The digital shift has spurred a mass epiphany about physical bank branches.
After all, almost anything we can do in the physical world can be done via bits and bytes. To be sure, everything from check deposits to bill payments to investing — those staples of financial life that had traditionally been done at the teller, at the ATM, by phone and by snail mail — are finding uptake on platforms and apps.
The headline number says it all: Mobile banking is up 200 percent. But the headline number masks a stark reality. Many users, particularly younger customers like millennials don’t like their banking apps — marked by what they see as slow, clunky or even wrong — features.
As a trio of executives told Karen Webster in a recent On the Agenda discussion, separating the great mobile banking app design from the bad needs attention to friction and to the fact that, all too often, the user experience (UX) suffers at the hands of security and risk concerns.
One of the topics of discussion centered around PYMNTS research finding that more than one-third of respondents were “not happy at all” with the state of their mobile banking app. Six in 10 respondents stated that it simply wasn’t a great experience when they tried to add or remove people from their accounts or conduct other simple, basic activities.
There’s quite a disconnect, then, as Capital One’s Poole noted, between perception and reality. Go to any app store and you’ll see that most banking apps have four- or five-star reviews.
“That tells you how bad a barometer ‘star ratings’ are,” Poole told the panel, and those ratings may not be drawing a bead on the UX itself.
At a high level, said Entersekt’s Nolte, the banking app should focus on, measure and strive to offer a great UX, not just across some activities in some settings, but across all activities in all settings. What we’re allowed to do might be magic, but really, we should be allowed to do so much more than we can, at least right now.
As Nolte posited: “How do we ensure that it’s a true omnichannel experience? If I go to one branch or to another branch, I’m still the same person. Why is the experience not the same if I go to the internet or if I use the app in the branch? All channels of the same bank should treat me the same.”
Against that backdrop, against an industry-wide trend of banks shrinking their digital footprint, the UX should, at least at an aspirational level, be the same for a 20-year-old as it would be for a 60-year-old.
The Need For Digital Speed
In some cases, firms might choose to go the digital-only route and bypass any physical operations. Fair’s Parekh said that his own company, which offers banking, lending and investment products to underserved populations, started as a tech outfit with the mindset that “the digital transformation has to happen with banks faster than any other industry because of the sheer consumption and because of the sheer number of products that they have to offer in one singular platform.”
The time is ripe for banks to whole-heartedly embrace digital channels and an omnichannel mentality, said Poole, in part because the tech underpinning it all is at the ready.
“Customers weren’t satisfied with the amount of interaction they got with their banks,” in the past, he said, “but little did we know that the problem wasn’t the experience we were delivering. The problem was the channel didn’t exist yet. That channel is mobile, and it’s with you at all times.”
We’ve come a long way from the days when we checked accounts every now and then on apps. We went from mobile, where feature-rich apps made us more comfortable with online banking, to having online assistants that give users information as they need it at the points of various transactions and interactions. The most intuitive apps, Poole said, leverage data to anticipate users’ needs ahead of time, showing them relevant products and services as time goes on, and customers move along their financial journeys of planning, saving, spending and investing.
The digital experience should be the same as the physical (in-branch) experience, but getting there is no easy endeavor, given the long laundry list of services that a branch typically has provided (Poole likened that list to a “long tail” of financial activities). Poole noted that the “lift and shift” paradigm no longer applies; after all, it’s hard to fit a full complement of banking/branch activities onto a six-inch screen. Navigation should be flat, and app designers should consistently mull how they can tech one step further.
Candidly, banks must ask how they can transform activities that they probably really hated. The easiest one that’s long standing in banking is remote deposit capture, an innovation used by all banks these days.
“People are still learning about it,” Poole said but noted that customers are thrilled they no longer have to wait in line at the branch if they choose not to.
“The gold standard that we are striving to achieve as a bank is how do you deliver an experience so that you really take full advantage of this ‘always on always with you’ setting but you don’t abuse it,” he said. “We’re not trying to get eyeballs or create addictions to a banking app.”
Cross-Channel And Intuitive
But done well, a cross-channel, intuitive model can let customers conduct financial life seamlessly, solving problems before they’re ever recognized as problems.
Fair’s Parekh noted that, with his firm’s offerings, a Hispanic construction worker may get a paycheck every Saturday, but in traditional channels may have to stand in line and pay fees to remit funds back to his family.
“We have built our app in three languages, English, Spanish and Arabic,” he said. “You can now go and enroll in banking without knowing proper English. You can get your employer to pay you digitally instead of cutting you a physical check. And not only as soon as you get paid (two days early) you can transfer money to Mexico or wherever instantly in Spanish.”
Integration of various activities across a user’s life cycle is a hallmark of a successful digital banking experience, he said.
Making all this work — really, making any banking app work — takes data. And getting and using data requires trust. As Webster noted, Generation Z trusts food delivery apps more than they do their banks.
It’s incumbent on banking executives to understand how customers use their services online just as they would the physical, in-branch experience, said Nolte, adding mobile banking services cost less to administer than do services rendered physically. Banking execs need to find out where the distrust comes from.
There’s also the matter of money itself. The online banking customer who has a bad experience is likely to vote with his or her feet. Parekh cautioned that banks need to be sensitive to how individuals want to use their data and explain how that data is being used in simple terms.
Sometimes it’s a purely generational matter. The younger cohorts don’t trust ATMs because they didn’t grow up with them.
Nolte said “the younger generation is growing up with wallets and all the ‘Pays’ [Apple, Google and Samsung among them] out there. Trust is the big advantage of banks, and it is going away.”
Digital identities are going to become what he termed the anchor of trust within financial services.
The Fine Line
In enrolling customers, onboarding them and keeping them loyal, banks have to walk the fine line between security and loyalty. The mobile banking, digital environment requires different levels of security, but authentication provides access. As Poole observed, in the current environment, people don’t like receiving a one-time pin via email, and then getting a follow up PIN on their phone, with an additional scan of the user’s driver’s license.
But biometrics and selfie matching can help users take a bit of control of the experience.
“If you can do those things and you can do them [in a way] that gives you high confidence as the bank that you’re dealing with the right person, you create infinitely better experiences for customers,” he said.
The bank that doesn’t pays the price and sees less usage of the app.
Intelligent friction, said Nolte, is a goal, but the way apps are typically designed is rife with stumbling blocks.
“The problems on the tech side have been solved,” he said. “But any number of organizations design an amazing application, and it solves all the problems and right at the end, [designers say] ‘let’s get it past those security guys.’”
The security team counters with various reasons why the design cannot do all that is promised in the name of risk and vulnerabilities.
“Then the app ends up being terrible because there are patches and plasters and all sorts of stuff, and the user experience is destroyed,” he said. “So, I think what’s fundamental is to actually bake that in and get a partner from the beginning that … can actually tell you what is possible and how you should design it around foundational principles. Then you can actually get that magic going.”
Begin with the end in mind, he said, with the compliance at the top of the list, but where consideration of the UX is never far away.
“We’re missing the entertainment, and that might be a weird word to use in connection with banking,” said Poole. “If we’re not careful, we’ll find ourselves suddenly chasing the new bar — the delightful app.”
Looking ahead, the panel said that banks should focus on millennials, who Parekh said would be financial services firms’ customers for the next several decades. They’ll want to have all their financial accounts and activities integrated across a single platform.
Talking to customers in real time will be key, said Poole, who added that banks will have to spend an enormous amount of infrastructure design as they rethink the customer experience. But, as Nolte said, the heavy lifting gets a bit lighter when banks let individuals pick and choose what data they’ll share and give input to those digital designs. In effect, the customer is deputized.
“We need to move to the mindset of earning permission and delighting people first so that they want to engage with the bank and ask, ‘Hey, what else do you have?’” said Poole.