Digital technology disrupts the financial industry and all bank branches could be closed by 2034. Digital disruption focuses on customer expectations and behavior, which is a game changer. We see global banking digital transformation, but it is not always customer-friendly. Why? We believe it's because of a lack of an Experience mindset.

Disruption of the industry requires rapid banking digital transformation

Current trends suggest that all bank branches in US could be closed by 2034, according to "The Death Of The Banks" study. So, the digital transformation in banking has become the number one priority. The digital age has had a drastic impact on the service and product consumption behavior in the financial industry. Consumers get used to well-designed products and services from technology companies, and they’ve become more and more selective about what they choose to use. Their expectations are growing, and they compare banking services against the user experience provided by well-established technology companies. You have most likely heard the phrase, “This sucks... when will Apple or Google disrupt this?”

Customers actively consume digital banking services from both traditional banks and Fintech startups. Competition in the industry is growing at a rapid pace as customers are receiving more and more opportunities and offers every day. The digital technology experience disrupts the banking industry. Consumers are no longer loyal to only one bank, often switching from one bank to another. Many even use several financial services simultaneously, especially via mobile applications.

Million-dollar marketing and advertising budgets don’t even help traditional banks. Consumers ignore advertising, so its effectiveness is reduced. Even using digital promotions through social networks, video services, blogs, etc., does not always achieve the desired results. At the same time, some young and ambitious teams gain tremendous traction through the creation of financial services without such resources as traditional players.

For example, the mobile wallet, Revolut, with almost no marketing budget in three years, secured 2 million users in Europe. And the online transfer service, Transferwise, moves more than 2 billion pounds every month on a global basis. The number of similar financial services is growing and will continue to increase thanks to the legislation of open banking.

Successful banking digital transformation strategy depends on the mindset switch

It looks like successful neobanks have some kind of “special sauce” or secret technology. In our opinion, they have only one main advantage, which is obvious — the mindset of their founders and team that determines their approach to business, the culture of the organization, principles of product design and customer service. It’s just more relevant to the digital world in comparison with the traditional banking players and helps to find right solutions intuitively.

Thanks to technology, the world is rapidly changing and we are witnessing disruptive digital transformation in the banking industry. Thus, in the banking sector, like any other, only those who are able to accept these changes and integrate them will rise to the top. But, we are not talking about simply the implementation of innovative technologies. Modern technology, the best specialists and trending design tools will not help a business that ignores, and does not understand the rules of the digital world.

In the digital world, success is achieved not by creating a selling package for a product, but by turning the product into a value that sells itself.

If you want to ensure your organization's success in the future, then it's time to change. A sharp focus on your customers’ requirements and desires is critical. It is their needs, perception and experience that play a key role in the digital economy. Don’t try to manipulate them; instead, you must cultivate an empathy for them. Be useful to your customers, and they will provide an unexpected power for the growth of your business.

The customers of today expect a more ethical, responsible and honest attitude from their financial institution, as well as attention to their needs. Only such an attitude can ensure long-term success in conditions of digital transparency, total socialization, globalization, the disappearance of intermediaries, low market barriers, high competition and changes in consumer values. This type of thinking differs from the usual mindset of consumers as a resource used for business development. We call it the “Experience mindset.”

As a company that designs financial services on the principles of an Experience mindset, UXDA receives a lot of questions from financial experts. Successful digital transformation requires a deep understanding of the processes associated with user experience, design, and a customer-centered mindset. But why some companies that perform digitization in banking and declare own customer-centricity, or even implement UX methods nevertheless suffer defeat in the market?

We've found that it's not enough of statements, you need the right mindset fundamentals that impact organization culture, strategy and priorities. Instead of outdated Marketing mindset which is focused only on sale, we should implement Experience mindset which is focused on creating value for customers. This is the only way to survive in the age of digital disruption and make longterm profit.

Check out my blog about financial and banking UX design >>