In 1995, Bill Gates said, “Banks are dinosaurs, they can be bypassed”. Although after two decades, the Banking dinosaurs still exist but they are under threat to evolve or go extinct over time.
According to the ‘World Economic Forum’, the “Fourth Industrial Revolution is taking hold in Banking.”. The way the industry is shifting its course is radically changing the way consumers interact with this sector and their expectations.
And this revolution is taking place primarily as a result of the following factors and developments:
Higher consumer expectations;
New technological developments like Blockchain, Artificial Intelligence(AI) etc.;
The rise of the Millennials and Generation Z;
Mass smartphone usage;
Consumer focussed regulatory changes that brings start-ups into the equation;
Relatively high cost of conventional Banking.
These developments are laying the foundations for change and disruption that is creating the alternatives to conventional banking. And this trend will continue and accelerate making it increasingly difficult for conventional financial institution(FI)s to do business as usual and eventually they will have to adapt to this new normal by shifting their existing business model, becoming more customer centric, redesigning their services, embrace new technologies and introduce new types of services and much more.
Market is rapidly shifting to where millions of potential customers have already turned to a financial technology companies (Fintech) for their banking and financial services needs - and will expect more. Even those customers who don’t currently need or use a fintech service will consider them as an alternative equal to or better than a bank.
As the existing banking model is unbundled, everything about our financial services experience will change. In five to ten years, the industry will look fundamentally different. There will be a host of new providers and innovative new services. The most important result will be the true “democratization of finance”. This will pose a grave threat to the conventional banking business model.
Nowadays, people need banking, not banks. So how do incumbent banks stay relevant?
They have to be more user centric/ customer focused;
They have to become more agile;
They have to adopt new technologies;
They have to become more efficient.
One of the key strategies of survival and to stay competitive into the new landscape will be, banks will have to take digital transformation seriously by means of leveraging the new technology and redesigned services portfolio and by creating extraordinary customer experiences. And it is already taking place. Few years ago acquisition of ‘Adaptive Path’, a San Francisco based UX consulting firm by the big American bank ‘Capital One’ took the industry by surprise; but also had set the tone and the trend. Things are moving towards the same direction at a faster pace since then and now every bank and FI needs solid UX strategy.
With so many transformation is happening in this industry, its hard to hand pick the most notable UX & technology trends that is reshaping or will reshape the future of banking.
To identify these top trends, lets start with the market needs and that will lead us to answer the big question of ‘Why and How?’.
Last year we ran an online survey on what people think about the fundamentals of banking. The most common answers were: ‘Safety of money’, ‘My financial management’ and ‘Life management’.
That brings us to focus on the following aspects of the user/customer:
Money – safe and secure;
Money management;
Social aspects of finance – family, friends etc.;
Financial services – growth of money, meeting financial goals, money transfer etc.;
Beyond money – build memories, raise children, professional accomplishments etc.
And notably this is the universal industrywide findings globally and UX trends are evolving to create the experience of future banking that is and will be designed to cater to these key customer requirements. The rise and growth of Generation Z is also one of the biggest contributor to those trends. The biggest differentiator of Gen Z compared to other generations is that they never experienced a life before the Internet.
Before diving into the trends, let’s take a quick look into the new developments that current and future banks & FIs can take leverage of to create delightful experiences as well as competitive products and services:
Artificial Intelligence & Robo advising;
Biometrics & Voice commands;
Blockchain;
Wearable & smart devices;
VR & Gamification;
Nudge theory;
Social integration;
Omni channel integration;
Hyper Personalization using Big Data;
Open APIs for integrating hundreds of new types of services;
Future banking will require creating the ideal customer experiences by adopting to these technological advancements by keeping the competition and market needs in mind; and to my opinion, the following are the top trends that are already driving the industry or about to do so.
A. Consumer psychology of finance is becoming more important than ever
User Research & User Testing is necessary but not enough. UX thinking of future banking has to go beyond that and dig deep into the human psychology. Which means UX researchers must learn and implement human psychology in order to conduct more effective and impactful research.
This requires going beyond testing the copy, colour usage, user flows and design; and include much deeper understanding of user’s problems, needs, cognitive function, financial behaviours etc. That will lead to design the products and services that users are actually seeking.
B. UX approach to Banking is becoming holistic
UX strategy and solution for banking will require solid understanding in a myriad of areas like human psychology, banking and Financial Services sector, marketing, technology trends, shifting user needs, competition, digital platforms etc.
UX strategist and designers will have to get the big picture of banking & financial services workflow, every possible user scenario, product portfolio and customer segments to create the user journeys. This holistic approach will also allow banks to meet their customer needs, provide innovative and technology driven digital solutions and minimize channel frictions.
C. Banks will treat UX as a platform
Banks and Fintech companies are increasingly integrating third-party services (e.g., payment processing, foreign remittance) into their core platform. This poses challenges like providing unifying and consistent experience throughout. Only way to address these challenges is to take a holistic approach to UX and treat UX as a platform. UX as a platform will bring unification, set integration guidelines and standards across lines of business, use common design system throughout and will be faster and more agile to adapt to the changing needs.
D. Alternative interfaces is going to influence UX thinking
As adoption of alternative user interfaces like chabot, voice command technologies, virtual reality, augmented reality, hologram etc., grows rapidly, financial industry will have to be prepared to use and design for those interfaces. This will bring host of challenges like design, gesture, integration, accessibility and unification challenges that user experience designers need to be prepared to address.
E. Deep level of personalization will happen in Financial UX
User data and behavioural analysis technologies like big data analysis, deep learning, machine learning, artificial intelligence will be able to provide unprecedented levels of detailed understanding and insights on user needs, behaviours and shifting choices. These technologies will allow user experience thinkers collect and analyze information from various sources and develop patterns. These patterns can be used to create hyper-personalized experiences.
F. Expectation will be to create fully digital and self-serve experiences
The trend started by the challenger banks or Fintech companies, will continue and will be the new norm for the entire industry. Customers expect the ability to do everything online or via mobile. That includes but not limited to fully digital and self-serve onboarding, perform key transactions, enroll into new products and services, trade securities, emergency activities such as block cards etc.
Providing these types of solutions will require streamlining process, understand journeys, technology capabilities, business drivers etc. Bio-metric authentication, pre-filling information, wizard based work flows, contextual help, AI powered chat, video tutorials, advanced ticketing system etc. will have to be factored in to create the best possible experiences.
F. Experience will be enhanced by micro-interactions and micro-copies
Banking UX can be boring at times. Tabular or spreadsheet type transaction display, long and boring statutory instructions, mega forms, bland and dry designs are traditions that banking industry is very used to.
But that’s changing fast. Cool screen elements, micro forms, funky colour, attractive iconography and micro-copy is being increasingly used to create more delightful and engaging digital experiences.
G. Financial marketplace will be integrated for extended services
One of the key differentiator for the financial industry players is value added services or extended services portfolio. In future, more banks will have to integrate these third party services to extend their offering by means of open platforms. APIs, web services and blockchain technology will be used to integrate these into the banking. Bank-as-a-platform will be able to integrate financial, retail, travel and other types of services. AI driven consumer behaviours analysis through, deep learning and psychological study will provide greater insights into their needs and platform will be able to surface and suggest relevant services.
Experience designers will have to make sure that the integration with the financial market place is seamless, delightful, intelligent and unified.
H. Financial history will become financial feeds
Checking transaction history is one of the most boring banking and financial activities we all hate to do. Boring and dull endless list of transactions bring little value to the customers and it will be re-thought for sure.
One way of re-imagining it may be something similar to your social media feed or timeline. If transaction history is transformed into activity feed to include transactions, advisories, insights, recommendations, offers, reminders, alerts etc. With exponential grown in mobile banking usage, this format would be more familiar and clear for mobile users.
It can also include advice and service tips that improve the user’s financial position. Users will see contextual recommendations from the system using predictive analytics based on big data according to the nudge theory.
I. Advanced data visualization tools will provide intelligent insights into financial behaviour
Managing finance is challenging for most of the people. Unless interactive and visual insights are presented to them, they get lost and aren’t able to manage their finances or control their spending.
Credit card spending and spending on certain items can be tracked and alert system can notify users as they reach their target spending. Interactive graphs and charts can help users visualize their spending and areas that requires attention.
And it must be done using AI. Users aren’t good at setting transaction limits or devising ideal spending patterns. AI driven financial advising can take care of that financial management part and provide users with the status in interactive visual format.
Beyond that, historical spending, life goals, certain financial targets also can be intelligently managed by AI powered system and can be visually presented to the users in a simple interactive and digestible format.
Age factor can be used to provide certain life goal recommendations such as student loans, housing, retirement etc.
J. Advertisement experiences will be created as essential services
Nobody likes Ads unless it brings real value to the user. Geo fencing, geo tagging, behavioural AI, predictive analysis – these technologies can be used to create an advertising eco-system that is not only targeted and effective but also can be proved truly useful to the users.
For example, geo-fencing is increasingly being used to surface promotions and offers that has real value to the users due to the fact that user’s physical presence in that location makes it easy for them to avail them.
The above combined with personalization, user’s financial status and predictive analysis can make these advertisements even more targeted and effective.
Contextual offers based on certain actions can also be proved useful and delightful to the users. For example, discounted tax services can be offered during the tax season. Similar techniques are used by the airlines by offering to add travel insurance while booking the flight tickets.
Promotions can be combined with actionable workflows that provides the option to take instant action and easy task completion. Your home buying behaviour can be used to pre-approve you for the home loan with option to instantly avail the home loan based on your KYC details. This will be tempting to the customers as well as delightful and effective.
K. Your financial activities will be gamified
Gamification makes things more exciting and engaging. Traditionally Banks and FIs did try to engage customers with offers, promotions, reward points, coupons etc.
However next level of gamification experience will emerge when it will be tied to the consumer behavioural psychology. Children can be rewarded through the banking app for not going to certain locations where they would be prone to spend more. And those rewards can be socially shared to create a sense of accomplishments as well as collect monetary equivalents.
Another example could be using scavenger hunting using augmented reality. Certain objects can be hidden around physical branches and ATMs and user will have to hunt them using the banking app. This will not only increase the foot traffic to the branches where certain up-sell can take place but also make users to adapt technologies to do branch or ATM finding etc.
Gamification can happen other segments of services such as customer support, profiles management, transactions etc.
Considering all the above factors, it is evident that future of banking is going to be exciting and revolutionary. And lot of those UX and technological trends are already in sight in different degrees of maturity. I have tried to summarize the key items in the following list.
Quick and easy access to essential services;
Centralized access to all types of accounts;
Robo advising;
Social payments & transfers;
Banks as trusted life partners;
Social Banking;
All in one access to your account and card types;
Digital onboarding;
Digital wallet;
Contextual advertising etc.
Please feel free to leave a comment with any key item(s) you believe that I may have missed. Thank you and #staysafe
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