Analyzing the Capgemini and Efma “Retail Banking Report 2016” I have found three common mistakes related to user experience design. I think they very well reflect the most common strategic errors in traditional big companies facing the challenges of the digital world.               1. Focusing on older customers leaving the millennials behind                

Despite the overall growth of positive user experience (up to 50% in the last 2 years in Central Europe and Eastern Europe), the millennials (generation Y, 20-35 years) are by 20% less satisfied compared to older generation customers. The difference is particularly evident in North America where only 47.7% of the younger clients report positive user experience in comparison to 62.5% among generation X and 75.7% among older customer groups. It is clear that banks have oriented their services towards older customers and are overlooking the younger generation.   

Why is it important? Generation Y lives in the digital age and their demands are very high. In the coming decade they will be the main users of financial services, therefore the banks must learn the language of Generation Y and pay more attention to younger customers. Perhaps the age of decision makers is one of the differences between banks and FinTech startups. Basically, the founders of the FinTech startups themselves represent the Generation Y and it is self-evident to them that the service must be customer oriented.

   

2. Lack of positive experience for building customers trust

The link between the user experience and the level of trust is obvious. The level of trust may differ by as much as 300% when customers with positive and negative experience are compared. In Central Europe only 25% of customers with a negative experience are ready to trust their primary bank, while 72.6% of customers with a positive experience are ready to do that.

Out-dated marketing methods are not enough to ensure customer’s trust. Customers can’t be retained only because their parents are also customers of the bank. Only 55% of customers want to stay with their bank within the next 6 months and only 38% would recommend their bank to their friends.

What would happen if half of the customers would decide to move to competitors? Moreover, - 10% of the customers have admitted that they are unlikely to remain with their bank for the next 6 months.

Customer-centered strategy is the only way to do business now in order to survive in the future. The level of customer requirements has grown thanks to modern service providers, especially startups. A well-known brand today is not an advantage. An advantage is user experience offered by the service compared to other service providers. The word of mouth about excellent user experience spreads quickly and raises unknown brand to top spots in couple of months.

In a few years FinTech startup companies have reached almost the same level of customer trust as banks. How FinTech companies we have never heard of were able to out-compete 100-year-old banks? The only answer is - user experience. In addition, FinTech companies are not based on their own infrastructure, they use banking opportunities. It shows that the positive user experience has a huge potential in creating digital services. Right now the provision of user experience is what traditional banks struggle the most.

3. Underestimated UX impact of the success of the service

The most interesting part of the Capgemini and Efma report is the different views of the banks and the customers about the benefits of FinTech startups. Only 40% of the banks believe that good user experience is the source of the corporate success of the FinTech companies, contrary to what 80% of the end-users believe.

Lack of customer centered vision is clear also in comparison of other differences. The banks believe that the basis of the startup business competitiveness is related to marketing - the speed at which the product is marketed, social integration, ability to change quickly and adapt their business to market requirements. However, the customers choose FinTech startup services due to quality of service - faster service, more opportunities, positive user experience. Yet there is one benefit both sides agree on - usability.

Of course, marketing is an important part of business, but also this concept is changing. Historically, when there was a shortage of products, any product could have been created and sold, but with the competition growing, the need for marketing also increased. It was necessary to create a beautiful sign, bright packaging, to launch and ad campaign to sell the product.

We are living in the age of surplus. Anyone can create their product, receive funding from Kickstarter, produce it in China and sell on Amazon.com. Technologies opened up wonderful opportunities to offer services and introduces products in the world market without ever leaving the home. But is it all really necessary? The same thing is happening in the financial sector - impressive funding and very many startup companies.

Product-oriented approach is no longer effective. The product and service life cycle is very short, it is necessary to work on continuous development to keep your market position. Customers are very important in business, therefore the traditional push=marketing is no longer relevant, while ensuring positive user experience definitely is. A great example is Facebook, it is fully integrated millions of users every day thanks to global connection experience between friends it provides.

Main conclusions

1. Do not underestimate the millennials

This generation is the core of successful business in the future. It is important to understand what they like, what they want, what makes them unhappy or, on the contrary - makes them excided about the services. What do they expect from the services provided? By taking all of this into consideration, the best user experience will be ensured by using the appropriate channels.

2. Building trust

Business is no longer just a numbers game. It is not enough to pour funds into advertising in order to attract customers and build their trust. It is important to know your clients and give them what they want. Only this way the company can increase the level of customer trust, build brand loyalty and promote recommendations.

3. Know your customers

It is important have an objective look at the service you provide to understand how your customers see it. It is valuable to see how customers use the services, understand what they think about the competitors’ offers and what companies they see as good examples of positive user experience.

Today consumers expects much more from digital services than before. To create a successful service, the companies require new and innovative solutions to engage and retain their customers through relevant and personalized user experience across all devices.

The consumer now has more freedom in the selection of the service provider. To protect your business from customers leaving for competitors, the business must change its strategy from product-oriented to customer-oriented.

Innovation occurs at the moment opportunities are sought out to improve user experience, but there is no ready answer on how to achieve it. This must be understood by each company individually, first, understanding who are their customers and what are their expectations.

Aleksandrs Krēgers, Director of Financial Service Design Agency UXDA and UX strategist

Data source: Capgemini and Efma Retail Banking Report, 2016 (https://www.worldretailbankingreport.com/download)