“We need banking but we don’t need banks anymore.”

This was the emphatic declaration Bill Gates made over two decades ago. In 1997, such a statement would generally not have been well received - especially by more conservative circles who viewed banks as the financial pillars of society. 20 years have elapsed since Gates’ assertion yet we continue to see the gradual diverging of large banking institutions and banking processes. 

Overview

For the longest time, banking has remained a relatively centralised field. Whilst there has been an abundance of financial institutions, there has generally been great overlap and little variance in their day-to-day operations. However, with society’s increasing reliance on technology, this is all beginning to change. Applications and programs are now being developed which perform very specific tasks and business processes extremely well. And what analysts are finding is that users have a strong preference for these disruptive technologies. The reason being that customers ultimately have a better user experience with these technological banking instruments. 

User Experience Design (UX) is a redefined approach to product design which emphasises the importance of profoundly understanding the customer’s needs during the design process. In the past customers have always been an afterthought during the design process as efficiency and faultlessness formed the ethos of systems design. However, with the aforementioned increased reliance on technology, the human-computer interaction is not what it once was. As using computers is no longer an esoteric skill, a one-size-fits-all approach is ultimately untenable in today’s world. Nowadays there is so much diversity amongst users in terms of age, ethnicity and IT proficiency that any one system has to be usable and accessible to a wide variety of users. For this reason, end-users and their interactions and experiences with the technology must be kept at the forefront during design. Once again: the customer is king.  

The following three case studies will outline some of the ways in which UX has redefined how we do our banking. 

Case Study 1: Paypal

Disruptive technologies usually emerge in order to solve major business issues; this was unquestionably the case for Paypal. During the earlier days of the internet, making online purchases and using credit cards directly was nothing short of a gamble. It was much harder to discern the legitimacy of a website and for this reason there was much greater customer apprehension and wariness. The founders of Paypal identified this chasm between buyers and sellers and created their intermediary money transfer platform, instilling confidence into the users. With this newfound trust, customers could feel much more comfortable with online purchases knowing that they were operating through channels and not in solitude. In turn, this change in attitude allowed online businesses to become a much more viable option to more conservative and risk-averse customers, further promoting the growth of the online market.     

Case Study 2: Apple Pay

With each groundbreaking technological innovation, it becomes more and more evident that disruption occurs in a cyclic fashion. When credit cards were first introduced in the banking sector, they dramatically altered transaction management. However, despite their revolutionary nature, there were still persisting issues with security. Due to the physical nature of credit cards, customers were ultimately always vulnerable to credit card fraud and theft. Embarking on their own journey to create their own mobile payment and digital wallet service, Apple looked to resolve these issues. Apple was quick to embrace the UX methodology in order to provide the end user with an unprecedented level of information security and protection. Through the integration of multiple security mechanisms such as multi-factor authentication and tokenisation methodologies, credit card information is the most secure it has ever been. In addition to the extra layers of protection, users also experience an unparalleled level of convenience with Apple Pay. All credit cards, rewards cards and coupons are stored conveniently together in a virtual wallet, allowing users to access them with much greater ease. 

Case Study 3:  Direct banking

As more FinTech start-ups continue to find success in the modern world, the decentralisation of banking is gradually becoming a reality. Technological innovators are at the helm of these prospective organisations meaning that UX is at the forefront of the design process. The increasing prevalence of direct banks are one of the ways in which these UX-driven innovations have manifested. A direct bank is any bank which only has an online and telecommunication presence. Due to technological advancements, customer expectations for digital and on-demand service have progressed. In response to this burgeoning and newfound need, FinTech companies are finding that they are able to increase their market share in the banking sector. 

German direct bank N26 has established itself as one of the premier direct banks since its inception and for this reason has been steadily increasing its European banking market share. Recently, the company has recorded 3.5 million users globally and reached a valuation of $3.5 billion, placing the company in the top ten of the most valuable FinTech companies worldwide. 

Even in Australia, the start-up Up, a collaboration between Bendigo Bank and software company Ferocia, has also had a marked impact on the Australia’s banking market share, with over 100,000 customers joining in its first 8 months. Up has integrated auto tracking software, expenditure comparison metrics and other various data analytic methods to promote a much greater financial literacy among the Australian population. 

Conclusion

As previously outlined, disruption occurs in a cyclic and ongoing fashion. Innovation can never cease as long as businesses continue to pioneer in an effort to increase the value they provide to their customer base. This all rings true in the banking sector as through UX design processes, companies find that they are better able to understand what is truly important to the consumer and deliver.

Sources

Finextra

N26

Up