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Digital disruption is upending business models across industries: hotels, car services, rented equipmentgrocery shopping, and finance. The pressure is on for banks to capture market share and provide tangible value for customers, riding the wave of new fintech (see Techonomy’s piece on how the Internet of Things is an integral part). Riding it all successfully requires new types of teamwork and fresh ways of working. This new banking requires bankers and designers to work together.
Millennials’ digital expectations are changing fast, and financial institutions must adapt. Millennials already make up about a third of American bank consumers, and that number will grow rapidly along with their earning power. For this generation, personalization and customization are not added features—they are table stakes. Pair that with customers’ growing preference for mobile applications, digital wallets, and even robo-advice, and it’s increasingly evident that the time to adapt is now.
To win the digital race, banks must center their strategy on unified product-services that stay ahead of customers’ ever-changing expectations. The key to success is applying an experience-led strategy with a clear focus on real human needs.
Adopt a mobile-first approach
Today’s consumers expect streamlined and easy-to-use technology in all aspects of their lives. An astonishing 25 percent of Millennials never set foot inside their bank’s branch. So, it’s no surprise that about 87 percent of them prefer mobile banking. On an average day, 39 percent of Millennials interact with their smartphone more than anything or anyone, according to a Bank of America mobility report. The smartphone is their bank.
Partly because of all this, from 1995 to 2015, the number of physical banks declined. And financial institutions are rethinking their strategies. Earlier this year, Bank Leumi, one of Israel’s largest banks, successfully launched Pepper—the country’s first 100% digital bank, with no brick and mortar branches. Pepper provides all banking services through mobile, and is accessible at any time and with no paperwork: customers can do everything from their device, including opening accounts, depositing checks, applying for loans, and managing their personal finances.
To appeal to today’s ‘always-on’ customers, banks must interact with customers 24 hours a day, seven days a week. One bank that has successful managed the transition is Bancolombia, the largest bank in Colombia. Its service, Nequi, the first mobile-only bank in the country, has completely rethought basic financial products from the customer’s perspective. Nequi is an entirely new, multi-service, multi-platform application that allows customers to manage their money on the go—anytime and anywhere. Like Pepper, there is no paper and no need to enter a branch. As an organization, Nequi acts like a startup— with a separate brand, new technology, new offices, new team, and a new corporate culture. It is dedicated to transforming the Bancolombia’s services from the inside out.
Here’s a key insight from all this: Mobile is not a channel or a technology, it is a lifestyle.
Make something people want
But, it’s not just about going mobile. Many companies launch apps or services that put technology before design, assuming customers will follow. But ignoring usability can be disastrous; customers may end up annoyed or worse. Some in mobile app design even talk about an emerging global usability crisis. Overall, 34 percent of consumers are frustrated by the complexity and limited functionality of mobile financial apps and sites.
You can’t squeeze an old bank into a new application. Instead, banks need to use the limitations and obstacles of mobile to drive innovation—and simplify both interaction and content. Mobile is not just about limited screen size or touch, it is as much about how customers interact, and their expectations. Design capabilities are essential to survival. Banks must design tailored digital solutions.
However, consumer behavior is fluid and changing at rapid speed—often more quickly than organizations can evolve. A classic human-centered approach may not be enough. Mobile apps must go beyond the screen. Organizations must work with design research teams to anticipate the future.
For example, Pepper’s mobile-centric offerings include GIFs, videos and interactive artificial intelligence features. It customizes content and services for the individual. Clear and engaging content helps customers better understand their finances and enjoy a personal experience designed for their needs.
To differentiate from competitors, it is necessary for any industry competitor to channel users’ needs to develop better technology—not just more technology. That means understanding new user interface paradigms, for example, and being ready to say goodbye to good-old touch UI and hello to no-touch technologies like voice-driven AI. To drive disruptive innovation and ideas that go beyond classic banking, companies need to start thinking about banking in radically new ways. With design teams banks can leverage new thinking, new ways of working, and new technology to speed into the digital age—restructuring traditional offerings with customers at the center. No customer has ever asked for more banking. What they want is simpler banking.
Leverage data-driven insights
A human-centered approach is imperative to understanding users’ needs, and connecting with those needs on a deeper personal level. To fend off disruption from emerging startups and web-based financial advisors, big banks must utilize cutting-edge technology to glean insights into consumer behavior. Through the use of AI and automated technology, big companies can act with the same agility as startups —offering personalized recommendations based on data about an individual’s bank account, spending history, and billing statements.
Leveraging data is all about creating trustful data relationships with customers. Like any other relationship, it’s not only about what you get, but what you give back. Customers don’t want to give away data without getting something meaningful in return. Data is a resource, a raw material, with which you build better customer experiences. As customers, we’re simply more prone to allow data usage if our banks ‘pay back’ with services that improve our experience.
Get inside the mind of a hacker
The surge of digital financial technology will inevitably give rise to new security risks, including mobile malware, unsecured Wi-Fi networks, and check fraud—so banks must be prepared. So financial institutions must use extreme caution when implementing digital applications.
Designers need to channel the mind of a hacker throughout every step of the process. This includes making pre-emptive, self-inflicted strikes to find holes in defensives and eliminate threats before they develop.
It may be hard to imagine venerable financial institutions quickly falling victim to digital transformation. Yet virtually every area of finance is undergoing massive disruption at rapid speed. To maintain market share and gain customer loyalty, banks must embrace experience-led design to uncover new opportunities and stake their claim in the digital landscape.
Mikal Hallstrup is founder and global CEO of Designit.