Most Banks & Credit Unions Are Their Own Worst Competition

Stop stressing about how this neobank, that fintech or big tech firm will change banking. Focus instead on what consumers really want, then use reverse engineering to create the digital products that will help your financial institution win. Without superior customer experience, no amount of marketing will save you.

As challenger brands and big tech muscle in further into financial services, how can banks and credit unions survive the attacks? Frankly, they need to stop focusing on these new rivals — and instead concentrate on improving the value their financial products to consumers. That energy will address consumers’ rising expectations and counter new players’ actions. You can’t stop the newcomers, but you can push your own offerings to new heights.

It’s natural, in the face of deteriorating results, to try to fight rivals head on. But when this doesn’t help, financial institutions shift the focus inside and seek out scapegoats. But typically results continue eroding. So they pour money into increased advertising and aggressive sales drives.

On the surface, this seems very decisive. But none of this helps. It just demoralizes and demotivates the institution’s partners and staff.

Institutions must instead determine what’s wrong with their offerings, what’s missing, and why consumers reject them. You can’t force the world to adopt your product, but you can adapt your product to the world. Indeed, digital transformation is pointless if it doesn’t improve user experience.

Implementing design thinking and UX (user experience) techniques through four powerful tactics will help.

1. Tap the Power of Reverse Engineering

Surviving the digital age demands transformation, but efforts often fail because companies think about their products from their own viewpoint. This includes such thoughts as what backend technology to use and what marketing tricks will help sell it. It’s a time-tested formula, yet in the age of digital transformation, it’s wrong because it puts the main focus on technology. Focus instead on producing a delightful customer experience. Create success by devising products that sell themselves, not through fancy sales techniques.

Doing so requires implementing financial UX design methodology, which provides a specific way to reduce the risk of failure and increase the success rate by focusing on product value. It’s based on reverse engineering, which begins with defining the ultimate value for the users and ends with an action plan.

There’s a saying that if you wish to predict the future, create it. That’s what reverse engineering does. At its best it reduces the risk of failure and maximizes the product’s success, by creating an experience that users love and will eagerly recommend.

Reverse engineering resembles a maze that has multiple entrances — and only one exit. Usually, entrepreneurs try to guess which entrance to choose. They determine which products are trending, code a lot of features to impress customers, and finally pack it all into a vibrant design sold by tons of advertising. This is a very expensive gamble.

In reverse engineering, you start from the maze exit and work back to the correct entry. Begin with exploring the value that’s significant to customers. This focuses the entire effort on consumers’ needs.

Reverse engineering is not easy. Often it requires a dramatic change in the company’s decision-making principles, culture, and the logic of its business processes.

Action plan:

  • Focus on transforming the experience, not technology.
  • Start by defining the product value, not functionality.
  • Integrate the principles of UX design.
  • Use UX research to define how to maximize the product’s value.

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2. Make Customer-Centricity Your Religion

Drive long-term success by helping customers and keeping them happy. Even a seemingly hopeless product can be turned into a valuable one if every employee of the company shares this thinking. Employees’ eagerness to create grows rapidly if they are working on something that could make hundreds of thousands or even millions of users happy.

So, to avoid being disrupted, companies must pay attention to user dissatisfaction. Update and even reinvent products accordingly. Have you asked users how your products could be improved? What are they saying about it on social media? What kinds of ratings and reviews do they register on Google Play and the App Store?

Surprisingly, even many big banks that come to us for UX help are shocked when we present them with their users’ ratings and reviews. “Where did you find those?” they ask. And we reply, “Just by Googling; it’s publicly available information.” Meanwhile, fintechs constantly ask their users for feedback so they can improve the experience.

Action plan:

  • Look up your application’s ratings and reviews on the App Store and Google Play.
  • Check out what people are saying about your products on social media.
  • Ask your users what can be improved. They will surprise you with their answers.
  • Make it a habit to share these discoveries with your team.
  • Use what you’ve learned to create an improvement plan.
  • Use UX research methods so that employees can see their product or service through the eyes of users.

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3. Save Yourself from the “Red Ocean” with Authenticity

Often, instead of delivering a specific value through a product, financial institutions create template solutions. Such products are all inconvenient, faceless and without benefit to users. One wonders if the product team even understands why they have created the product— let alone having any overall vision. Institutions that don’t begin knowing such basics risk watching their products quickly sinking into the “red ocean” of competition.

You could compete on price. Offering a poor solution that’s cheap may work for a while, but not in the long run. More to the point, the digital age is a time of authentic solutions. “One size fits all” is history. When consumers recognize value, this drives emotions resulting in conversion and ultimately consumer loyalty.

Successful design requires empathy with the users as a beginning and analysis of competitors’ losses — and wins. But the institution must also be committed to standing out from the crowd — being conventional demotivates staff, especially as demand dwindles. The rules of the game have changed in the digital age: A business that doesn’t provide unique value quickly loses the meaning of its existence.

Action plan:

  • State your “Why?” Simon Sinek’s technique, “Start With Why,” will help with that.
  • Make sure you have a strongly defined inner culture and company values, as well as an overall goal that the whole team understands and adheres to.
  • Ensure full compliance of the product with the company’s uniqueness. Don’t be afraid to change it — today, your product is your marketing.
  • Use UX design to implement unique qualities in service, function, architecture and design.

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4. Conquer Transformation with Flexibility

Finally, the survival of the disruption depends on your ability to be flexible. Be prepared to abandon obsolete practices that once helped you achieve success. You must be agile and able to adapt to today’s market. A true professional knows that legacy holds the institution back.

Failing to focus on users means missing opportunities to match the product to the market. We need to constantly be open to new trends and growing user expectations. Businesses have to regularly look for ways to gain market advantage over their competitors by paying close attention to consumers’ struggles and solving them.

Action plan:

  • Cultivate open thinking in your team. You will find great examples of how to do that in the publications of the Arbinger Institute.
  • Do not ignore criticism of your product. On the contrary, seek it out.
  • Don’t allow your legacy to hold you back.

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