How can UX revitalize the Financial Services sector?

The turn of the decade has shown a change in how people and institutions are interacting with money.  With an advent of rapidly advancing technologies in the fray, an era of the informed consumer has been embarked, with evolving expectations and a changing regulatory landscape, also clawing its way to disrupt the most traditional sector of our economy.

Hari Nallan & Mohita Jaiswal

Into the world of crypto-currencies, peer-to-peer lending, big data and financial technology (FinTech), innovations are capturing the attention and imagination of investors, customers and incumbents. 

According to a survey conducted by MIT Sloan Management Review and Deloitte Digital, 90% of FSI (financial services industry firms) agree that digital technologies are disrupting the industry to a great or moderate extent 

This technology-driven change being so pervasive that no financial institution is clearly immune.

 

What are the key trends which are making traditional ways of doing business obsolete?

1. Traditional institutions are not in pace with emerging FinTechs

Fintechs are fast moving, high-tech, low-footprint organizations with a huge potential to drive down costs and offer better customer experience. Their global investments are reaching more than $12 billion, more than tripled in 2014. An important share of revenues and the traditional ways of doing business are at risk due to the emergence of these new market entrants.

2. Inability to leverage Customer Intelligence as a precursor of growth

Research shows that the new age consumers do not understand the value of the available financial products. A key demographic: Millennials (comprising 24% of the world population) and gen Z, are 2.6x times more likely than other generations to have used a mobile banking app . As the first digital natives, less brand loyal & allowing experiences to drives their decision making, one-third of them are open to switching banks in the next 90 days, representing a distrust in the present financial ecosystem.

Some major impediments to the above have been:

  • Existence of a transactional relationship with banks, which has created a gap between the needs of the customer and the services banks offer.
  • Most financial applications and services perceived unexciting and cumbersome to use, complex to understand and engage with .
  • Financial institutions not seen as catalysing financial well being in their inability to dispense financial advice and support effectively in a robust manner.
  • Delay of traditional players to shift to digital and adopt technological and design innovations on the fly.

 

The most important challenge currently plaguing the financial services industry is the inability to meet the customer needs in a context-specific manner. Customers these days are no longer looking at banks as the only provider of banking. With the advent of challengers like FinTechs as well as Tech giants into the banking domain, there is a definite shift in customer experience which is warranted – Sathish N., SVP Product Management at Suntec Business Solutions

Gurpreet Sidana, Head, Retail Broking at SBICAP Securities says,

Financial industry was predominantly following branch-based customer servicing model supported by technology based transactional operations. In recent years, the impact of digital technology has moved most of customer servicing out of the branch to web first and relatively recently on to mobile devices. This paradigm shift in the overall business model has created an immediate need of digitizing most of our processes. Our customers who are hearing about AI, robotics, open trading APIs; want the same available with us. In order to meet these demands, we need to ramp up very quickly. – Gurpreet Sidana

According to a report by PwC , estimated percentage of business revenues that will be at risk by 2020 due to disruption in banking is 28%, in insurance, asset and wealth management – 22%.

While technological solutions can definitely ease off the risk while re-engineering the face of the sector, yet technology without design is as obsolete in value, as ideas are without language. Futuristic leaders need to be increasingly agile in considering the implications of design as a key component of their strategy.

 

Designing the way forward

With the current ecosystem in the picture, the bottom-line is to also keep an eye on key innovations taking place around customer experience which can transform the way users engage with products. “The bank of the future will be able to make sense of interactions using facial cues, body language, words used in chatbot interactions, social behaviour as well as digital persona of the customer to create a much better picture of each customer – creating a segment of one.” Design Thinking and UX can bring indispensable value to the table by:

1. Understanding Needs through thorough research

Relying on a mix of data, intuition, and experimental design, research can provide more relevant insights than just validating a problem with the current means of data analysis. UX specialists pay attention to human psychology, not relying necessarily on what the customer says, but rather on what the customer actually does.

2. Making it Simple

Creating user-friendly front-ends, simple elements and lines, clear icons and frictionless flow, where banking design switches from static to dynamic by implementing rich micro-interactions based on descriptive animation. Providing an omnichannel strategy(including major mobile platforms, responsive desktop service, wearables, IoT, VR solutions.), can facilitate faster response.

3. Bracing for the future

Dynamic data visualizations and dashboards can prepare for possible future patterns of behavior if the same reasons remain in play; utilizing predictive analytics and insights.

4. Reducing complexity, latency and ensuring safety

Instant and imperceptible authorization based design can ensure secure exchange of user data in an atmosphere of increased regulatory demands and concerns of cybersecurity.

Design becomes incumbent in today’s world as it takes a consumer-centered approach that puts the discovery of highly nuanced, even tacit, consumer needs at the forefront of innovation. It takes into consideration feasibility, including both the available technological landscape (can we do it?) and viability (will it have a commercial market?), creating an integrated solution to current challenges .

How smartly we use advanced data analytics offering user-centred delivery of services is going to be a game changer – Gurpreet Sidana, Head, Retail Broking at SBICAP Securities.

According to Mr. Nanda Kumar, the CEO of SunTec Business Solutions, one of the fastest growing FinTechs in India,

With ecosystems being regulated across the world, banks need to effectively manage, monitor and monetise their partner ecosystems to be able to create need-based products comprising not only their own offerings, but also offerings from other industries enabling them to cater to the larger objectives of their customers. This can, and is being enabled by smart enterprise mid-office systems bridging the gap between faster digitally-enabled touchpoints and slower legacy back-office system of records. – Mr. Nanda Kumar

 

CASE STUDY

HDFC: From a brick-and-mortar entity into a full-scale digital bank

Taking inspiration from the most tech forward companies and its dynamic leadership, HDFC bank has been an exemplary example of creating a transformational digital legacy. Today, 85 percent of the transactions by customers takes place though non-branch channels, showcasing a systematic focus on making customers use and adopt digital along with strategic investments in offering products online, to changing the ecosystem of the company, comprehensively. Some major initiatives taken by the bank in its foray into digitization are:

1. Transforming payments

The bank launched a product combining debit card and credit card limits under one wallet for payments in a merchant establishment through an application-based system; to replace physical debit and credit cards benefiting 900 million mobile users in India. Installing a much cheaper designed contactless POS machines the bank underwent a major expansion of its network.

2. A digital bank

The bank revitalized to be faster in finding out their customer needs through analytics and provides products, including those not manufactured by them (like mutual funds, insurance, etc). Focus was given to user centered design to build digital capabilities offering the same banking experience, ease, level of engagement and product comprehensiveness that they offer face-to-face, across online channels, 

Eyeing the future, the company believes that people-intensity in the banking system will certainly reduce in future. This and all these approaches taken forward will change the face of Indian banking as and when it happens.

As the financial sector transitions towards digital maturity, it would become incumbent to gather behavioral data from customers and become more sophisticated in understanding risks, customers’ financial status and needs. The use of the blockchain network, the adoption of PSD2 analogs and integrating visual design cues, will ensure maximum safety, transparency and convenience in speed of payments UX.
Hari Nallan

Hari Nallan

Founder and CEO of Think Design, a Design leader, Speaker and Educator. With a master's from NID and in the capacity of a founder, Hari has influenced, led and delivered several experience driven transformations across industries. As the CEO of Think Design, Hari is the architect of Think Design's approach and design centered practices and the company's strategic initiatives.

Mohita Jaiswal

Mohita Jaiswal

Research, Strategy and Content consultant. With a master's from IIT Delhi, Mohita has diverse experience across domains of technical research, big data, leadership development and arts in education. Having a keen interest in the science of human behavior, she looks at enabling holistic learning experiences, working at the intersection of technology, design, and human psychology.

 

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