Belatrix’s President and Co-founder, Alex Robbio, recently published his perspective of “UX as strategy”. As he points out, we’re seeing more and more companies follow the trail blazed by organizations such as Uber and AirBnB, and building competitive differentiation based on compelling and powerful user experiences. In fact, these successful digital companies have set the bar high, which establishes a broad level of customer expectations regardless of industry.
We’re seeing a very similar dynamic occur in banking and financial services. Banks are no longer competing on the extent of their branch network, but rather the usability and overall experience of their website and mobile application. Indeed, the brand of a bank is now defined by the quality of the experience that their software delivers.
Too many banks though have struggled to generate these powerful experiences, such as those that characterize products from Google. While many banks have, for all intents and purposes appeared to have created a strong mobile application – typically they been built with the mindset of a traditional, legacy bank. In discussions with banking executives I often mention that while these apps may technically work, they are so “secure” and old fashioned, that people simply don’t enjoy using them. As a result, while they may work to conduct a transaction, you don’t see the high levels of engagement, advocacy or, very simply, enjoyment, that you see with other consumer applications.
Unfortunately we’ve seen the consequences of this approach. Looking back in time, ING Direct was 100% online and had a pretty solid app for a time. It was one of the first banks and insurance companies that could really claim a UX-first business strategy. But unfortunately ING direct was acquired by a traditional bank, Capital One, was renamed as Capital One 360 and many of the improvements in their apps and online banking stopped. So what made ING Direct a cutting edge option, is now a subpar experience.
On the other hand, there are large traditional banks who have managed to change their strategy and are moving to be a customer-centric company in a proper digital way. This is the case of BankMobile, a division of Customers Bank. BankMobile has been named the most innovative bank in the US and is one of the largest and fastest-growing mobile-first banks, that offers checking and saving accounts, loans and credit cards, while providing a powerful alternative experience to the traditional model. Their experience strategy is centered on creating customers for life. Their disruptive model is based on generating delightful experiences for young people (their main target) using a multi-partner distribution model, known as “Bank as a service”.
Unfortunately however, research by Forrester, surveying more than 110,000 people about their experience with banks, found that there has been a stagnation in customer experiences. Capital One 360’s position, for instance, declined from 2017 to 2018. Many of these financial experiences have been upended by the digital, mobile-first, and UX-first strategy of banks such as N26 and Monzo.
N26, Monzo, Tomorrow, BankMobile are all examples of mobile-first banks. And it becomes clear how they have built their strategy around the mobile experience and a compelling UX. As the CFO and Co-founder of N26 has stated, they have taken their inspiration “from Spotify and Google Maps, who offer a great user experience, not from retail banks”. Reading his comments about how they have redefined the banking experience on a customer’s smartphone, you get the impression you could be reading the comments from an executive at Apple or an innovative design-focused software startup:
“We have re-designed banking for the smartphone, not just developed another interface. Every feature or product is available with only one click directly in the N26 app. All processes (credit checks, applications for overdraft, signing up for our insurance wallet, for fixed-term savings or investments) take place in real-time. You can lock and unlock your card, as well as change your pin, within the app. Everything is fully digital without any paperwork. Opening an account only takes 8 minutes.”
Banks such as N26 are also demonstrating what can be achieved for fintechs by building an API marketplace, and forming a broad partner ecosystem.
Fintechs of course benefit from not having to maintain expensive legacy systems. However, even despite this, recently, the Australian bank, Xinja, stated that it cost them just $1.8 million to build an entire core banking platform in 11 weeks, with a highly attractive user experience. This compares to the tremendous sums of money that some banks are throwing at technology, but often still result in a shoddy and underperforming experience.
Meanwhile, as my colleague Alex Robbio concluded in writing about UX as strategy, the democratization of technology is also playing a major role. Fuelled in particular by cloud computing and open source technologies, today it is easier and cheaper to build a powerful UX based on modern frameworks. There are more tools available for user research, more information, thus enabling even those organizations on a budget, to build powerful digital experiences.
Building lightweight, mobile-first digital experiences needs to be the top priority for every financial organization in 2019. As UX becomes your strategy, you will reap the benefits of greater customer loyalty, retention, enrichment, and ultimately will help customers to feel more respected as patrons of your organizations. Remember that your competition will no longer just be other traditional financial institutions, but will likely be one or more startups in which every single team member is obsessed about their product, from the top executives down to the most junior team members. Make sure to think about that when you treat your next customer-facing software product as just another IT project.
My advice for achieving success in the digital age involves creating a new mindset focused on human-centered and delightful experiences. Companies must align their digital strategy to an “experience mindset” as its cornerstone. It is key to consider the following recommendations:
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