Scott Ewings, Big Radical

Scott Ewings

New regulation in the form of the updated Payment Services Directive (PSD2) means we are on the cusp of a seismic power shift in the financial services sector which is putting the customer firmly in the driving seat.

Compounded by a large dose of digital empowerment, it’s no surprise that today’s customers come with higher expectations of a more innovative value-driven service exchange. Accordingly, all players in the market, be it brokers, banks or insurers will have to work harder not only to secure their loyalty and retention but to capture their attention in the first place.

Increasingly mobile personal finance tools become a weapon of choice to meet the ‘anywhere, anytime’ service expectations. In the investment sphere, for example, apps that enable you to trade from your smartphone with the same ease as ordering a take-away is one bandwagon filling up fast – and with good reason.

Yet with many companies offering comparable technology and functionality, attention turns to the nuances and intent of the user design that can become a core differentiator in a crowded marketplace.

While, traditionally, finance and design may not seem to be natural bedfellows, today it is the collision of these worlds which is transforming the delivery and consumption of financial services.

It’s an alignment no better exemplified than by the new breed of Fintech start-ups whose genesis is rooted in combining financial and design expertise from the outset –  think East London-based Monzo, which puts banking entirely on the smartphone and has stolen a march on the traditional institutions by focusing on solving problems rather than selling financial products. Here, an inclusive approach to design sees constant feedback from communities who are testing the apps and informing the creation of new features so that design becomes a collective experience based on real user experience and challenges.

Inevitably the more established incumbents are playing catch up, with success hinging on how well they can bridge the gap between their more conservative and regulatory culture and the creative and agile design world geared to user expectations.

This sea-change is demanding a shift in ethos from technology-led to design-led products, in which the digital user experience permeates the process rather than being shoehorned in as a box-ticking afterthought.

More personalised products become ever more critical to pique the interest of the time-poor but digitally savvy customers. More relevant and contextual content is needed, along with features that can also provide a deeper insight on customer behaviours, helping companies to derive actionable intelligence.

Only through this approach can we create more meaningful products that offer substance beyond the technological hype.  We see this brought to life in the battle to better engage the millennial generation, a demographic typically turned off by brokerage services.

It’s a challenge which demands a rethink beyond the enticement of lower entry fees if their inherent scepticism towards the financial sector is to be tackled. Toxic associations from the legacy of the 2008 financial crisis still cast a shadow for this group who, when it comes to hedge funds, are more likely to see corruption than opportunity. Tackling this image problem means establishing more trust, integrity and a sense of purpose.

For too long many institutions have paid lip service to this with brand values that spout platitudes of customer-centric service and transparency, sentiments which are all too easily lost in translation when it comes to the realities of service delivery.

Instead, financial products must start by cutting through the complexity and jargon and make education around investment more illuminating while minimising the technical details. Many of the mobile investment apps on the market are aimed at those who already have some investment knowledge but many young people come to this arena with a complete knowledge gap.

Social features which drive the more collaborative approach to investment better align with the under 34s preference for collective decision-making, advice and feedback. For this market, financial advice is no longer confined to dealing with a single individual expert, perceived as costly and perhaps difficult to relate to. Instead peers, the pub, research and parents all factor in their motivations and decisions, meaning that features in finance tools which drive connections with wider, like-minded communities for feedback and advice become another way of tailoring these services.

Furthermore, alerting them to the best rates of return will no longer cut it; this generation comes with different considerations, notably a greater focus on the ethics and credentials of the companies they choose to deal with. For many, whether to invest at all can only be justified by altruistic payoff so that the question of ‘what are you investing for?’, which taps into a wider goal, needs to be central to the offering.

Features that drive socially responsible investment decisions to capitalise on this intent will come into play, such as offering a sliding scale of ethical organisations based on set criteria and sourcing investment opportunities that resonate by offering positive environmental and social outcomes.

Crucially, this becomes a way of introducing contextual and personalised content, adding a humanistic element to offset the level of automation needed to reduce costs and serve the millennial cohort profitably.

Not that automation and personalisation are necessarily mutually exclusive. The advanced algorithmic capabilities of IBM’s cognitive intelligence system, Watson, have proven to be ground-breaking when applied in this context, driving deep content analysis of a customer’s financial status, objectives and risk aversion, responding to the nuances of his or her personality, behaviour and current mood to best tailor the approach to the user’s needs.

This detailed picture of the investor enables the most pertinent offerings to be sourced and delivered, a potentially vital advantage for meeting the needs of those who do not have the time or inclination to trawl through the realms of competing information.

Technology driven by purpose becomes the most powerful combination and an investment worth making.