Legacy banks have traditionally held the position of power but, shackled by the constraints of their own legacy issues, their efforts to withstand the tremors of disruption are starting to fall short.
This shift in the financial landscape has given rise to a new breed of banking experience that answers the demands of savvy and time-poor customers who are crying out for a transparent, accessible and user-centric journey. A survey by Altus Consulting revealed that more than half of 25-34 year olds who were comfortable using online services, were happy to share data; an indication that heightened accessibility and convenience are indeed an attractive trade-off.
With almost half of Revolut’s customers falling into the 25-35 age bracket, it seems there is some truth in the perception that traditional banks are no longer meeting the needs of younger, tech-savvy generations.
And so, weighed down by sluggish, inefficient systems that are riddled with complexity, and offerings that are irrelevant to upcoming generations, the major banks are in real danger of losing their position of advantage if they don’t respond to the disruption.
Clustered together – in spite of their diverse offerings and different market dynamics they face – Monzo, Starling, Revolut and Metro are just some of the challenger banks that have emerged on the retail banking scene, driving innovation, increasing the competitive spirit and, ultimately, improving customer choice and service levels.
While the credibility hurdle may have stopped some challengers in their tracks, disruptors like Monzo are leaping ahead as they quickly gain a reputation for exceptional customer service, delightful design features and a usable product. So, what’s their secret ingredient? How can other emerging challenger banks achieve a brand and design that will likewise thrive in tomorrow’s banking scene?
What Monzo did…
When Hugo Cornejo initially moved from Madrid to London, he witnessed first-hand just how broken the banks were in the UK: despite ticking all the boxes and claiming they could open an account ‘while you wait’, he had been informed by a well known high street bank that he couldn’t get a current account. He wasn’t trusted as a new customer. This negative experience was front of mind when he joined the team at Monzo, and so the goal to be recognised as being on the customers’ side took centre stage.
From day one, the Monzo team set out to listen to and speak with potential customers. What became clear was that banking customers fall on one of two ends of the spectrum: there are those who love a spreadsheet and will regularly sift through their own data, and there are those who have little or no comprehension of where their money is. Clearly, these two groups approach the issue of money in very different ways – which proved a real challenge for the Monzo design team.
Sweating the small stuff however proved to be a winning formula, and the small design decisions equated to a more delightful and sticky product. For instance, developing design language elements in detail – such as how to display the numbers in a transaction – may seem insignificant, but successful decisions around these details have come to set the standard for many other financial products.
They had some fun, too. Historically, banks have been somewhat void of any sense of charisma, but the challenger banks are quickly showcasing how a little personality can indeed go a long way. Monzo’s sense of fun is revealed through its use of relevant emojis on push notifications for retail store transactions – much loved by their users.
Taking it one step further, when Monzo decided to ramp up its brand following rapid growth, playfulness was brought into the on-boarding experience: while new users waited for their sign in email to hit their inbox, an animated character appeared saying ‘on my way!’ This helped to align every touch point with their customer to their overall brand mission of building a new kind of bank.
Even the use of a hot coral colour for the cards has fed into the personality element: it’s a conversation starter, and immediately marks out the company as playful and ‘not just another bank’.
These examples of Monzo’s approach provide interesting food for thought for banks of the future, who’d do well to remember that it’s less about personality per se, it’s actually more about demonstrating you understand your customers as people - people who have financial needs and lives that are intertwined.
By a bank appearing to understand ‘people’ and having a brand that customers feel they’re able to relate to, they’re able to occupy a particular presence in our lives. They shouldn’t feel like a necessary evil, rather a service that compliments how we live our lives - much like a service as approachable as Amazon, Netflix or Nest.
The human touch
Playfulness isn’t a characteristic that’s synonymous with financial institutions, but challengers like Monzo have made some important moves in this respect, and both the traditional and wannabe-banks of the future should take note.
Powering up efforts to become more human, the challengers are connecting directly with customers in a natural way. And it’s this warm customer support approach that’s appealing to today’s customers.
There’s genuine transparency and a distinct lack of complexity in the language they use: it’s fast, it’s coherent, and it’s engaging. Customers are no longer treated in a transactional way.
Scour the twitter feeds of Monzo and some of its peers, and you’ll discover real conversations, for example, where customers have been let down by technical difficulties. But because the support is so on-point – and being in the public domain it’s super transparent – the customer no longer feels let down: they’ve been heard, they’ve been taken seriously, and they haven’t been fobbed off by starchy automatic messaging.
The challengers’ personalities aren’t restricted to digital touchpoints either: they aren’t afraid to step outside of their comfort zones and get up close and personal with the community.
Monzo, for example, has held a number of community events around the UK, allowing customers to see the people behind the app. According to Hugo, in-person events like this are advantageous in that they highlight any biases in their community before the data can. If Monzo wasn’t attracting a diverse user base, they could identify this quickly and act on it.
Showing customers that they are more than just a number, more than just a transaction, has been an important ingredient in what is fast becoming a winning recipe for challenger banks. From straightforward conversations and transparent community forums to face-to-face interactions and personalised customer support, there’s an opportunity to not only reiterate your brand tone to the customer, but also – and most importantly – to really listen to them.
In the case of Monzo, community members are so empowered that sometimes their suggestions are incorporated into the product – you only have to think of the ‘drunk mode’ which freezes your card at certain times.
Making advantages out of disadvantages
It’s true to say that the new banks on the block don’t have the same luxury of time that the traditional banks had to deliberate over long build times, working up to that big reveal. But rather than let this push them down, they instead leverage their speed, agility and creativity, to turn this disadvantage into an advantage.
Having a lack of time has forced challengers to build and iterate with their users. Consequently, the features they build into the product are more customer-centric. And some of the traditional banks may be left feeling that time has actually become the albatross around their neck.
But the game’s not over yet, as the plucky agile players haven’t all got this down to a tee just yet and there’s work to be done on honing the process – as clearly demonstrated by Revolut’s recent lockdown of accounts. This latest eruption could however be the nudge that’s needed for traditional and emerging banks alike to innovate around KYC checks – with AI, machine learning and other emerging technologies at fingertip distance, there’s opportunity to create a much more seamless experience for the customer.
Ultimately, customers want to be able to trust their banks - access to your money is one of the key services you physically couldn't live without. Trust in traditional banks is probably at its lowest ever, with the general attitude being one of distrust and an overriding feeling that these established financial institutions are ‘out to make money off me’ - so when things go wrong, we are are unlikely to tolerate it. However, newer propositions and brand characteristics that align with us as people results in greater trust and greater tolerance, shifting the expectation.
Ingredients for success
With so many different use cases to satisfy, there’s no single recipe for success when it comes to building a bank of the future. However, based on the achievements of some of today’s stand-out challengers, it seems there are some essential ingredients that existing and emerging banks should stock up on, including:
Frictionless experience – cut through the complexities and take the pinch points out of the customer journey
Speed and agility – time is of the essence. Don’t take a ‘build it and they’ll come’ attitude, they’re already here, so build it together, and be prepared to change direction with each shift in customer behaviour
Customer-centric culture – it’s not just about delivering the right experience: listen to them and wow them.
Being human – customers respond positively to warmth and an ‘open-arms’ approach.
Personality and humour – have some fun: a little personality can go a long way, and can easily be worked into every nook and cranny of your product
Transparency – not just a mantra anymore, the approach to transparency could well define the bank of the future
Low fee models – in keeping with the customer first approach, lean set-ups and lower cost structures means lower fees to the customer
Attention to detail and design elegance – sweating the small stuff can make for a more delightful and sticky product