Invention is not innovation: providing customer-centric digital banking

Written on 12 June 2015

The key to unlocking game–changing digital banking experiences is to deeply understand the people that banks are looking to serve.

Banks understand the importance of providing the right customer experience. NatWest private banking promises a “more personal banking experience”. Lloyds private banking allows you to “focus on what’s important to you” and offers to “help you to plan your future”. Santander starts its description of private banking as a “personalised treatment” with “maximum quality of service”. In the market for wealthier customers, all of the major high street banks aim for personal relationships. But what about digitally enabling relationships, maximising the quality of service and tailoring personal experiences?

I recently met with an executive at a major UK bank who told me that they have four different types of customers: mass market, affluent, high net worth and ultra–high net worth. Their wealthier customers get personal service from private bankers. In his view, digital banking is what you give to mass–market customers. But are these really the type of people that digital banking serves? Or is this merely a wealth–related marketing segmentation? Marketing segmentation was developed for the purpose of targeting sales and campaigns. Our expectations are not a simple translation of our gender, socio–economic standing, location, age, mortgage size, annual salary or savings. As a banking customer, I might be financially savvy or not. I might be cautious and sceptical, or open and curious. I might need advice or prefer to make my own decisions. I might be a big spender or a calculated saver.

To me, digital banking is what we all expect: personal and customised treatment. Across the wealth spectrum, we expect an intuitive, respectful, relevant and meaningful experience. We now enjoy intuitive, tailored and thoughtful services across a range of providers, from social media, retailers and entertainment to taxi services, fitness and news providers. And you don’t need to be affluent. Most of these services are free! Regardless of the size of our wallets, most banking customers expect personalised high–quality treatment.

Banks are good at understanding and designing their own architectures, frameworks, structures, policies, procedures and technologies. Any digital user interface supports a dialogue between a banking interface and a human. Dialogues with banking alternatives are simply one click away. If banks truly want to create differentiated services that build lasting relationships, they must create services that show that they care.

Creating new digital banking solutions that the world needs – dos and don’ts

Things not to do:

Rely on analytics only: There is a fallacy that analytics, MIS, CRM and/or big data sufficiently explain everything you need to know about customers and their behaviours. The data only captures what customers do within the boundaries of a particular technology context. It does not take into consideration what customers are doing elsewhere or doing offline, why they ‘can’t trust’ you, why they are or aren’t taking particular actions, or how they feel.
Design solutions for you: Banks must avoid dreaming up solutions in brainstorming and boardroom sessions – solutions that solve their own problems or the ones they perceive their customers to have. The Harvard Business Review carried a piece recently on start–up failure. Whilst some start–ups fail due to poor execution, most fail because they build solutions to problems that don’t exist in scale. This is not unique to start–ups. Our team at Tobias & Tobias is often asked by major global financial institutions to redesign digital banking solutions that have had low user adoption or poor ongoing digital engagement and retention.
Only focus on a few ideas that sound great: Financial institutions are risk–averse. Risk management is a key part of banks’ DNA. So banks tend to follow a reductionist approach to product design and innovation. The typical scenario is to ask many people in the bank to generate ideas: filter out (most of) the bad and good ideas, get executives to commit a budget to a few of the best ideas and launch a few new digital solutions that executives liked. All you have to do now is hope for the best, because the problem is, of course, that this approach is even riskier. Your typical bank executive is not a typical bank customer.
Rely on attitudinal market research: Electrolux once failed to get any demand for a new free washing machine with a technology that charged per wash, although potential customers responded positively to the idea during market research. Showing ideas to people in a focus group or asking people for their likes/dislikes in surveys are both limited. Studies in psychology have consistently shown that attitudes and actual behaviours have a poor statistical correlation.
Only focus on minimally viable products: New digital products must be technically feasible and financially viable. But without starting with customers, their needs, hopes and fears, solutions are unlikely to be desirable. Elevate product experience over function. This balancing act is crucial. Otherwise, digital banking solutions will suffer from low user adoption.

Things to do:

Borrow well–established behavioural research methods: Over many decades, social scientists have developed research methods to study people and their behaviours. These will help you to capture valid insights, understand customers and increase your chances of finding the right solutions: methods from anthropology and ethnography for immersion with clients; psychology for behaviour and cognition; and behavioural design and behavioural economics for behavioural prediction and modification.
Consider your customers’ social identities: We all have different social identities. In different contexts, different identities are triggered and influence our behaviours. These identities change over time. Using the right interviewing techniques and maintaining ongoing conversations would allow banks to create more accurate predictions and increase user adoption.
Copy from architects and product designers: Create cheap and tangible models of digital banking ideas: paper mock–ups, card–boards, sketches, and more sophisticated prototypes. Making is a fantastic way to think and test many different ideas. Making is also an easier and more effective way to share and collaborate without messy and ambiguous documentation.
Fail fast and learn: Digital solutions are rarely right the first time. Think about using cheap mock–ups as experiments. Put these in front of banking customers and collect feedback. Test interactions, behaviours and fit, not just attitudes and first impressions.
Explore many ideas: Using cheap ways to create tangible expressions of ideas will allow banks to explore a range of different possibilities, and encourage playful discovery. Eliminate bad answers early, until the right solutions reveal themselves.
Get out of the innovation lab: Digital product designers have to immerse themselves and step into bank customers’ shoes, see their context and have conversations. Create digital solutions from an external perspective. Facilitate empathy–driven ideation by leaving the espresso machine, designer furniture and flipcharts behind and working with customers.
Build, test and iterate: Get feedback from customers on an ongoing basis. Build prototypes and test them with the people who will use the product. Validate solutions with customers throughout the product life cycle, instead of hiding in Bank Street, Bishopsgate, Canary Wharf or Cheapside. It is too risky and expensive to rely on clever marketing campaigns to achieve your customer acquisition and user adoption targets.


Almost all of the banks are launching consumer–facing digital solutions, trying to build accessible and usable digital propositions and provide or plan to provide an omni–channel experience. This is not good enough. Some banks try to differentiate through design innovation. But successful digital banking innovation goes over and above inventing new product ideas, designing a novel service, launching mobile or smartwatch apps, or configuring an existing product differently. In the future, successful banks will partner with their customers to discover new ways to unlock their needs and provide them with considered, caring and well–thought–through banking solutions across any segment, any platform and any device. The service should be personalised, relevant and high–quality digital banking that people will love to use.

Originally published on Lafferty News Innovation Watch on 12 June 2015. Innovation Watch is a weekly briefing on innovation in retail banking, cards, mobile and payments.

[Hero Image by Matthew Guay on Unsplash]

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