Banking IT systems have a mixed reputation. Typically considered inflexible, they nonetheless handle enormous volumes of transactions, including complex ones, without complaint and have up-times measured in years. Indeed, such is the stability of the mainframes used in banks that when they don’t work, they make national news.
On the other hand, bank systems are also defined by batch processing and the need for complex integration with an array of legacy systems. The upshot of this is that they are rarely swift.
Unencumbered by such a complex technology stack, a host of app-based, online neo-banks and other fintechs have swooped into the European market and found customers amenable, if not to switching, then at least to complementary usage alongside traditional bank accounts.
Billy Kennedy, principal user experience designer at Each&Other, said that this created a growing mismatch between customers’ expectations and banks’ online offerings. However, fintechs and neo-banks in particular, are considered easy to use, but not always considered quite as sound as traditional banks.
Speaking from a user perception point of view, the perception is that if they [neo-banks] are not under regulated then they are at least not as heavily regulated as the old-school banks in Ireland. There is, frankly, a perception that they have chosen light-touch jurisdictions.
Whether or not this is the case, and it does vary even within the EU, though the same basic guarantees are in place, the reality for the challengers is that they can ‘on-board’ customers and start offering them services much more rapidly and painlessly than banks are used to.
“Looking at it from a customer journey point of view, there is always a trade-off between convenience and trust,” said Kennedy.
In practice, this has created a contradiction in the marketplace, or at least raised expectations about what can or should be done.
“People want those mature processes that are robust, which the banks can offer. At the same time, the same people want to do things conveniently and quickly,” he said.
However, this could be seen as an opportunity for banks rather than a threat to them: banks could have the best of both worlds were they able to combine their trusted and regulated nature with more flexible front-end technology offerings.
Of course, systems integration and migrations are not trivial tasks, Kennedy said. They might just prove worth it, though.
“There is certainly a cost associated with it, we’re well aware of that, but, looking at it from a user experience perspective, there are things that can be done to improve what the customer experiences,” he said.
It also does not need to be done alone. Surveying the competition to see who has complementary technology or services, for example, could be one way to drive change.
“There is an opportunity for the banks to partner with fintechs to deliver those added services,” Kennedy said.
Would that result in the banks having their lunches eaten by their putative partners, though? Kennedy said lunchtime was already over.
“The lunch is already gone. It’s a question of how much food will be left on the table,” he said.