While offering new capabilities to help small businesses overcome critical challenges is key to their success, banking institutions shouldn't loose sight of the importance of user experience. In fact, while functionality is important, usability trumps functionality as a consideration when small business owners select new banking partners.
Defining user experience
What is user experience? The term is mostly used when referencing user interface design, or the “look” of a product or service. The less often talked about aspect of user experience is the “feel” of a product. It’s the combination of the design, usability, and feeling that encompass the user’s experience with a product.
Don Norman developed the term user experience and he illustrates user experience as follows:
“No product is an island. A product is more than the product. It is a cohesive, integrated set of experiences. Think through all of the stages of a product or service – from initial intentions through final reflections, from first usage to help, service, and maintenance. Make them all work together seamlessly.”
The user experience advantage for fintechs
When you read the quote above, you start to see where non-bank fintech providers have started to leverage user experience to their advantage.
According to McKinsey, the expanding role of design in creating an end to end customer experience is critical.
“Time was, a company (financial institution) could rely on a superior product’s features and functions to coast for a year or more before competitors could catch up. Or a well-honed service advantage (physical location of a branch) could single-handedly buffer a company from start-up challengers looking to nip at its heels. No more. As digitization drives more and faster disruptions—and as customers increasingly desire the immediacy, personalization, and convenience of dealing with digital-marketing leaders—the business landscape is undergoing an upheaval.”
Non-bank fintechs are leveraging the opportunity to create digital-only customer experiences as a wedge into the market. They solve a single pain point for a customer holistically, and then add new features and services over time to expand upon the initial offering. Over time they are disintermediating the customer from their banking relationship, training them on a new product line that does not require a physical branch.
The opportunity to partner for better results
What is not accounted for in the non-bank fintech model are two critical items:
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Not all customers want digital-only
- There are many fintechs that want to partner with financial institutions to offer best-in-class user experiences for both the digital and physical banking channels
When financial institutions are willing to partner with a fintech, they are able to complement their in-branch experience with a digital-first experience that creates a product expectation for the customer that cannot be duplicated by a non-bank fintech provider.
What type of user experience do small businesses expect
Small business owners are able to manage their account balances and transaction history in online banking, but when it comes to managing their business, it can be very fragmented. They're often using combinations of pen and paper, spreadsheets, online products, email, and text to stay on top of customer payments and financial record keeping.
According to an Aite report, 86% of small businesses state it would be beneficial or extremely beneficial to their business to have a single-entry login and user interface for all major aspects of their money management, including online banking, payments, electronic invoicing, and payroll. Portal experiences eliminate the need for multiple logins and provide customers with the consolidated experience and views they desire.
Small business owners see value in going to a single location to manage their finances and business back office.
The impact of offering great user experiences
Financial institutions that partner with fintech providers to offer better customer experiences will have an advantage over those that don’t. There is still a place in finance for physical and digital to cross over. Those that are able to bring both together as a single product offering will stand apart as offering a “cohesive set of integrated experiences” that truly define user experience.
Offering new capabilities to help small businesses overcome critical challenges is key to their success. While functionality is important, usability trumps functionality as a consideration when small business owners select new banking partners.
Explore the User Experience Advantage
Register now for the User Experience is More Than Design, as part of the Autobooks monthly webinar series. We'll dive into user experience, the complete definition, the advantage non-bank providers have in creating user experiences in a digital-only environment, and how financial institutions can leverage a more holistic approach to create a user experience advantage for small businesses.