The acquisition of the visionary user experience design firm Adaptive Path by Capital One suggests that differentiating around the customer experience could be too challenging for the biggest, most sophisticated leaders in the financial industry. They can’t seem to do it on their own.
We live in an era where simplicity and convenience have mass appeal and the successful, disruptive brands are embracing this wholeheartedly (think: Uber and Siri). Yet financial institutions are failing consumers when it comes to the digital experiences.
Banking executives will need both the intel and bravado necessary to respond to emerging challenges and affect broad changes. Taking a step back to evaluate the banking experience across both physical and digital incarnations, it becomes abundantly clear that there is a big divide between the two types of service experiences offered.
On one hand, conducting banking business in a branch comes with certain inconveniences such as having to wait in line or only having access during “regular banking hours.” The “human touch” manifests as active listening, responsiveness, and clear communication — all critical to the successful completion of one’s banking business, and consistent with the user-centric principles championed by Adaptive Path.
The digital landscape can be a completely different story, with the user experience frequently taking a backseat to aged designs and ineffective content. A critical breakdown occurs when there’s a decision, conscious or otherwise, to prioritize internal processes ahead of simplicity, engagement and contextuality.
This usually takes the form of counter-intuitive information architecture, functional limitations across the user interface, disjointedness between access platforms, and stale or irrelevant content that does little to inform consumers or advance marketing purposes, leaving customers unsatisfied and disenchanted.
These flaws are not only evident in the financial services industry unfortunately. Most other legacy service-oriented enterprises are having difficulty making user experience design a priority. Industries like healthcare, transportation and others are equally disappointing for their digital consumers.
“There are few spaces as ripe for technology and human-inspired re-imagination as how people relate to their money.” — Daniel Makoski, VP/Design, Capital One
But, a shift is occurring and there seems to be a beacon of hope emerging around the principles of user-centric experience design. It’s worth noting that even the near-universally decried airline industry is making strides in engaging and offering more personal interaction with customers. Both Virgin America and Southwest have recently made significant investments in offering a robust, user-friendly, and engaging digital experience.
Not unaware of these shortcomings, why is the financial services industry so slow to respond? The hesitation most likely stems from the lack of understanding and appreciation by financial institutions for the financial return on investment they can expect from improving the digital customer experience.
This can manifest as both cost-reduction for impractical and less effective methods of service (i.e. utilizing call centers for basic service tasks) as well as increased customer LTV metrics that go hand-in-hand with improved engagement. Staffing a call center in America can cost banks an average of $11.00 for an average customer call. With an effective content strategy for curating and service-oriented content that’s laid out across an easy-to-use and action-oriented design, it’s easy to see how these costs could quickly be pared.
There is a strategic imperative for the financial services industry, specifically consumer-focused banks and credit unions, to awaken to the principles of user-centered digital experience design. Great examples are now being infused into a wide variety of industries to promote highly-considered purchases such as real estate (Zillow), cars (Tesla) and even watches (IWC).
A survey was done by Extractable of over twenty banks’ online banking experiences in order to determine the state of the industry. The results were conclusive. Many banks provided their prospective and current customers a contemporary, responsive, content-rich, personalized, easy-to-use public web experience. But, when it comes to the post-login online banking experience, whether app- or web-based, the industry falls far short.
There are certainly new contenders in the space who provide the key elements of simplicity, engagement and contextuality, such as Moven, mBank and EverBank. Even more telling can be BBVA’s recent $117 million acquisition of Simple, much like Intuit’s $170 million acquisition of Mint. It could be argued that the innovative, user-centric experience both firms provided was a primary factor in the considerable prices paid by their suitors.
“This is exactly the kind of problem Adaptive Path was created to solve: helping a company with the resources, but more importantly the will, to reimagine its strategies, processes, and design solutions to create better experiences for millions of people.” — Jesse James Garrett, Co-Founder and Chief Creative Officer, Adaptive Path
As innovative companies move forward, they are sure to leave some competitors in the dust. The Newport Group, a leading retirement services firm specializing in the design and administration of retirement and executive benefit plans, took the initiative to develop a user-centered digital experience for hundreds of thousands of plan holders who regularly access Newport’s platform to manage their retirement and deferred compensation accounts. The personalized experience has been highly successful, exhibiting an 85% increase in mobile engagement since the launch.
Capital One made an investment to lead the charge in customer-focused digital experiences with the Adaptive Path acquisition. Bringing talent inside the bank should help build an overarching UX culture that is more difficult if the talent was outside the bank. Adaptive Path said of the acquisition, “This is exactly the kind of problem Adaptive Path was created to solve: helping a company with the resources, but more importantly the will, to reimagine its strategies, processes, and design solutions to create better experiences for millions of people.”
The bank also introduced a new mobile wallet app, designed to work with Apple Pay. The clean and intuitive design are a far cry from what most financial institutions provide today.
Both of these events came after the hiring of top design talent Daniel Makoski, founder of Google’s modular Project Ara phone project – known as “the most radical piece of hardware to ever come out of Google.” Makoski was hired to become the first Vice President of Design at Capital One.
“I don’t blame people if they’re like a few of my colleagues who think I’m a bit insane to leave one of the world’s most admired tech companies for a bank,” Makoski said in a blog post. But, he said, “There are few spaces as ripe for technology and human-inspired reimagination as how people relate to their money.” He continued, “I’ll be working out of the SF studio, building a money team, focused on bold, breakthrough transformations that will help people connect with their finances in meaningful and delightful ways,” he said.
Capital One is paving the way for others in this new digital era. With the acquisition of Adaptive Path and the hiring of Dan Makoski, they have moved far beyond words and promises, investing in talent that is not available within most (any) financial organizations. Beyond just a mobile or digital play, it is expected that the impact of these investments will be felt throughout the organization, providing the springboard for differentiating Capital One in an increasingly crowded marketplace.
For those financial services companies on the sidelines watching … the stakes are high. With a return on investment that will be seen in the form of higher customer retention, lower cost customer acquisition and even lower cost delivery of services, can organizations afford to not move in the same direction?
Joel Oxman is the principal outside sales officer responsible for developing new client relationships at Extractable, a digital strategy and user-experience design agency in San Francisco that specializes in helping Financial Services clients succeed online. Extractable was recently named ” 2014 Top Agency” from the Web Marketing Association. Before joining Extractable in 2006, Joel has previously worked with USWeb/CKS and Scient in business development, account management and technology research capacities. You can also follow Joel on Twitter by clicking here.