A decade ago, when I began working in the fintech sector, I realized that there was a significant disconnect between the way people in the banking industry think about products and the way consumers use those products.
As an early project in my startup, I recruited people from Craigslist to come talk to me about money. I found consumers were generally clear about what they wanted, even if they didn’t refer to something by the same name that the industry does.
This disconnect still persists today. It continues to thwart many traditional banks in their efforts to relate to customers. It also hinders the ability of banks to compete with fintechs that are much better at rising to the challenge.
But the problem can be fixed.
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What Do Banking Customers Really Want?
I asked the Craigslist recruits a whole series of questions about how they organized and managed their money, the various relationships they had with financial service providers, and even the language they used to describe and define aspects of their financial lives.
I learned that people rarely concerned themselves with the technicalities of loans or checking accounts, or whether it was offered by a bank or credit union, or even a fintech. They might have had very simple or complex ways that they organized, thought about and managed money, and in most cases, they used their own labels to describe it all, without regard for the way the industry might describe it.
What they cared about most was achieving their desired outcomes, in a way that was as hassle-free and values-aligned as possible. For example, people don’t “want” a loan; they want to get the thing that the loan enables (home, car, product, etc.). Yet far too often marketers focused on the loan’s attributes (rate, term, payment options) when they could have appealed to the customer much more effectively by focusing on the end result.
“People rarely concerned themselves with the technicalities of loans or checking accounts, or whether it was offered by a bank or credit union, or even a fintech.”
Given the historically cold nature of financial products and the lack of emotional appeal from the people who provided them, it was actually surprising to customers when we asked them questions about their life goals. Because we showed that we cared about them, they quickly saw us as being on their side and having similar values. We were not perceived as judging and doubting them — which, they told me, is how they felt from prior interactions with financial service providers.
They also wanted to interact on their terms, whenever and wherever they wanted — which technology had begun to enable. Financial institutions that provided such flexibility were starting to be viewed as caring more about their customers. And while banks and credit unions initially encouraged ATM use because they were a cheaper way to deliver services involving physical money, these interactions still centered on a set of physical activities — a location, a card, etc.
In other words, many traditional financial institutions missed the point: The digitization of money made convenience, availability and speed the most desired attributes.
Read more: Are Your Customers Cheating on You?
5 Fintech Strategies That Banks Should Adopt
Fast forward to today, and this divide is playing out in real time as innovative fintech companies — such as Paypal and Square with its Cash App service — acquire millions of users who now largely regard them as their virtual “banks.”
The reason is pretty simple: These fintech giants have mastered the art of putting users’ needs at the forefront. The convenience, availability and speed they offer are the new benchmarks for others to have to match. As for their users, it looks and feels like a bank account and has the key things they need for their financial lives, which is all that matters to them.
So, what does this mean for traditional banks and what could they learn from others’ successes? Here are 5 key takeaways.
1. Put customers’ needs at the forefront to show that you’re in the business of their success.
Idea: One simple way to start moving in this direction is by matching the bank’s human support hours to the ones when customers are actually engaging with the bank, including mobile and online banking interaction times. Many have found that digital users do their “banking” outside of historical business hours.
Warning: Financial institutions that fail to adopt a more user-centered approach risk losing relevance among small businesses and consumers.
2. Embrace the digital shift.
Consumers have flocked to fintechs because of their seamless, intuitive experiences. Banks can create these same experiences. The products and tools to achieve this are out there.
Idea: Hire a fintech designer at the bank to help improve the user experience. Develop a process for rapid testing and deployment of digital experiences and adopt the tools needed to implement that process, such as a no-code platform or a flexible, responsive design environment like Webflow.
3. Focus on outcomes.
Talk about what customers care about in a way they can relate to. Shift from using financial jargon to informal, everyday language and focus on helping them achieve their goals. Easier, streamlined services drive customer delight and loyalty. At a prior fintech startup, we tried to write all terms and conditions in language that was as simple and plain as possible.
Idea: Create a customer advisory board to give you more objective feedback on messaging and help identify points of confusion or frustration. You can use this additional user input when working with legal and compliance teams.
4. Build trust through transparency.
Users value transparency. Be clear about your offerings, avoid hidden fees, and earn trust by being open about how you protect customers’ data and funds. Employees can apply this thinking across the organization, in areas such as products, operations and support.
Idea: If you charge a monthly fee for various products, provide details on what services are provided for that fee, and even offer options to the customer. Let them opt in for the services they value or give them a way to reduce the fee by giving up certain services. Not only does this provide greater transparency, but it also gives customers a sense of control.
5. Personalization matters.
Fintech companies excel at personalized digital experiences. Traditional banks must use their data to understand individual customers and offer tailored solutions. Allow your employees to access this data as well, so they can be better and smarter partners.
Idea: For business accounts, implement a solution that can analyze and tag transactions for customers. More intelligence about that data will create opportunities for relationship managers to have richer conversations with customers. It’ll also enable recommendations for other relevant products and services.
Read more about personalization:
- How to Turn Your Website into a Personalization Treasure Trove
- Customers in Control: What Personalized Banking Means Now
It’s All About the Customer Experience
User-centered design is powerful, and it’s winning with users. And that doesn’t just mean a mobile app — it means every interaction they might have with a financial institution. A good digital foundation can make every interaction faster, better and more personalized, even when that interaction takes place over the phone or in a branch.
It’s a continuous improvement process that can energize and excite your team and your customers. Aspire for them to say, “This is my bank, and it’s exactly what I need!”
About the author:
Carey Ransom is the managing director of BankTech Ventures, a strategic investment fund that facilitates technology innovation for community banks. Participants in the fund include more than 100 banks and dozens of tech startups.