Three Mistakes In A Banking User Experience That Can Lead To A Tipping Point

by Alex Kreger, UX Design Agency CEO/Founder

1. Banks are focused on older customers leaving Gen Y less satisfied

Despite of overall positive customer experience growth (up to 50% in last 2 years in Central Europe and Eastern Europe) Gen Y is 20% less satisfied comparing to older generation customers. Difference is especially apparent in North America, where only 47.7% of Gen Y customers reported positive experiences, compared to 62.5% of Gen X customers and 75.7% customers of older age groups. It’s clearly seen that bank focused their service on older customers, and have lack of attention to the younger generation.

Why is it significant? Gen Y lives in digital age and their expectations are really high. In next 10 years they will become main users of financial services. It means that banks have to learn “Gen Y language” switching their focus to younger customers. Оne of the difference between banks and fintech startups is about age of decision-makers. Startup founders are millennials in general, and it`s obvious for them that service have to be customer-centred.

Figure from Retail Banking Report 2016 by Capgemini and Efma

2. Banks have to generate positive experience to gain trust

We can see there is an obvious correlation between the experience and the trust level. We can see up to 300% difference in trust and confidence between customers with negative and positive experiences. In Central Europe only 25% of customers with negative experience have trust and confidence in their primary bank, comparing to 72.6% for customers with positive experience.

Figure from Retail Banking Report 2016 by Capgemini and Efma

As you see, old-school marketing is not enough to ensure loyalty nowadays. You can`t keep your clients just because their parents also are your customers. Only 55% customers are likely to stay with their primary bank in next 6 month, and only 38% are likely to refer their bank to a friends. What would you say if a half of your customers are under question mark? And there is even more — 10% admitted that they are unlikely to stay loyal in next 6 months.

Figure from Retail Banking Report 2016 by Capgemini and Efma

Customer-centred thinking is the only way to make business. Customers expectation level is raised by modern service providers, especially startups. Old and famous brand do not have an advantage today, it`s all about experience you deliver comparing with other financial services. Buzz about outstanding experience goes viral, and puts unknown brand to highest ranks just in a months.

In a few years fintech startups almost achieved the same level of customers trust and confidence as banks. How fintech companies, that we never heard before can outcompete 100-years old banks? The only answer is experience. Оften fintech startups do not even have their infrastructure, they just get it from banks. So, basicly it`s not about tech innovation, they are experience providers. And customer experience is something where traditional banking have troubles.

Figure from Retail Banking Report 2016 by Capgemini and Efma

3. Banks underestimate the impact of the user experience

Most interesting part of Capgemini and Efma research is about gap in banks and customers understanding about fintech startups advantages. Only 40% of banks believes that good experience are fintech firms value proposition, despite the fact that 80% of customers are assured.

This lack of customer-centred vision is clearly seen comparing other differences. Banks believe that source of startups power is more about marketing: speed to market, social integration, quick turnaround. Customers choose fintech because of service things: faster service, more features, lack of service by primary bank. And only the main strength was agreed by both parties — ease of use.

Figure from Retail Banking Report 2016 by Capgemini and Efma

Of course marketing still important part of any business, but this concept changes. In the past you were able to create any product and sell it. Because of the deficit. In growing competition need of marketing appeared. Create nice legend, make bright package, launch advertising campaign and that’s it — sold out.

We live in age of over-production. Everyone can sketch their product, get funded on Kickstarter, place order in China and sell it on Amazon. Technology opened amazing opportunities to produce services and goods, even without leaving your home. But does we really need all this stuff? And the same happens in financial services with all this impressive funding and tons of startups.

Product-centred approach does not work anymore. Life-cycle of goods and services are extremely short, so you have to develop them all the same time to keep your positions. In this chaos the only stable centre for your business is customer. And this means that traditional push-marketing is dead, It’s time for designing experiences. Look at Facebook, it`s fully integrated in billions life routine because of friends connection experience they provide.

Main takeaways

Do not underestimate millennials

Gen Y are future success of your business. Find what they like, dream of, their pain points and passions about your service. Discover their expectations and provide best possible experience through right channels.

Generate trust

No, it`s not the numbers game anymore. Today it`s not enough to put some budget and count leads. Get to know your customers and give them what their need. This is the only way to gain more trust to your brand, keep customers and generate referrals.

Explore consumers

Go back to the real world to look at it through the eyes of your customers. Go to field and see how customers use your service. Ask about your competitors, ask about best practice. Reveal their thoughts and emotions. Make your service customer-centred and deliver delightful experience that solves customers problems.

P.S. Probably the main question still appears:

What a hell is this “experience” and how to improve it?

Actually this is exactly where innovations are born. We hear about market “disruption” all the time, but what is all about. Because of new technology markets are in continuous development, right? In my opinion all these “unicorns” first of all disrupted traditional user experience. They opened to consumers new opportunities for solve their problems. That`s why we call “unicorn” founders — genius. And there is no ready answer how to enhance experience in your industry. You have to go this whole journey by yourself to find it out.

Tell me what do you think about it, I would be happy to hear!

Previous Posts:

UX FinTech case study of how online banking design should work

UX Design Agency Reveals UX Approach That Made Us The TOP3 Banking Innovative Company

Why People Are Stuck With Finances And How Technology Can Change It

Alex Kreger

Founder of UX Design Agency
UX Architect & Strategist

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