Disruption in Financial Services

by Andrew Japp on 12 November 2015

We recently presented at the Equiniti Share Registration Conference around our thoughts regarding digital disruption in the Financial Services industry. Check out Andrew's summary of what he presented to attendees on the day.

Financial services is an industry in turmoil, and that looks to become the norm. Many of the large, traditional players are looking to innovate, but that's easier said than done. What direction do you take your business in, and how do you figure out what to focus on? Amidst this chaos, a new focus on user-centred or UX design has emerged, but it remains a bit of a nebulous concept to many. So what is it all about?

A quick fix like moving your services to mobile for the sake of it isn’t likely to solve everyone’s problems.

What is UX/user-centred design?

Webcredible is a UX design agency, but what does that really entail? UX as a term has become increasingly popular, but it's often poorly understood.

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Sometimes these definitions become unnecessarily complicated. You'd probably leave the room more confused than ever if someone tried to use the above diagram to explain it to you.

We see User Experience as simply the overlap between three areas: business goals, technical capabilities, and user needs.

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Innovative design caters to all three areas, and brings users a great experience while still accomplishing company goals.

Our company philosophy see this as the ultimate goal, and there are a few key processes required to accomplish this:

  1. Investigate – conduct research regarding business objectives and customer goals.
  2. Formulate – based on the above, create a digital strategy.
  3. Accelerate – design digital products based on the above, real insight. We aim to do this quickly and collaboratively.
  4. Evaluate – test, test, and test again to ensure the digital product meets customer requirements, keeping long-term costs under control.
  5. Cultivate – across the whole process, it's important to foster a user-centred design culture in the organisation through training and sharing knowledge. We strive to do this to help our clients and to develop a cost-effective way of working.

So what do customers want in finance?

As with any other industry, we always encourage financial services businesses to look into their customers motivations. Unfortunately, that advice is often misconstrued into hopping on the latest trend, e.g. mobile. I would see this as missing the point: the channel is not the most important decision, and should only come once you've actually identified your customers' requirements.

In truth, a quick fix like moving things to mobile for the sake of it isn't likely to solve everyone's problems. Finance is one of the biggest laggards when it comes to innovation, due to a variety of reasons including expensive legacy systems, compliance, and regulatory issues, all of which also scare away potential competitors in the traditional market.

You're probably wondering: if that's the case, why hasn't it been 'disrupted' yet? It's true, finance hasn't had its so-called Uber moment yet, but that's probably because it's significantly more complicated than a taxi service.

Nevertheless, incremental innovation is widespread, across the many different subsectors:

  • Payments has seen initiatives like PayM to standardise mobile payments, and services like Apple Pay, Paypal, and Zapp have seen non-traditional players enter the market
  • Funding has been dramatically altered through crowd funding services like Kickstarter and CrowdCube
  • Banking has seen new digital-focused entrants such as Mondo, Atom Bank and Fidor
  • Loans have also seen change through peer-to-peer lending services such as RateSetter and Zopa, and services such as Mogo offer new lower rates.
  • Investment has become more personal with Nutmeg and Betterment
  • Insurance has seen innovation through firms such as Guevara, offering peer-to-peer car insurance
  • Shares have seen new online services enter the market, such as Kapitall, making for an easier investment experience for individuals

Each of these businesses is looking at traditional services in a new way, but most importantly they all have one thing in common: they all encourage creativity and collaboration, and pair this with meaningful customer research. Given their size and scale, they face less fear of failing and are able to try new ideas. While financial services isn't facing a single Uber moment, it is experiencing dynamic innovation and disruptions in each of its subsectors; a death (or perhaps rebirth) by a thousand cuts.

Case study: ARC Insider trading platform

Small innovations in mobile are happening that can even benefit the Company secretary, particularly around insider management. Arc is a simple tool supporting complex processes to achieve compliance and manage insiders. It provides help to those on 'the insider list' to remember close periods through regular communications and, of course, keep track of every transaction. In a global market, the company secretary or approved colleagues can request clearance, and approve from anywhere in the world.

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Innovative design tips

To finish up, I wanted to share five tips with you to help enable innovation, whether that's on a mobile, watch, glasses, tie, hat, or any other wearable item:

  • Recognise that there are different types of innovation – you don't have to build the next iPhone or best-selling mobile app. Small 'quality of life' advancements that lead to improvements in consumer experience are important as well.
  • Create spaces that encourage creativity and collaboration – the right environment is important. This doesn't just mean getting some colourful new furniture in your office to imitate Google's HQ, but also engendering a culture encouraging new ideas and collaboration. As an example, no one has a desk in our offices, but instead we all move around to get to know each other, share ideas, and collaborate effectively.
  • Get very close to your customers – this means conducting meaningful contextual research that will help you develop empathy and understanding. A survey is not going to cut it!
  • Build the right team and make it cross-functional and cross-departmental – segmenting a few special people into an 'innovation lab' is not as effective as getting people with different experiences together in a collective effort.
  • Find ways to prototype innovative products and fail fast and be brave – this should already be happening before you start hitting key milestones.
If you enjoyed the above, why not check out some of our case studies, where we detail how we've helped companies improve their user experiences?

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