Banking Fintech Mobile & Online Payments UX

Disruption in digital banking

Written by Jelmer de Jong

Jelmer de Jong summarizes a recent Backbase webinar that focused on disruption in digital banking.

Last Thursday, Jouk Pleiter and I hosted our closing webinar of 2014, where we talked about Disruption in Digital Banking. You can watch the recording on our YouTube Channel, and the slide deck is available on SlideShare.

We all agree that customer behavior is changing. They’re looking for convenience – the kind of convenience and simplicity they get online and on their mobile devices, such as when they’re watching their favorite shows on Netflix, or when hiring a cab with Uber. But where is the convenience and simplicity in financial services?

Was the taxi market ready for disruption? Perhaps, but nobody was arguing as strongly for disrupting the taxi market as they are now chanting to disrupt financial services. And it’s definitely starting. Uber is booming, but the Uber in banking, Lending Club, is going even stronger. LendingClub went IPO last week, opened with a 56% increase in share price, giving it a whopping $9 billion valuation, ‘lifting the company’s market value higher than all but 13 US banks’.

And it’s not just LendingClub that’s starting to target the traditional banks. Tom Loverro of RRE Ventures recently created these images:

Image from Up & Right blog by @tomloverro of @RRE. It's a screenshot of the Wells Fargo homepage.


Image from Up & Right blog by @tomloverro of @RRE. It's a screenshot of the Wells Fargo homepage.

In this example, you see the Wells Fargo homepage, but this could be the case for any traditional bank, with some of the larger FinTech companies going after pieces of the banks market. And this isn’t just a few logos. FinTech companies in 2014 raised nearly $3 billion, more than tripling the $930 million invested globally in FinTech in 2008. Yes, FinTech is hot!

So, what can banks and credit unions do to fight back and step up their own game? It’s time that banks challenge the challenger and become disruptors themselves. To do this, they have to start by accelerating their digital transformation.

In our recent webinar, we defined ‘4 Key Focus Points for 2015’ to help banks and credit unions change themselves:

1. Start with the Customer Experience – Of course, your customer comes first, but is this reflected in every department? For most banks ‘customer first’ is the mantra in the customer contact center, but is forgotten when it comes to the rest of the organization. Too often, I hear Heads of Customer Experience talk at conferences and discover that their main focus is the call center and the training of branch employees, but where is technology in this picture?

We see the shift in customer behavior. It’s about a personal and relevant, ‘anytime’ customer journey – a journey that starts more and more on a mobile device. Yet, to deliver the best mobile experience, you need to do a lot of work on the back-end. You need to change the stack, from inside-out with a main focus on network, hardware, and just a little bit of data and UX, to full focus on UX, data (to deliver a personal experience) and where hardware and network are just an afterthought. This is the only way to be able to truly start designing for moments of truth in an iterative approach; the approach that make the disrupters so successful, but is still almost impossible for most banks.

2. Pursue an Omni-Channel Delivery Model – Stop saying omni-channel is ‘just a marketing buzzword’. The fact is, customers are using multiple devices and multiple channels to accomplish a task over time, and this is especially true when purchasing new products and services. As a customer, I expect the same brand experience on every device and in every channel, and I really don’t care that your mobile app lives in a different code base, controlled by yet another agency. I expect to be able to perform a seamless handover between devices and channels. I can continue watching House of Cards on the train while on my tablet, so why can’t I continue that long loan application form on my regular computer after I decide to stop on my smartphone?

To make this possible, banks have to move the flexible customer experience layer that runs independently from the main stack. Banks should have flexible APIs for their main processes and core systems, and an orchestration layer in between to ensure handover and session persistency. Start working on this.

3. Regain Control of your Digital Strategy – To deliver on points 2 and 3, you have to be in control again. Too many banks lost control over their digital strategy to an outside software vendor, or to a big, bloated internal IT team, particularly the Tier 3 and 4 banks and credit unions – they all look the same. Why? Three banking vendors dominate the market – they are in control. As a small bank or credit union, the only thing you can change in your digital channel is the logo, and if you’re lucky, the color of the text. For the rest, you look exactly the same as all your competitors. This cannot be the way forward in the age of digital disruption.

Banks have to regain control. Core banking should be core banking, and on the front-end you need a digital banking platform where you are in control; a digital banking platform that’s unique, personal and relevant; a digital banking platform where business and IT teams can work together on innovation; a digital banking platform that’s flexible enough to mix and match best-of-breed third party systems for PFM, Bill Pay, Remote Check Deposit, etc. Did you like the innovation you saw on the stage of Finovate? Make sure your digital banking platform can run widgets that can actually let you experiment with those vendors. (Yes, a shameless plug for Backbase Engage and our Open Banking Marketplace.)

4. Define your Inspiring Purpose – It’s not all about technology and new platforms. Most neo-banks, such as Simple and Moven, attract a following of people that want to change the world. People want to engage with those brands they feel ‘understand them’. They want to be seen with their new Nikes, they drink Coca-Cola instead of Pepsi. They have an Android phone because they don’t want to be an Apple sheep (or vice versa). But how often are you proud of your bank? Banks need to find their voice, their brand feel, and need to start building that personal community of followers. People should be making a decision for a financial institution because they believe in that company, and banks need to redefine their inspiring purpose.

Watch the full recording of this webinar right here:

About the author

Jelmer de Jong

Jelmer de Jong is VP Product Management at Backbase, a software company that produces a digital banking platform that delivers seamless customer experiences across multiple devices.

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