Putting cardholders in control with digital banking services

Jeff Parker, SVP and Managing Director, International at Marqeta

User interface (UI) has come a long way in the fintech space and an increasingly tech-savvy customer base coupled with rapidly evolving digital banking offerings means that individuals are no longer finding digital finance processes technical and hard to grasp. Improved user experience (UX) is central to this transformation, in fact, a lot of the growth of fintech and digital banking businesses in recent years can, at least partly, be attributed to consumers appreciating an increased focus on UX and UI.

In the digital age, providing good UX is essential for businesses operating in almost every services space, with the data being gathered from customer feedback and opinion shared online used to inform almost every parameter of the customer journey. In recent years, we’ve seen how word of mouth marketing techniques have been effective with the likes of Monzo, the UK online bank, which used a customer referral scheme to build hype around its product and engage potential users. Customer referral schemes have repeatedly been found to be an extremely effective marketing tactic, with research revealing that new customers who have joined through referral are 18% more loyal.

But these approaches will only ever work if the original customer base is happy with the existing product offering. Which is why there has never been more incentive for banks and fintechs to develop digital offerings with optimal UX.

Consumers Go Digital

Companies in all industries, but particularly banking, have moved well beyond taking something analog and digitising it. These companies are now focused on trying to build digital experiences for customers that are faster, more cost-effective, and feature-rich than ever before.

Many of the most successful fintechs in Europe are aiming to completely eradicate friction from the customer experience with an increasingly digital ‘self service’ UX – for example, when launching new card programmes – to ensure the most positive experience possible for card holders. This includes increasing the development and sophistication of services, such as  AI chatbots which are available all-day, 365 days a year to answer questions and meet customers’ needs more efficiently.

The latest iterations of chatbots are proving themselves to be increasingly effective for more than simply providing a smoother digital journey, with the on/off boarding of customers also benefiting from this approach. First impressions are lasting impressions, and a smoother, swifter onboarding process is no exception. Tracking onboarding data and understanding how long it takes to do everything from inputting an email address, or opening an app, is now an important part of optimising the experience for customers and ensuring a consistent, easy, ‘always on’ experience.

Improving UX in Big Banks

Consumer expectations in the financial services space are ever changing thanks largely to the speed of innovation and disruption brought about by fintechs. As a result, users are constantly demanding to do more and do it more conveniently via digital touchpoints that offer quicker responses and new functionality like bill splitting to pay for products or services, or the creation of ‘saving pots’.

The agility offered by fintechs when it comes to responding to new customer demands has meant that they can push boundaries when it comes to developing enhanced digital options. Again, we’ve seen this lead to increased customer demand for the same levels of speed and digital services from traditional banks. For instance, functionality enabling cards to be frozen in the event of loss or theft was something originally offered by fintechs, with the banks needing to quickly follow suit due to overwhelming consumer demand.

The challenge for traditional banks is managing increasing demand for their product while building out their UX on vast legacy infrastructures across multiple channels and products. Modern fintech companies tend to run on one, modern technology stack, whilst the bigger banks often sit on multiple stacks built over many years, making the efficient rollout of digital services harder and slower.

Other factors such as technical debt – the implied cost of additional rework that is caused by choosing an easy solution now, instead of using a better approach that would take longer – can also result in coding or design decisions that are sub-optimal, and will therefore require updating in the future.

The solution is new, digital technology

For banks, it’s about understanding that the need for rapid change to meet customer demand can outweigh the benefits gained from initiating time-consuming, resource-intensive cross channel tech transformation projects. And to do this requires support from external providers such as modern card issuing platforms that have been built to meet the demand for new digital services. This is where legacy financial services meets best of breed fintech to deliver maximum benefit for the customer.

Modern card issuing means delivering a customised and secure, digital-first payment experience for customers, regardless of size or scale of operation. For banks, this immediately opens the door to more innovative digital disruption such as customised credit options during a cost of living crisis, alternative payment offerings like Buy Now Pay Later, or even enabling crypto transactions.

This enables banks to better place themselves to overcome the challenges in front of them, and start to compete on a level playing field when it comes to UX. By providing more flexible financial instruments, banks can empower their existing customer base with a broader choice of payment options, as well as expanding their market to new customers who may have previously been excluded from accessing formal financial services. For example, this might have included individuals who were considered unprofitable, but might now be able to engage with digital services with lower fees (thanks to lower cost bases from digital distribution) and create more intuitive and easier-to-use services.

There is a huge potential for UX in the fintech space, and we are only just beginning to explore the huge benefits that can be achieved by UI & UX evolving in both banks and fintechs. UX is likely to continue developing at a rapid pace, which will benefit financial services, by providing increased access to valuable, real- time transaction data, as well as customers, who will have any unnecessary friction removed from their financial interactions. Financial services have an opportunity to truly embrace digital innovation to facilitate better customer experiences, reach new users and meet the public’s ever changing demands.