In the last 5 years the banking sector has changed significantly. We’ve previously needed banks for mortgages, to receive our salaries, pay our bills or get cash to do the groceries, etc.. The financial crisis made it clear that even the largest and most trustworthy banks could not guarantee to be here for good. At the same time, alternatives grew strongly in both numbers and maturity. Newcomers like PayPal, AliPay, ApplePay, Google Wallet, BitCoin and even Octopus provide new disruptive technologies that could in time overturn the whole banking landscape.
Traditional banks also face competition from so called neobanks. These banks without branches provide a (small) range of traditional banking services and distinguish themselves with transparent cost structures, low or no monthly fees, large ATM networks and easy to use and always up to date mobile apps. With their limited product portfolio they focus on service above product.
From selling products to managing user experience
How do banks respond to these trends? The way forward for the traditional banks is to focus more on service and improving their user experience, thereby reducing the need for consumers to seek alternatives. Some banks employ design talents to ‘pimp’ their online platforms. The design is indeed an important aspect of user experience. However, other aspects of functionality (how many banking tasks people can do with the platform) or usability (how fast, easy and pleasant the platform is to use and to understand) are equally or even more important.
Recent research in the UK found that mobile banking apps of five major UK banks, including HSBC, failed their user experience test. Even though some of the user-interfaces were visually attractive and user-friendly, they only provided functionality for a limited number of banking tasks. Consumers expect more. Traditional banks have the organization and infrastructure to provide a much wider range of services than neobanks or the new technologies. The opportunity banks have, is to provide access to all these services on their website and mobile platform in a user-friendly way that (re-)imbues trust.
One of the challenges being faced is security. Banks traditionally focus on security and compliance. And security measures, when overdone, are annoying to users. New payment technologies either provide inherent security or security issues are of limited consequence, for example because of limited transaction amounts. On the other hand, fingerprint scanners and front camera face recognition now enable banks to provide a great user experience while guaranteeing their customers a minimum required degree of security. This requires a drastic change of focus, though: away from proven technology like security devices.
Cultural aspects of user experience
Cultural and legal differences are also relevant. In Common Law countries agreeing with detailed terms and conditions is often required. In Western Europe consumer protection and the reasonableness and fairness principle are dominant (including the reasonableness that endless terms and conditions or fine print may not always be assumed read or agreed upon). This reflects in the way that apps may deal with transaction confirmations and it directly impacts the user experience.
Apart from this, cultural aspects cannot be ignored when optimizing user experience: a red colored user interface that seems cluttered to some will (on average) not be appreciated in the same way in Europe as it would in China. Basing new apps or websites on generic usability guidelines is therefore not a guarantee for the best user experience for the target group. Every good development process is iterative and includes incremental improvements based on testing with real users. The Rabobank for example has a dedicated user experience lab in The Netherlands where existing functionality and improvements are extensively tested.
User experience beyond the online platform
Managing the user experience does not only involve websites and mobile apps. A customer experiences the products of a company via all available channels. The travel distance, waiting line, employee expertise and tone of voice suddenly become relevant when customers wants to visit a branch office instead of use the app. Cost transparency, simplicity of terms and conditions and an option to circumvent the automated telephone answering system all contribute to a better user experience. Although banks face fierce competition from new technologies and neobanks, there are enough opportunities to out-compete them and leverage existing strengths, but it does require a paradigm shift.
(This article first appeared in the Dutch Chamber Magazine, publication of the Dutch Chamber in Hong Kong)