Banking today is unrecognisable from just five years ago: the shift to online, the appearance of new neobanks, and, most recently, the departure of Ulster Bank and KBC have each been like earthquakes caused by shifting tectonic plates.
Brian Herron, director of user experience agency Each&Other, which consults with financial institutions in Ireland and abroad, said that as a result of the landscape changing rapidly the remaining banks standing, particularly the heritage banks, are encountering a number of challenges.
“They have strategic projects ongoing, but they're also going to encounter challenges driven by a number of factors,” he said.
Right now, however, looking at pinch points that are causing problems for customers rather than working to complete long-term transformations might be the right thing to do, he said.
Focus on the tactical to win strategically
The factors Herron said need to be addressed were no small matters: firstly, we are now in a post-pandemic world, in which we see changing attitudes to previously agreed things such as working practices. In addition, there have been massive ups and downs in people's feeling of wealth. Finally, we are now very clearly in an era of uncertainty, globally.
“It’s a complete change from just two years ago,” he said.
“The dynamics have shifted in the last six months, and, as well as that, in an Irish context we have two medium-sized players leaving the market, leaving people with the two pillar banks, a few others and some fintechs,” he said.
At first blush, these sound like issues that have little to do with user experience and design but in fact, said Herron, design was central to them.
“What does it result in? The need for contact with the bank. Because these things are happening, people contacting your bank, joining your bank, needing to make changes. All of these interactions start to snowball up and create a huge weight on human resource and the banks are not 100 per cent set up for the self-service requirements that they're going to face,” he said.
As a result, there is a possible role for tactical projects based on data, such as taking a customer journey and seeing how it ends up in a phone call, or looking at small self-serve applets to resolve pain points.
A different challenge for new entrants
The fintech space, which has no legacy technology burden, is not necessarily in a better place, either. While we are all familiar with the likes of Revolut and N26, other fintechs are appearing and they face complex challenges.
Like the banks, these new entrants also cannot afford to get things wrong, Herron said.
“There are new start-ups coming in the fintech space, and for them to get a leg up they need to get the technology right,” he said.
Many of these new players go far beyond current account provision, seeking to take a bite out of the traditional profit centres for banks.
“We’re talking about companies that are going through financing at the moment and seeking to reimagine the mortgage experience in Ireland, reimagining pensions, reimagining lending, developing lifestyle wallets – things like that,” he said.
Irish start-ups in this space are now hoping to sell a smooth digital experience to customers.
The challenge of brilliant experiences right out the gate
“The challenge here is, they come from backgrounds as innovative insiders so they will be looking at those entities out there in the market and asking, ‘how do we get there?’ How do they get products into people’s hands?”
The competition, naturally, includes the Irish banks, but also international competitors now coming into the market. As a result, stakes are high, and fintechs are torn between developing things themselves or consulting with experienced outsiders.
There is no room to have a B-plus or B-minus online experience. You have to get top-tier experience.
“There is no room to have a B-plus or B-minus online experience. You have to get top-tier experience. You have a choice between building an internal team, the challenge of building that, and then maintaining it, and the alternative of going to market to look for a partnership in the longer term,” he said.
Fintechs, naturally enough, are typically well able to access technology, but they tend to find getting access to design talent more difficult, he said. As a result, this challenge is immense in light of the effort international neo-banks and other fintechs are making.
Though the challenges are different, in the end, both fintechs and traditional banks are swimming in the same sea and facing the fact that there is now a huge appetite to look for alternatives.
"Customer behaviour is changing, so it’s a huge opportunity for new companies to gain, and because of ‘business as unusual’, banks need to start to solve these problems, too,” he said.