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.
The Next Evolution in Banking
By Young Pham, Chief Strategy Officer at CI&T
Everything we know about banking is about to change. A new industry around the sharing of financial data is primed to give birth to a host of new consumer services, all thanks to Application Programming Interface (API) technology. Already known for being the safest place for money, there are opportunities for banks to expand that relationship to other aspects of the customer relationship. Banks will no longer simply be just a place to deposit and withdraw your cash, but a one-stop-shop for a range of data-sensitive services.
The passing of GDPR and the Payment Services Directive (PSD2) were the first steps in this process of banks modernising how they handled their customer data. However, incumbent institutions have so far not engaged enthusiastically. Rather, it was only after growing pressure from fintech challengers and government regulation that they were forced to open up and share their data. This should not be treated as a regulatory challenge, but rather a way to grasp the unique opportunities that banks have to reposition themselves as the most trusted resource for their customers.
It is hard to overestimate the breadth of possibilities arising from open banking, should banks choose to take advantage of this evolution. While the public rarely holds bankers in high regard, it still puts a high level of trust in banking institutions. People are more willing to hand over their sensitive data than they would be to almost any other private entity. Furthermore, banks have a unique perspective into their customers’ behaviours, needs and desires. Spending habits, income streams and risk appetites are just a few examples of the data that no other institution can tap in to.
There is certainly appetite to expand offerings. In our recent study of business banking customers, over 68% of respondents indicated that they were open to their financial institution providing digital non-banking services. This includes services such as tax support, managing payroll, or invoicing to help them with their day-to-day businesses.
More banks should consider how open banking can maximise their digital capabilities and create a greater range of services for customers to enjoy. Such offerings could be tailored according to each bank and their particular customer audience. For instance, banks could offer everyday services for most users, such as insurance for individuals or business management tools for business accounts. Alternatively, banks could offer more exclusive and specialised services for high net worth individuals to meet their specific needs, such as art appraisal and investment management.
The idea that a firm can expand its offering into new verticals is hardly new. Many of the world’s largest tech companies, such as Apple and Amazon, already offer diverse products including hardware, software, entertainment and cloud services. They are able to do this thanks to the vast quantities of data they have gathered, which provide invaluable insights into consumer behaviour and demand. Banks are in prime position to follow the example of these top tier tech companies thanks to their monopoly on key financial data.
Disruptors vs incumbents
The business model described above is already being adopted by numerous challenger banks. These firms have led the innovative charge thus far, thanks largely to their agility afforded by their smaller size. Indeed, some fintech banks already provide a range of non-banking services to their customers. Revolut, for instance, offers users several types of travel insurance as well as access to airport lounges as part of its premium service for a monthly subscription.
These offerings are not a sign that the challenger banks are about to topple the large incumbents. Rather, these disruptors have always flagged the gaps in the market that larger institutions have been too slow to fill. It is now up to the established banks to learn from their example.
While challenger banks may have a first-mover advantage for these services, the incumbents have two key advantages: capital and credibility. Firstly, the top banks have enough cash to fund this overhaul of their business models. While the challengers have been able to afford to do so in recent years, they lack the reserves to tide them over during economic downturns such as the current pandemic.
Secondly, even though challenger banks are perceived as more convenient and are less vilified than traditional banks, the public still trusts the latter. Many of these large banks can point to their extended histories and long-term investment success – accolades young challengers simply cannot match. In short, people don’t have to like their bank to trust them with their cash and their data. These two advantages strongly suggest that large banks are better positioned to take advantage of the open banking business model in the long term, despite being slower to adopt and adapt.
All this opportunity is within reach. We already have the technical capabilities for data sharing, and the regulatory framework is not insurmountable. Rather, the key for this evolution of the sector lies in banks’ appetite for risk and willingness to reinvent their business model.
Banks need to take a leap of faith and leave behind the business paradigm to which they’ve become accustomed. They should embrace transparency, run towards regulation and take advantage of opportunities to invest in these areas or collaborate with outside technology firms. Only then will banks be able to make the most of their data assets, creating value for the customer and further strengthening the relationship.
Banks talk a good game, but are bankrupt when it comes to change and innovation
By Erich Gerber, SVP EMEA & APJ, TIBCO Software
You hear all the time about the incredible pace of change in technology and the way that it affects business, but sometimes we kid ourselves about the real speed of that change and the depth of its effects. Retail banking is a perfect example to illustrate the yawning chasm between the illusion and the less attractive reality. In this article, I want to provide a critique of the banking sector and its failure to change fundamentally and to modernise.
Banking is an old sector: the Banca Monte dei Paschi di Siena has its roots in the 15th century and the oldest UK banks go back to the 17th century. We often talk about legacy holding companies back, restricting their speed of operations and hampering their ability to adapt. Well, established banks have legacy in spades.
They also have cultural challenges. The old saying has it that something is “safe as the Bank of England” and that is a standard for security. But today we need banks to be more dynamic and represent something more than being a deposit box for our wealth. Consumers are accustomed to the superb customer experiences in entertainment (Spotify), devices (Apple), retail (Amazon), travel (Uber) and much else. Surveys show that they want their banks to be responsive, easy to use and available across multiple channels. They’d like banks to be secure but also to be advisors, enable flexible movement of assets between accounts, provide useful data analytics, be cloud- and mobile-friendly and offer deals that are specifically targeted at their interests.
At their core, banks now must become digital enterprises but, frankly, it has been slow going. As Deloitte observed: “While many banks are experimenting with digital, most have yet to make consistent, sustained and bold moves toward thorough, technology-enabled transformation.”
We all know that retail banking has changed significantly: you can see that in the proliferation of apps and the fact that, in pre-pandemic times, the morning and evening commute are peak times for transactions as people arrange their finances while sitting in trains, buses and subways. Banking has become a virtual, often mobile business, thanks to new tech-literate consumers pushing banks in that direction. But my fear is that the banks aren’t moving even nearly fast enough and that’s bad for us as consumers and bad for the banks themselves.
Banks are under pressure to change because challengers don’t have the legacy constraints of incumbents and because PSD2 and open banking regulations are having the intended effect of promoting banking as a service, delivering transparency and greater competition.
Attend any business technology conference and banks will talk about their digital transformations and customer experience breakthroughs, but it’s my contention that a lot of this work is more window-dressing than platform building. Or, to put it another way, banks are injecting Botox, rather than undergoing the open-heart surgery that they really need. It’s a case of ‘look: fluffy kittens and shiny baubles’ in the form of apps and websites, but the underlying platforms remain old and creaking and that means that the banking incumbents are hampered.
To be fair, I have lots of sympathy here. They simply can’t move as fast as the challenger banks that have had the luxury of starting their infrastructure from scratch and sooner or later that will come back and bite them. Look, for example, at cloud platforms where only 10 or 20 percent of infrastructure has been migrated despite promises of cloud-first strategies and the banking data centres where monolithic on-prem hardware still reigns.
You feel that slowness of action in your interactions with banks that communicate only via issued statements, letters notifying you of changes to Ts and Cs, and threats when you go into the red. Inertia is nothing new in banking either: we like to think that technology change happens in the blink of an eye but in banking contactless NFC took the best part of 20 years to go mainstream.
This is the dirty secret of banks. They see the need to change but remain shackled. Why are the banks so slow? Historically, because it was hard for competitors to gain banking licences and the capital to really challenge so there was no catalyst or mandate for change. Also, because change is tough and fear of downtime or a security compromise to critical systems is very real. More recently, because internal wars in organisations set roundheads against cavaliers, the risk-averse against the bold, resulting in impasse and frustration.
I said change is tough and that’s why banks need to power through on the basis of Winston Churchill’s wisdom that ‘if you’re going through hell, keep going.” How? By a combination of maniacal focus on expunging legacy systems, placing maximum emphasis on superb customer interaction experiences and digitally enabling anything that moves.
Right now, the banks are surviving, not thriving; they’re rabbits blinking into the headlights of approaching traffic, frozen in the moment. But they need to disrupt themselves before others do it to them: change is painful but not as painful as the alternative. They have to do much more or they will see a decline in their fortunes due to their bankrupt capacity for innovation and their inflexible infrastructures.
Vietnamese National Citizen Bank Rises to Excellence with Three Global Financial Awards
Hanoi, Vietnam – Global Banking & Finance Review is proud to announce the sweeping victory of National Citizen Bank in the 2020 Global Banking & Finance Awards®. The bank was recently presented with three prestigious global financial awards: Best Place to Work Vietnam 2020, Fastest Growing Retail Bank Vietnam 2020, and Best Investor Relations Bank Vietnam 2020. The Global Banking & Finance Awards® recognize the innovation, enterprise, method, progressive and influential transformations that transpire every year within the global finance community. National Citizen Bank would like to extend their thanks and appreciation to the community and their customers for their continuous loyalty and support throughout the last 25 years.
The National Citizen Bank was recognized for its all-inclusive professional working environment and ongoing staff development that enhances its internal communications and employee relations. Throughout the last 25 years, National Citizen Bank has focused on the core fundamentals of regulatory modifications with the underlying goal of dividing the volume of both business and administrative tasks. As a result of this, the bank has successfully strengthened its staff’s capacity to obtain, manage outstanding liabilities, and acquire assets to negotiate and retrieve capital efficiently and reliably.
When asked what allowed the bank to triumph against the fierce competition, Wanda Rich, Editor for Global Banking & Finance vocalized, “one of the key factors that stood out to the committee is that National Citizen Bank strives to maintain and maximize profit to shareholders through the implementation of stable, sustainable business operations and advanced production methods. The bank has also remained stable, positive, and had a high growth rate in all of its activities, which is not often seen; however, it clearly indicates how prestigious and overall accomplished they are. They should be exceptionally proud of all three awards.”
About National Citizen Bank
The National Citizen Bank was initially established as a rural bank in 1995 under the name Bank of Kien River. The bank optimized its competitive standing within the global financial industry, later transforming into an urban banking institution where they reinstated their name as the National Citizens Bank. With a team of highly professional financial experts and customer service representatives, the bank embraces each customer’s diverse needs to ensure customary, efficient, and trustworthy experiences from start to finish. Over the years, the bank has prided itself on its continued emphasis on risk management and global business relations with investors, customers, and partners. For more information, please visit the National Citizen Bank.
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