In 2020 and beyond, your customer experience is only as good as your digital experience. Invest in design innovation now, or risk being left behind.
We often hear that the financial services industry is in the midst of a digital revolution. Fintech start-ups are shaking up traditional customer relationships with financial institutions. By providing cutting-edge, mobile-first financial experiences, they are resetting customers’ expectations for what financial services experiences should be.
In the coming decade, intuitive, easy-to-use, mobile first products and websites will set the bar for user experience across consumer products and services. Established firms can keep pace with the changing landscape if they embrace design innovation. By investing in quality design now, incumbent financial institutions have the opportunity to win over Millennials and build lasting, rewarding relationships as their wealth accelerates.
The Demographic Shift and the Shift Toward Digital
Traditionally, the wealth-management industry has relied on demographic segmentation as a map for sector growth. Although Millennials as a group currently have lower net worths and fewer assets than their Baby Boomer counterparts, this demographic is poised to become the largest client group for the financial services industry.
As Millennials reach their prime earning years, many are entering the investment space for the first time. As the generation that came of age in the wake of the financial crisis, they are less predisposed to trust legacy financial institutions. Traditional advantages such as geographical coverage and branch footprint are becoming less important than providing superior digital experience.
In fact, it would be more accurate to say that Millennials are at the vanguard of a broader demographic shift toward a more digitally-savvy, tech forward clientele. Many Gen Xers— now in their 50s and set to inherit from their parents— are accustomed to working in digital environments and have higher expectations for digital user experience than the Baby Boomer generation.
Established firms must carve their place within a consumer ecosystem where expectations for UX are sky high. Compared to e-commerce, ride-sharing, or streaming entertainment, financial websites and apps — especially at larger, more established institutions — are often outmoded, confusing, or difficult to navigate.
Lessons From Fintech: User Experience is Key
Today, Millennials (and many in Gen X) begin their investment and banking journeys online. They compare firms, conduct research online, and solicit recommendations from their social network. According to a Deloitte report, 57 percent of Millennials are willing to change their bank relationship for a better digital platform.
Winning over Millennials will be tricky, but the battle-lines around user experience are unmistakable. Millennials value simplicity, transparency, and a humanizing touch, and quality design can differentiate institutions from the competition.
Examples of innovative, successful fintech companies leveraging excellent design abound. N26, “the mobile bank,” is aggressively moving into the traditional banking space on the basis of their superior mobile experience:
Robinhood, a commission free investment app, is making investing accessible to a younger, mobile-first demographic:
Similarly, Acorn, the micro-investment platform, attracts clientele by being transparent about what the platform does and how investing works:
Trov, which offers on-demand insurance, emphasizes the compatibility of insurance offerings with different lifestyle choices:
For established banks and financial institutions, investing in superior UX is essential to keep pace with the expectations of a new demographic — tech-savvy consumers attracted to the sleeker products offered by fintech companies. Additionally, high quality UX will accentuate the existing advantages of legacy institutions — trust, security, and comprehensive service.
Embracing UX innovation can also help bridge the knowledge gap that still prevents many Millennials from investing. Although Millennials prefer more direct control over their wealth, they are often less informed about their financial options than previous generations. Currently, less than 30 percent of Millennial wealth is invested in stocks.
84 percent of millennials seek financial advice, and according to a 2017 Accenture report, 65 percent want gamification that will help them learn about investing. If your firm is not providing impactful customer experiences that satisfy these expectations, your customers are likely to turn elsewhere.
In short, traditional banking and financial institutions have an opportunity. By investing in UX design, they can leverage their expertise to motivate a new generation to put their dollars to work. Incumbent institutions willing to invest in digital experience will reap the benefits for years to come.
Building Relationships of Trust
Banks and institutions need to recast their approach to digital as an integral part of client relationships. Digital platforms, like face-to-face meetings, are vehicles for building trust. At the end of the day, chatbots and digital portals are not intended to replace wealth managers or financial advisers, but to enrich and enhance person-to-person relationships with additional useful, easy-to-navigate touchpoints.
Although Millennials begin their research online, they do not end their investment journeys there. Like Gen-Xers and Baby Boomers, Millennials value face-to-face meetings with their financial advisers and building lasting relationships with wealth managers. For legacy banks and wealth management firms, quality digital UX will enhance and transform advising, but they will not cut out the human connection.
If you would like to speak with L&T about how we collaborate with financial institutions to deliver superior digital customer experience, we invite you to contact us today.