. Part 0: The Future of Customer Experience in Retail Banking: Wearables, App Stores, Biometrics, & Cryptocurrencies
In the final chapter of this series we ll look at some of the most striking technological developments which will shape the future of user experience in retail banking. Wearables, app stores, biometrics, and cryptocurrencies present mind-blowing possibilities Wearables have found a home in personal fitness, but their other most obvious outlet is in banking and payments, where they could represent a far more practical payment solution than the smartphone. The smartwatch is particularly amenable to simple functions such as push notifications, authentication of payment services, balance Banks appear to have recognised the potential of wearables and need to frame this demand with actual solutions sooner rather than later. The fact that mainstream banks are thinking in terms of a year roadmap to get wearable apps to market emphasises their inability to respond to technological trends; the new set of digital only banks on the other hand will be able and also challenging obstacles for a updates and contactless payments. to frame requirements and go to market in bank s digital strategists. months rather than years. Rapidly emerging technologies such as wearables will increase the diversity of endpoints and introduce new UX design parameters which the financial sector s developers and designers must cater for. In addition, the days when banks crammed a whole host of services into a single app seem to be over, with the continuing emergence of banking app stores which will be particularly applicable to banks with API platforms or a rich product catalogue. Banks will be further tested in terms of how they absorb and accommodate technological developments such as the blockchain distributed ledger which appears to demand a place at the core of the financial business model, and it ll be interesting to see how they incorporate recent advancements in mobile biometrics. Wearables Econsultancy s A Marketer s Guide to Wearable Technology states that wearables are the most disruptive technological development since the smartphone. The latest research by Juniper Intelligence supports this claim, predicting that 10 million banking customers will access their bank accounts via smartwatch by 2017, rising to 100 million in 2020. 1 According to the financial services software company, Misys, 72% of banks say that wearables are on their roadmap in the next years, and 52% have a wearable app planned in the next 18 months. 2 1 https://www.juniperresearch.com/press/press-releases/banking-apps-accessed-via-smartwatches-to-exceed-1 2 http://pages.misys.com/rs/111-mbw-889/images/misys_samsung%20-%20wearables%20in%20banking_infographic.pdf http://www.gartner.com/newsroom/id/2758617 App Stores Gartner predict 2016 to be the year when 25% of the world s top 50 banks will have mobile app stores, which means that the development challenges for Tier 1 banks are unprecedented. Banks will seek to cater for their retail, commercial and investment arms by placing apps in one single store in order to help promote a core of services. It s easy to think of a banking app store as adding unnecessary fragmentation to a simple service but maybe this is missing the wider picture. If a bank simply broke your current banking app into smaller pieces and deployed the same service on different apps, it s true that this would generally degrade the UX; but the objective of the app store is much more about the atomisation of apps and services whereby your bank can come to you at key moments such as online purchasing. This alternative approach to service distribution seeks to retain brand identity whilst reaching users across third party platforms. If a bank can control the APIs and develop the apps which utilise them, they could capture opportunities lower down the payments chain and come out with a net gain. However if they re slow to capitalise or wait for the competition to move first, their revenues may be seriously eroded. The idea of an app store brings back elements of security and control as excess development begins to run wild. If a bank plans to introduce an API platform or has more than fifteen apps in constant operation the app store will become something of a necessity. 2
Biometrics UX is an increasingly complicated business in the world of banking due to the heightened security needs and login demands which need to be integrated into the user interface. Security by its very nature is inconvenient, often resulting in password fatigue or the need for additional hard tokens and one time passwords. An elegant biometric solution could potentially help to authenticate clients with minimal user interfacing. Mobile biometric identification is a technology which banks can and should pioneer. A mixture of behavioral and physical biometrics could be the key to smooth and secure authentication, and whichever bank is first to market with a streamlined solution could stand to gain a lot of industry credibility. The biometric solutions of the future will be looking to take advantage of a combination of smartphone capabilities in the form of front facing cameras, fingerprint scanners, GPS and accelerometers, continuously monitoring user behaviour to validate identity. Cryptocurrencies Cryptocurrencies seem like an apt way to conclude this series as they epitomise the fine lines between opportunity and threat which technology presents to the banking sector. Bitcoin, or more specifically, the blockchain distributed ledger, represents a technological breakthrough which banks will find hard to ignore. Bitcoin is a classic peer-to-peer (P2P) exchange network of the type which has gone a long way to making other traditional services far less viable than they were 5 years ago. To emphasise how much banks should fear the P2P marketplace, consider the impact Airbnb and Uber had on the accomodation and taxi industries respectively. Individual cryptocurrencies clearly have a long way to go before they threaten to disrupt the banking sector in any meaningful way, but banks which recognise the opportunities of the blockchain ledger and choose to offer their own digital currency exchange could steal a large chunk of new clients. Bank of Tokyo-Mitsubishi UFJ (MUFG) has recently released its own digital currency; our own central bank, the Bank of England, has made statements about the potential to produce a digital currency; UBS have a specific team dedicated to blockchain known as Crypto 2.0 ; and most of the big retail banks including Barclays are particularly vocal on the subject. The jury is still out on the ultimate potential of Bitcoin, but the blockchain distributed ledger is here to stay and banks of all varieties can t afford to act blindly in the face of such ground breaking technology. 4
Final Thoughts 2016 represents a year when traditional banks need to leverage their increasingly narrow advantage by producing cutting edge digital strategies which can utilise rich repositories of customer data. It s imperative then for established banks to find ways of constructing the best digital customer experience, achieved using a core system responsive to the scale of continuous development required for ongoing digital diversification. Challenger banks will be the motor driving enhanced digital experience in banking, and UX based digital agencies will be one the key enablers. Capital One s acquisition of Adaptive Path, and BBVA s purchase of the marketing and design consultancy known as Spring Studios, illustrates the pivotal role creative agencies will play as the financial sector immerses itself in the experience economy. 6
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