuitive, effective, and easy to use.
Advances in technology, such as the smartphone, have driven a wave of digital transformation in the banking sector. But until now, UX hasn’t really been prioritised, meaning banks generally have been offering the same services – and the same frustrations.
Because of this inactivity, smaller, innovative banking providers have been able to steal a march on their more established competitors by designing their products and services with customer needs front of mind from the outset. Specifically, digitally-focused fintech brands, such as Atom and Monzo, have analysed the day-to-day banking issues customers face, and designed their services from the ground up to mitigate these issues.
Recent research from EY suggests that positive strides are being made in this area, with 85% of executives at traditional banks citing digital transformation as a key growth area this year. Despite this, more needs to be done if the high street brands are to keep pace with the more agile fintech start-ups.
How UX is transforming financial management
In terms of how user-centric banking translates into the services we use, the most interesting use-cases seen thus far focus on creating greater transparency between banks and customers in order to alleviate consumer anxiety and build trust.
Here is a selection of notable examples we’ve seen:
Enabling greater control over our finances – Excess expenditure is a perennial issue for banking customers who are looking to save, or even just maintain control over their financial lives. This is why mobile banking platforms, which go beyond the traditional monthly statement, are gaining popularity among customers who struggle with the age-old question of “how can I avoid spending too much?”.
Many forward-thinking fintech providers now offer money management functions with detailed spending breakdowns, which allow their customers to effectively budget and manage exactly where their money is going. In the future, we could see this go even further with more widespread adoption of financial safety nets such as automatic savings transfers, warnings against upcoming payments, and safe-to-spend limits.
Positive friction – This may initially seem an odd inclusion; after all, user friction is exactly what we as designers generally aim to avoid.
In certain cases, however, friction can be used as an invaluable design tool to improve the user experience. For example, late-night impulse spending can often be a source of regret and anxiety for customers, with many waking up the next morning wishing they could revoke their purchase. This is backed by research from the Money & Mental Health Policy Institute, which found that this impulse spending is particularly prevalent in sufferers of mental health impairments such as Bipolar Disorder.
An example of a forward-thinking provider designing against this is Monzo’s implementation of a late-night spending “safety net”, wherein users are provided with a summary of any purchases made after a certain time the previous day (say, 11pm), along with an option to review and cancel certain purchases before the funds leave the customer’s account.
Not only does this go a long way towards increasing trust between customers and their banks, but there is also the important ethical consideration of safeguarding vulnerable customers against unwanted spending and potentially falling into debt.
What direction might banking UX take in the future?
Greater flexibility for customers – open banking makes customer’s financial data far more freely available to banks, and other service providers, which transforms the traditional onboarding process. Because customers will need to provide far less of their data when switching banks, much of the onboarding process for these customers will be negated. Not only does this make it as simple as possible for customers to pick the best provider for their needs, it also makes the entire switching experience far quicker, easier, and less of a burden for the customer.
The increased flexibility offered by these user-centred banking providers does not stop here, and could also transform our experiences in other sectors. A great example of this is the utilities sector, where uncertain energy prices, increased competition and the recent cold snap has led to more of us than ever before switching suppliers in search of a better deal. Considering this, many have speculated that in future we could feasibly see customers able to switch providers from any sector – all from one app.
Greater accessibility – For the first time ever, more than half of the world’s population are online, and nearly two in three (63%) UK residents do their banking online (a 33% rise since 2007). This move to online means that it has never been more important for banks to embrace inclusive design, thus ensuring that nobody is discriminated against or unable to access vital money management services.
We’ve already touched upon the great work being done to cater for those living with mental impairments, but this is a field in which we think further strides could (and should) be made in the near future as more brands begin to design with the user at front of mind.
Another area in which banks could be more inclusive is in how they communicate with their customers. We live in a multichannel world, and customers will have their own unique preferences (whether this is driven by choice or by necessity) as to how they engage with businesses. Brands must therefore be equally accessible via multiple communication channels, whether this by more traditional methods such as phone, email, or even newer methods such as instant messaging apps or social media, if they are to effectively reach their customers in the digital age.
User-centred providers are set to thrive in the new banking landscape
The rise of user-centric design has already had a substantial effect on the banking sector. In the wake of open banking, switching providers will now be easier than ever before, creating a greater focus on engendering and retaining customer loyalty among banking providers.
While on the surface, this loyalty may now be more difficult to achieve, there is the opportunity for stronger customer relationships than ever for banking providers who are able to innovate and offer these user-centric solutions.
Regardless of current size, those who will thrive in the new banking landscape will be those who strive to innovate and create exceptional experiences for their customers.
Ultimately, this will forever reshape the relationship between banking provider and customer, moving away from a purely transactional relationship to one which is truly customer-centric. This means that the successful banking provider of the future must place the customer at the heart of the design process, working from the outset with the customer at front of mind.
StanChart profit falls 57% as COVID-19 inflates bad loans
By Alun John and Lawrence White
HONG KONG/LONDON (Reuters) – Standard Chartered PLC (StanChart) on Thursday posted a 57% fall in annual profit, missing analyst estimates, on higher credit impairments due to the COVID-19 pandemic.
StanChart, which earns the bulk of its revenue in Asia, posted a pretax profit of $1.61 billion. That compared with $3.71 billion in 2019 and the $1.85 billion average of analyst forecasts compiled by the bank.
Credit impairments last year more than doubled compared with a year earlier to $2.3 billion because of the pandemic, the bank said, but noted the majority of these took place in the first half of the year.
The London-headquartered lender said it would return capital to investors via a 9 cents per share dividend and $254 million buyback, with the total payout being the maximum permitted under temporary ‘guardrails’ set by the Bank of England.
The central bank last year told Britain’s largest lenders to suspend dividend payments and share buybacks for 2020 to help them maintain capital buffers against an expected hit to loan books from the pandemic.
“Having now resumed it, we expect to be able to increase the full-year dividend per share over time as we execute our strategy and progress towards a 10% return on tangible equity,” Jose Vinals, Standard Chartered’s chairman, said in the exchange filing.
The bank said its return on tangible equity, a key profit metric, would climb from 3% to 7% by 2023.
It also said overall income in 2021 is likely to be similar to 2020’s because of the impact of global interest rate cuts.
(Reporting by Lawrence White and Alun John; Editing by Christopher Cushing)
Reasons Why You Should Be Opening an Offshore Savings Account Today
No one has to convince you that savings accounts are a bad idea. As a safe investment, this approach is hard to beat. It also has the benefit of allowing you to set aside funds for all sorts of purposes while you earn a little interest.
While this can be done with a domestic account, there are compelling reasons to consider opening an offshore savings account. How can you eventually use those funds, and why would it be better to house them in an offshore setting? Here are some ideas to consider.
1. Setting Aside Funding for a Short-Term Goal
You have a specific financial goal that you want to reach in five or ten years. It could be saving the money for a down payment on a home or possibly buying real estate. Any such goal requires dedicating a part of your income to reach it. Placing funds in an interest-bearing account in the interim is a good option. That’s where an offshore savings account comes in handy.
The temptation to withdraw money from an offshore account is less likely. While doing so would be easy, it’s not unusual for people to turn toward the balances in their domestic accounts before pulling money from offshore ones. The result is that you’re more likely to consistently make progress toward building the funds needed to reach your goals successfully.
2. Creating a Contingency Fund
No matter what your life circumstances happen to be, it’s a safe bet that you’ll need emergency funds at some point. Think of what it would mean to have six months to a year’s worth of cash to carry you over if your company went out of business or if you lost your job. Even if it took some time to find another full-time position, the money in a contingency fund allows you to maintain a reasonable standard of living while you’re in search of opportunities.
Using an offshore account to house your contingency fund works well because you are less likely to withdraw funds until the need is significant. By opting to set up recurring funds transfers from a domestic account to your offshore account, you can add to those emergency funds without having to give the process much thought. When the day comes when you need the money, it will be easy to transfer the funds back to a domestic account or use the debit card supplied by your offshore bank.
3. Building Assets for Retirement
As many people learned during the last recession, employer-provided pension funds may or may not be around by the time you retire. If the investments made with the retirement contributions tank, there goes all or at least most of the money you planned on using to live after leaving the workforce. Establishing your resources for retirement, and diversifying them, protect your financial future.
An offshore savings account can be one of those solutions. A time deposit account lets you build more reserves for retirement. Since the account is not tied to your employment status or to the investments used to shore up your pension fund, it will be there when you need it.
4. Growing an Education Fund for the Kids
Perhaps the plan is not so much about investing in your financial future. Education for your children may be what’s driving you right now. Knowing how much a college education costs these days, you realize that now is the time to start saving. Even if the kids can secure scholarships that cover much of the expense, there will still be costs that need attention.
An offshore savings account provides an excellent means of setting aside funds for education. Let the balances roll over from year to year and earn more interest. Take advantage of offshore accounts that provide higher rates of interest when the balances exceed specific amounts. This strategy will make funding college a lot simpler.
5. Building Reserves for Purchasing a Vacation Property
You’re reaching a point in your life when having a second property to use for vacations sounds appealing. Now is the time to start setting aside funds that will aid in the purchase. An offshore account can be the means of growing the balance a little faster. The result is that when you’re ready to buy that second property, there will be considerably less that needs financing.
This solution also makes the process of transferring funds for purchasing international real estate easier. For example, you decide to buy a vacation home in the same country where your offshore account is based. Your bank can make withdrawing the funds and remitting the money to the seller much simpler.
6. Protecting Some Assets Just in Case
You don’t have to work in a high-profile field to be sued. What would you do if things didn’t go your way? The court could order most of your domestic assets seized to settle the judgment. How would you get by then?
Here’s something that you may not know about the money in offshore accounts – domestic courts can’t order a seizure of the account balances. Even if a lawsuit means every asset you have at home is taken away, there is still the money in your offshore savings account to help you rebuild. It may also be the way that you keep a roof over your head and food on the table while you decide how to go about rebuilding.
7. Taking Advantage of Higher Interest Rates
If you compare the interest rates offered in many international settings with what you can command at home, the difference is immediately evident. It’s possible to open an offshore savings account with a relatively low balance and gradually add to the balance. Over time, you reach a balance level that allows you to earn some of the best rates found around the globe.
When the plan is to place money in an account to accrue interest for over many years, an offshore savings account is the way to go. Once the day arrives when you want to use those funds, the balance will be noticeably more than if you had invested the same proportion in a domestic account. Think of how good you’ll feel knowing that your money was able to grow simply because you chose the right offshore location for the account.
8. Enjoying Peace of Mind
At times, it seems increasingly difficult to find peace of mind in today’s tumultuous world. With money placed in an offshore savings account, it’s possible to secure a little bit of tranquility even when everything else is upside down.
By establishing an account in a politically stable country, offers excellent returns in the form of interest, and is protected from any domestic court action, you know there will be assets to draw on no matter what. That’s a good feeling.
Get Help Setting Up an Offshore Savings Account
These are just a few reasons why opening an offshore savings account is a smart financial move. There is no better time to start than now, and an excellent offshore location to choose is Belize.
Caye International Bank, located on Ambergris Caye island in Belize, Central America has helped thousands of people establish offshore financial accounts. We can help you, too, in determining which offshore accounts work best based on your goals. You’ll find that setting up an account is a lot simpler than you anticipated.
This is a Sponsored Feature.
Luigi Wewege is the Senior Vice President, and Head of Private Banking of Belize based Caye International Bank, a FinTech School Instructor and the published author of The Digital Banking Revolution – now in its third edition.
You can follow his posts on trends shaping the banking and financial services industry on Twitter: @luigiwewege
Former BOJ executive calls for ‘genuine’ review of central bank stimulus
By Leika Kihara and Takahiko Wada
TOKYO (Reuters) – The Bank of Japan must abandon the view it can influence public perceptions with monetary policy and conduct a “genuine” review that takes a harder look at the rising cost of prolonged easing, said former central bank deputy governor Hirohide Yamaguchi.
The BOJ will conduct a review next month to make its monetary policy tools more sustainable, nodding to criticism its policy is crushing bond yields, drying up market liquidity and distorting stock prices.
But Yamaguchi, who was deputy governor when the BOJ first began buying exchange-traded funds (ETF) in 2010, said the costs of the bank’s stimulus programme have become too large to mitigate in the review in March.
“It’s unlikely the BOJ can come up with an outcome that has a substantial impact on the economy and markets,” he told Reuters in an interview on Monday.
“The review will probably be just a show of gesture that it’s doing ‘something’ to address the cost,” said Yamaguchi, who retains strong influence on incumbent policymakers.
Under its yield curve control (YCC) framework, the BOJ guides short-term interest rates towards -0.1% and 10-year bond yields to around 0%. It also buys risky assets such as ETFs to fire up inflation.
Ideas floated in the BOJ, which could be discussed at the review, include allowing the 10-year bond yield to deviate more from its 0% target, and making its ETF buying nimble so it can slow buying when stocks are booming.
Tolerating bigger yield swings, however, could undermine the feasibility of YCC by highlighting the limits of the BOJ’s control over the yield curve, Yamaguchi said.
“It’s hard to control long-term interest rates within a tight range for a long period of time,” he said, calling for an overhaul of YCC – something the BOJ rules out as an option.
Yamaguchi also called for halting the BOJ’s ETF purchases, as the bank could “end up using monetary policy to prop up stock prices” if the programme continues.
“At the very least, the BOJ must end as soon as it can the current situation where its ETF holdings keep accumulating.”
When the BOJ began buying ETFs in 2010, it used a pool of funds to ensure purchases remain at a manageable level, said Yamaguchi, who was involved in the decision.
That cautious approach was replaced by Governor Haruhiko Kuroda, Yamaguchi said, after he took over as head of the BOJ in 2013. Kuroda ramped up purchases dramatically with his “bazooka” stimulus deployed that year under a pledge to deploy all available means in a single blow. Eight years on, inflation remains distant from the BOJ’s 2% target.
“It’s impossible for the BOJ to guide public perceptions at its will,” Yamaguchi said. “It’s time now for the BOJ to conduct a ‘genuine’ policy review and use the findings to modify its policy framework.”
(Reporting by Leika Kihara and Takahiko Wada; Editing by Ana Nicolaci da Costa)
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