Designing Services for the financial industry


 

When Auguste and Louis Lumière premiered their short movie „L’arrivée d'un train en gare de La Ciotat” over a hundred years ago it agitated people deeply. In 1895, a motion picture of a life-sized train coming towards the audience was such an overwhelming and frightening experience that it ‘had a particularly lasting impact […] causing [sic] fear, terror, even panic.’

 
 
 
 

Looking back, the reactions of the audience seem grossly exaggerated and difficult to follow in light of the learning curve that developed over the last hundred years and the development of film and interactive media today.

 

THE RISE OF MOBILE FINANCIAL SERVICES

A comparable shift in perspectives can currently be observed in the retail banking industry. Traditionally dominated by a large number of brick-and-mortar branches staffed with well-dressed bankers, banking services began to move to the web, letting customers access services more conveniently. While  ‘traditional’ online banking reach just hit 50% in Europe last year, a fast growing group of simple consumer-facing banking applications increasingly takes hold of a market that was long dominated by established financial institutions.

One of these player is Number26, Europe’s self-proclaimed ‘most modern bank account’. Recently, I opened an account with Number26 using their iOS application. As advertised, it took only a couple of minutes to enter my credentials and proceed to the built-in identification process. Using the identification service IDnow, I was able to verify my identity via video chat by shortly stating my name and ID number. Not only did this final step only take 2 minutes, I also didn’t have to leave my office or send any paperwork.

The advantages of this method − increased convenience and reduced processing time for the customer and the bank − are fairly obvious, especially compared to competitors like Postident. However, the idea of opening a bank account on a smartphone in under 5 minutes without speaking to a ‘real’ person seems to be quite odd for the majority of people who I described my experience to. The feedback ranged from anxiety about showing ID documents to a stranger, to sheer incredibility of the ease of use.

 

MAKING FINANCIAL SERVICES CONVENIENT, ACCESSIBLE AND TRUSTWORTHY

What most traditional banks currently underestimate is the fundamental shift in perception of everyday services that is being pushed by on demand services like Uber, Airbnb and Number26. Trying to compete by simply integrating new technology to make financial services faster and cheaper will not be sufficient to stay competitive and serve customer expectations in the future. Banks need to refocus and adapt their core competency of customer advice and consulting to offer a fulfilling customer experience in an environment that is heavily influenced by volatile digital platforms.

 
 
Centralway Numbrs, mobile bank account management

Centralway Numbrs, mobile bank account management

 
 

Number26 and IDnow are just two examples for the transformative potential of digitalisation for financial services. Account balance forecasting, simple and easy savings or uncomplicated investing are opportunities that are already being seized by start-ups with minimum viable products that lack huge and bulky infrastructures. These start-ups pave the way for more user-friendly and accessible services that offer new ways to pay, save, lend and invest money, freeing people of the burden to spend time on dealing with personal finance. At the same time, these new players face the great challenge of winning over customers that are used to trusting established brands that promise security and stability.

 
To order a security for regular costs at a retail bank, is like sending a letter via taxi.
— Niels Nauhauser
 

If traditional financial institutions want to become more agile and offer services that are valuable and convenient from a customer’s point of view it is key to employ design methods early on. Only by involving relevant stakeholders, constantly focusing on customer experience and executing a compelling strategy across touchpoints do established players stand a chance to tap the potential of the emerging market and stay relevant.

This post is based on the talk “Tschüss Umständlich – Digitaler Wandel am Beispiel Bank” that Sebastian Frederick Müller and Jewgeni Goranko gave at the Friedrich-Naumann-Stiftung in April 2015. Edited by Marius Giesske

 
 
 

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