Why tomorrow’s banking industry is being built by design

Designit CEO and founder Mikal Hallstrup looks at how the banking industry is being shaken up from within and by new competitors as banks look to satisfy the appetite of young consumer’s for simple digital baking solutions that suit their lifestyle.

Digital disruption is changing business models across every industry. But the real disruption is not just about technology, but in people’s expectations to products and services and how well they fit into our lives. From grocery shopping to banking, consumers expect new experiences when purchasing goods and managing their finances – even in the relationships they have with their banks.

Millennials in particular are one audience that have changed the ways banks provide financial services to customers. Making up a quarter of the UK population, millennials want to bank on mobile with speed and ease. This no surprise as they are the generation that grew up using mobiles and who demand the immediacy and the cool factor of social media like SnapChat and Instagram. Millennials’ digital expectations are changing dramatically and financial institutions must tailor their experiences to this hyper-connected, tech-savvy generation.

To be able to really tap into the new ways in which audiences, especially millennials, want to use banking services, it is essential for banks of all sizes to build services that are simple, user-friendly and more natural to use. And essentially shift their mindset to transform tech-shaped banking into human-shaped banking.

Design is more than pixels, UX and screens

In the past when mobile and millennials were new words, a lot of banks tried to squeeze a whole suite of services into a single app. Since then the financial industry has come a long way. Banks have learnt to tailor-make products and services for a mobile context. Banks have also embraced new ways of working, e.g. ‘design sprints’ which is a fast way of developing, testing, and eventually bringing true mobile experiences into the hands of their customers. This new way of working is about building internal design capabilities.

Making new things and getting them to market is no longer a question of years, but months. We have seen a number of banks begin to acknowledge this and include a design-led approach to building new services. Many large retail banks have already set up in-house design teams that work on research and development to create online services for customers. NatWest is one bank that has launched a digital studio to redesign its online banking services. The bank has 80 designers, analysts, and software engineers, working to re-launch the bank’s browser and mobile platforms.

With increasing design awareness, banks are beginning to realise that the old way of working is no longer relevant, and that the mobile experiences they offer must adapt to their customer needs. Mobile banking experiences can’t be developed by bankers on spreadsheets, but with design strategists in a co-creation process that includes the end user.

The future is human-shaped – so is the future of banking

Applying human-centric design processes has been best practice for years and while it has become common, it is no longer enough. Banks need to raise the bar with even more emphasis on human needs. The future success criteria means a shift from “human-centric processes” to “human-shaped outcomes”. There is no market for complicated in the future.

To be relevant to today’s discerning customers, banks need to make design a cornerstone in their strategy. This past year, Bank Leumi, one of the two largest banks in Israel, successfully launched Pepper. It is Israel’s first 100% digital bank, with no brick and mortar branches. With Pepper, Bank Leumi has radically redefined banking with design. Pepper provides all banking services through mobile which are all accessible at any time. Customers can do everything from their device with a few clicks, no paperwork needed. Further challenging traditional banking models, Pepper’s mobile-centric offering includes GIFs, videos and interactive AI features that study customer behaviour and customise content and banking services for the individual, not the masses. Pepper gives customers a fresh perspective on their money and future financial decisions that is modern, relevant, and personalised.

The future of banking is design

As the future of banking changes, it will no longer be enough for banking applications to be built solely by bankers with bank customers in mind. The teams that create the future of banking will be hybrid teams with a mix of skills. Building an application with designers may be a first for many banks, however with the right investment and team of people, banks can build services that customers actually want. Banks are already applying technologies like AI in customer care and the big challenge will be to shape these new products.

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