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The future of banking is spelled U-X

17 Feb

Market surveys suggest that the banking sector is a tone-deaf industry that lacks customers’ trust. The male-dominated, hierarchical world of banking has traditionally provided little sympathy for user experiences and customer-driven innovation. But something is about to happen in the banking sector, and perhaps there is a light at the end of the tunnel for the average banking customer.

The financial industry is not traditionally associated with values such as user experience, transparency and innovation. Many other major industries (telecom, media, fashion, etc.) have undergone a metamorphosis over the last decade or so and have been forced to become more user-centric in what has been called “The Age of the Customer”, an era characterized by connected and discerning users. Yet the banking and financial sector has been surprisingly resistant.

The fact that the banking industry is a conservative one is obvious. An embarrassing example of this is the fact that the European Central Bank’s main decision-making body, the Governing Council, until just a few years ago consisted only of men (twenty-three really old men, to be exact). And the first thing that comes to mind when you see this jolly bunch is perhaps not innovation, great user experiences and disruptive fintech solutions:

Sweden is not by any means an exception. The Swedish banking industry has long been characterized by conservatism and low competition. The Swedish Consumer Agency has often complained about the oligopoly they believe the Swedish banking system to be. For consumers, this oligopoly means locking mechanisms, expensive banking services and a feeling that the banks can do whatever they feel like. A survey conducted by market research company Svenskt Kvalitetsindex in 2013 showed, for example, that fewer than one in three Swedish bank customers have high confidence in the industry.

“Fewer than one in three Swedish bank customers have high confidence in the industry”

On the other hand, Sweden has long been one of the most Internet-connected countries in the world. (Right now, Sweden is ranked number three in the world according to the International Telecommunication Union.) The combination of expensive, conservative banks that provide bad service and connected and enraged customers ought to be a great hotbed for the development of innovative fintech company offering something new, right?

Fintech is booming in Sweden

And indeed, in recent years, the banking industry in Sweden has started to turn. Swedish Fintech companies such as Tink, Toborrow, Klarna, iZettle, SEQR, ShareVille and many more have begun to put pressure on the major banks. The four major banks in Sweden have made some successful (and quite a few unsuccessful) attempts to adapt and catch up ‒ but to turn a battleship takes a long time.

One of the banks that has taken the opportunity to become a leader in innovative banking solutions is Länsförsäkringar Bank. Their banking app is considered the best in Sweden both by experts and by users. In recent weeks, the app was awarded both by the expert jury at the Swedish Mobile Awards and in the largest site survey in Sweden, with answers from 155,891 users.

Since 2014, Screen Interaction has been Länsförsäkringar’s mobile partner. Two important pieces of the puzzle in the creation of Länsförsäkringar’s app are Screen Interaction’s mobile developer Julita Barkauskaite and UX designer Keren Tal. They claim that Länsförsäkringar is a dream client in that they are really serious about creating mobile solutions based on user experiences.

‒ They really listen to their customers, and that’s just so important when developing mobile services. It’s great that we get the chance to develop new features that focus more on customer benefit than the business benefits for the company, and all the positive feedback we get from users is proof that it works, says Julita Barkauskaite.

To work customer-driven in an industry that normally doesn’t listen to its customers unless they have to will provide with you a lot of feedback ‒ customers were extremely dedicated. One of the things that surprised the team during user interviews was how advanced and mature younger banking customers were.

‒ Virtually all of them had some type of savings account, even those who were 21 years old. Many had long-term savings in an investment savings account (“investeringssparkonto” in Swedish, where capital gains tax has been replaced by an annual standardised tax) or similar, extremely good track of their financial situation and acted very mature from a financial point of view. Several had a credit card that they used as back-up and some were very active in the stock market. I did not even think about stuff like that when I was 20. Generally, I am surprised every time by how engaged users are sending emails and giving feedback, both positive input and … well, let’s call it constructive criticism, smiles Keren Tal.

The future of banking is spelled U-X

However, there are obstacles on the road even in a progress-driven bank like Länsförsäkringar. Few industries are as regulated as the banking industry. This is of course in both the customer’s and the bank’s best interests, but it also means that any new feature must always be filtered through a legal assessment process before it can go live, says Julita Barkauskaite.

‒ The biggest challenge in developing for banks is perhaps getting a new feature approved in a legal sense, because it has to undergo a legal process in the bank. Lawyers must ensure nothing is wrong from their point of view. Sometimes it can take a long time to get approval from all stakeholders, she says.

Despite legal obstacles, fintech continues to flourish in Sweden. And Länsförsäkringar continues to challenge the major banks. Besides having the best banking app in Sweden, Länsförsäkringar was the first bank in Sweden to have a banking service for the Apple Watch. The heavily hyped watch’s launch date in Swedish stores was July 17, 2015. By that time, Länsförsäkringar’s Apple Watch application had been available for download in App Store for about two months.

‒ I think the banks have recognized the value of releasing features that add real value for the users, because they have received very positive feedback for each customer-focused release, says Julita.

It would probably be naive to expect a complete UX revolution in the banking system in the coming years, but the banks will be forced to move in the direction of better user experiences whether they like it or not, say Julita and Keren.

‒ Yes, banks definitely have to continue working on their user experiences. Länsförsäkringar, for example, has done a proper market analysis in terms of both technology and user behavior. They understand that customers these days expect positive experiences. I am confident that they will continue to mobilize their businesses and create new, accessible solutions that make everyday finances simple and easy, says Keren Tal.

Perhaps there is hope for the frustrated banking customer, after all. It seems that the banking sector might be changing for the better. And of course, there is room in the banking industry for talented women, too.

“Of course, there is room in the banking industry for talented women, too”

By Christian Dahlström

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