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Why banking’s ‘omnichannel’ dreams haven’t become reality

For years banks have been talking a lot about executing an “omnichannel strategy,” which is supposed to help them learn more about their customers by giving them a greater view into their needs and behavior through more channels – the mobile device, the tablet, the computer. But that dream hasn’t yet become a reality.

The reasons, as usual, are in the mundane details — and in the difficulties in executing sensible strategies within large, hidebound organizations while keeping up with new complexities that inevitably arise from tech advances.

For instance, an omnichannel strategy requires banks to be able to integrate each of the channels into a single, quality experience. But most haven’t gotten there. According to a report this week by researcher and consultancy Celent, half of the 112 institutions it surveyed haven’t even begun “substantive” efforts on their omnichannel delivery and just one in 10 institutions is actually executing a strategy.

“There’s a huge disconnect,” said Bob Meara, senior analyst at Celent. “Everyone agrees omnichannel is important but they haven’t actively executed.”

One reason is that artificial intelligence is driving a proliferation of new channels – like Alexa or connected cars – that make it impossible to build experiences for individual channels well and in a scalable way. So while many banks still struggle to perfect their mobile strategy, the ones that are nailing the “omnichannel” idea are now having to move along pretty quickly anyway as new technologies and therefore, new experiences, emerge, said Meriah Garrett, chief design officer at USAA.

“Our members just expect us to be there wherever they are,” she said. “That’s not always in this pure mechanism of traditional channels as we once thought of them – mobile, web, voice, physical. Those things are blurring together at such a fast rate.”

To keep up with the constant change, banks need to implement AI into their interactions and services, and that’s how the “channels” expand beyond what people traditionally consider a channel to experiences like a Facebook Messenger conversation or a mortgage profile in Zillow.

“It becomes less and less about any individual’s channel and more about different distributions of experiences that aren’t necessarily owned properties anymore — that’s the part we as an industry have not even reached yet.”

Most financial institutions have invested a significant amount on the front end of their banking portals – the parts that interact with customers. Some might say they’ve over-invested in that experiences when they should be pouring more into the middle- and back-end – the areas that actually connect with other experiences, other parts of the business and improve seemingly boring efficiencies that actually make a world of difference to the customer.

For example, getting approval on a personal loan has traditionally been about a 72-hour process – unheard of for customers living in an on-demand world where you can get a car at the tap of a button. That kind of thinking is what makes digital lending startups like Prosper, Avant or Kabbage so attractive when they advertise decisions in minutes. If banks invested more in this stage of the experience, customers wouldn’t just be happier, they would probably engage more consistently.

It’s how Amazon rose to dominate retail. Jeffrey Brown, global banking and financial services leader at consulting firm Genpact, uses Amazon as an example when advising his bank clients, he said.

“You want to create Amazon Prime in your banking experience for your customers,” he said. “You wouldn’t use Amazon if it took 10 days to turn around a delivery. You get the Best Buy experience when you do your banking.”

Using mobile or online banking as a reference for account balances and activity is more common than ever. But actually executing on more complex things like credit applications is still a sticky spot for banks and their customers. The user interface of complex activity may be enjoyable, but the parts of the experience that follow need to meet the same standard to keep customer satisfaction levels high.

“Just like they shifted from retailers and other people who couldn’t get them the goods they wanted quick enough and thats why amazon took share.

“Being able to actually deliver, execute or fund is going to move market share over the next 12-24 months, Brown said. “People want speed. They shifted from retailers and other people who couldn’t get them the goods they wanted quickly enough and thats why Amazon took share.”

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Inside USAA’s new 120-person Austin design studio

Finance giant USAA is amping up its customer experience focus with a new design studio in Austin to house the 120 people it has focused on improving digital experiences.  The goal is to make financial planning, applying for a mortgage or choosing insurance coverage as easy as ordering up an Uber or buying something off Amazon.

“It’s time to turn up the discipline, the capacity, the way we partner and do the actual work,” said Meriah Garrett, the bank’s chief design officer. “A big part of that is hiring. The Austin market is to really able to scale up at pace… there’s a tremendous local talent pool.”

Among U.S. banks, USAA has a reputation for innovation. It was one of the first banks to get into mobile check deposit and online banking, for instance. It chose to locate its design operations in Austin, a tech hotbed, versus its home base in sleepy San Antonio.

The studio looks like a modern office, but with a lot of collaboration spaces. There are no office cubes, but a lot of stand desks. 

“Designers are a little bit obsessed with vertical working space and being able to ‘externalize,’” Garrett said, whether it comes in the form of work sketches, Post-Its scribbled with research quotes and findings, or marking up work in red pen.

In banking, the focus on design and customers’ digital experiences came recently, with the rise of financial technology and the growth of the mobile channel. Many banks have invested more heavily in design in the last two years – take Chase, which opened new Manhattan headquarters for its digital team almost a year ago – but it can take years to see a real impact, Garrett said.

The reality of user experience design is businesses and executives don’t experience the brand the way customers do and as a result, all this work around customer experience falls short. For example, people in finance treat finance like it’s a well known entity, Garrett said. They know it’s been around for years an years, understand the vehicles, mechanisms and why to choose one account over another.

“In reality, most people are operating their regular lives and finance happens to be a part of it,” she said. “One of the things that has really struck me is how much people are missing the 101. That is a tremendous weight for design practice at USAA, an opportunity to change conversation and emotion we all have about money.”

To drive that conversation, USAA is using new technologies and different types of artificial intelligence, but Garrett said making sure it’s the right conversation often comes down to the designers and team members themselves – the humans behind the products.

The bank doesn’t have a universal measurement for impact, Garrett said, and that’s something that’s challenging the whole industry. She sees it as an opportunity to really identify or detail a given customer experience in a way that gives insight and understanding to the designers. She also said she tries to avoid hard measures like numbers or clicks.

“You have to do detailed visibility testing but also understand emotions that bring someone to an experience. If it’s an in-and-out transaction, like trying to make sure you get your bill pay right, it’s all about speed and clarity,” she said.

Appropriateness is the key design principle.

“It comes down to how you apply things appropriately… That drives me to why we have to have really good people. What keeps me up right now is hiring – hiring quality and pace and making sure we grow the right talent at USAA in order to be able to fulfill on this vision.”

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Inside Regions Bank’s new digital UX

Regions Bank, the bank arm of Regions Financial Corporation, has UX on its mind. Having revamped its online and digital user experiences in Fall 2016, the bank has a clear vision of what the ideal UX should be and do. Andy Hernandez, Regions’ head of eBusiness services, and Matt Brunsman, user experience & design svp for Regions eBusiness, gave Tradestreaming an inside view into the bank’s UX guidelines.

Trends

The bank sees a number of trends setting the course of its UX trajectory, such as simply listening to the customer, or the use of AI to anticipate the customer’s needs. However, the central driving force of Regions Bank’s digital playbook is the need for consistency and integration throughout all of the bank’s channels.

According to Hernandez, this is something they bank has pursued across the spectrum, “from updating our content management systems to shifting our development model to one that is agile – and from working within silos to shifting to a needs-based architecture that better reflects what is most essential to our customers.”

The perfect digital banking experience

Regions wants its UX to inspire trust. Data from the Millennial Disruption Index suggests that this is easier said than done. However, the bank has some tried and true strategies for cultivating trust, including solving a problem before it takes place or meeting the financial needs customers didn’t know they had. “You establish trust by being proactive rather than reactive,” Hernandez explained.

The perfect digital banking experience has implications for the bank as well — if its customers are making more money, the bank is too.

Keeping employees onboard is critical

The robot uprising may be just around the corner, but until then, Regions Bank relies on human employees to keep the UX on track. Hernandez cites the bank’s move from waterfall to agile web development model as transformative, with employees eager and excited about the new model. The bank has also shifted some forward-thinking employees to focus on innovation, which helps the bank stay ahead of the UX game, instead of scrambling to catch up with existing trends.

Another important component of Regions Bank’s approach to bring the best out of its employees comes down to a shared workspace: “The front-end developers sit next to our back-end operations team in the same room on our agile teams, and that co-development and shared goals are a very powerful and successful combination,” explained Brunsman.

Challenges

Of course, there are hurdles on the road to UX paradise, of which one is choice. In a world populated with an ever-increasing amount of shiny new fintechs, deciding which technology and approaches will be most beneficial to customers takes time. As one of the largest financial institutions in the U.S., Regions can’t decide to make changes simply on a whim.

And though customers may be getting increasingly vocal about what they need and want, these needs and wants don’t always gel with with the bank’s needs. “So we always have to weigh business needs and customer needs together in any equation,” said Hernandez.