By Amandine Rodrigues
One of the first steps you take when moving to a new country is opening a bank account, a chore I recently faced. It didn’t go as smoothly as I’d imagined, and my professional self had something to say about it, being both a “modern consumer” and a “brand strategist.”
If, like yours truly, you have always imagined Switzerland as being the crème de la crème (de Gruyère) of the banking industry, with state-of-the-art, never-seen-before financial services, well, think again! I was pretty amazed to notice a distinct lack of innovation — not to say common sense — on the part of some of the most world-renowned retail banking actors. Moreover, the recent financial crisis has sent a chill across the global financial ecosystem: retail banks have lost what was left of their customers’ trust, mine included.
Yet we have seen major trends reshaping every industry, including the banking sector. For this post, I’ll take a fun look at breakthrough initiatives that will have a strong impact on financial organizations, their branding, and, most importantly, the way they design a successful customer experience.
By 2020, over 70 percent of the global population will own a smartphone, and with such device at one’s fingertips, anytime and anywhere, banks are just one of many sectors facing a fast-moving and inevitable challenge: the digitization of their activities. In some cases, this trend will have a crucial impact on their business model, but only for the good if they’re willing to embrace the challenge.
According to a mobile and online survey by Juniper Research, there will be more mobile banking users than online banking users by the end of 2019. Some actors have already developed a mobile-first service to address this not-so-new customer trend. (Fun fact: Kenya might be the flagship country where the impact of mobile-only banking is the strongest, since the majority of citizens are unbanked yet own a mobile phone.) But consumer banking is not the only sector being affected by the mobile-first trend.
Launched over a year ago, Robinhood is aiming to democratize the expensive and dusty business of stock trading with a free, beautifully designed, and easy-to-use app.
Simplification and Transparency
With the recession, banks have built a reputation for being hermetic powerhouses. Complexity — often seen in their messaging — is a sign of distrust, and people now expect more transparency and integrity. In order to win back the confidence of wary customers, many institutions are embracing simplicity, both in their verbal and visual communications, as a key symbol of stronger connections.
Beyond undergoing a branding overhaul, many banks have decided to revamp their financial flagship, moving away from the image of closed and cold places to a more welcoming and innovative atmosphere. Most of them draw their inspiration from concept stores and flamboyant boutiques, a breakthrough from the codes traditionally seen in retail banking.
Le 2 Opéra by BNP Paribas, in Paris, defines itself as an innovation lab, with honeycomb ceilings, bold colors, and mismatched furniture create a luxurious atmosphere.
Smart Use of Big Data
Beyond the buzzword, there’s a real opportunity for building tailor-made services for consumers who have been conditioned to expect a high level of personalization through their interactions with brands. With digital and mobile disrupting the financial industry, the great value of Big Data is that it can lead to a better and more effective customer experience and increased retention, revenue generation, and cost savings, not to mention lower risk.
InVenture’s data scientists are reinventing the credit score. The company uses mobile technology to collect data on users who might otherwise be unable to access funding for their projects because they lack credit scores. In doing so, InVenture helps SMBs around the world get the capital they need, especially in emerging countries.
Proliferation of Startups
According to a recent McKinsey study, banks could lose up to 60 percent of their retail profits to fin-tech startups within the next decade. From consumer banking to wealth management, these agile firms are revolutionizing the whole financial ecosystem and the way money is managed on a global scale. Established players now face a more tech-savvy and transparent form of competition.
Launched by a former Skype employee, TransferWise is an online money transfer service that offers a fairer and smarter way to send money abroad. The peer-to-peer service is said to be up to 89 percent cheaper than using a bank.
Addressing Gen Y
The expectations of Generation Y — the largest generation of consumers ever — are radically different from their elders, especially when it comes to financial services. One in five is said to have switched banks in the last year, with many moving to online-only options. According to the Millennial Disruption Index, nearly three-quarters of Gen Y members would “rather go to the dentist than to listen to what banks are saying.” Thus there’s an urge to engage the most skeptical of generations through maximum convenience for minimum fees.
The Society of Grownups is a witty, Boston-based master class launched by a life Insurance company that offers financial advice to millennials.
Banking: What’s Next?
In an era when the present moment is already past, it’s natural to start wondering how the Internet of Things, wearables, and biometrics will impact our relationship to banking. How are customer banks going to address the financial needs of those under 20 years old (Gen Z)? Will digitalization end brick-and-mortar banking as we know it, or will banks reinvent their physical presence through hybrid concepts, offering high-value added products and services? How will they face the rise of tech giants in their category, knowing that Snapchat and Facebook already allow their users to send money to their friends and followers?
What’s at Stake?
Given that nearly half of consumers say they would be open to considering companies outside the financial industry for their banking needs, banks must address a new form of competition from the likes of Amazon, Google, and others that have successfully embraced digital innovation and addressed the needs of empowered consumers. Designing a holistic brand experience is the most effective tool for closing the gap between the financial brand and its suspicious customers, and for winning back the trust that the recession shattered.
Sources: Mobile & Online Banking Report, Juniper Research, July 2014. McKinsey & Co., September 2015. Millennial Disruption Index.
Amandine Rodrigues is a brand strategist at MetaDesign Geneva.