How emerging banks are disrupting the market

It’s no secret consumers have a fairly poor perception of high street banks, with the financial crisis, numerous high profile outages and the PPI scandal doing little to ingratiate traditional banks to the national public. It’s therefore unsurprising so many competitors are emerging, disrupting a market which is traditionally quite stuck in its ways.

shutterstock_327093419The ‘big four’ banks have responded to the changing consumer needs, producing websites and apps which work across all mobile devices. However, emerging banks and the Fintech movement are pushing the envelope even further to differentiate themselves from the market leaders.

Far too often, professionals have an idea in their head of exactly what client-facing platforms should look like and don’t directly take customer requirements into consideration before creating a product. Just look at social media websites, the uproar which is felt when Twitter or Facebook makes changes to their platforms is unbelievable and is often felt for weeks.

It’s therefore worrying to think traditional banks fall into this category, despite the vast amount of customers they service worldwide. Their response to the mobile evolution has seen the development of apps, but these have often felt like tick box exercises, rather than the revolutionary platforms customers are crying out for. This is where emerging banks and the Fintech movement come into play, heading up the banking revolution by taking two approaches to disrupt the market.

Modelling products around user experience

One of the pioneering businesses to question the age old processes found in the banking industry is Mondo; a bank its own CEO has claimed is aimed at “people who hate banks”. Although it’s true all banks provide the same services for its customers, such as allowing access to finances, facilitating transfers etc, Mondo has taken an innovative approach to ensure its service is pushing the envelope. Rather than creating an app because it needs to offer a service, it puts the customer and their experience at the heart of everything it does.

Although many banking businesses are highlighting the importance of user experience (UX) currently, Mondo has taken this one step further. The business has identified UX as not only one of the most important elements to its success, but as THE most important element. This is why it has not only created its mobile app with the user at the forefront of its design, but is already releasing features within the app for early adopters.

For example, users with a Mondo cash card can top this up via Apple Pay and use contactless before receiving an instant push notification on their Apple Watch to confirm the purchase. This notification includes a logo of the outlet the transaction happened in, regardless of whether shopping in a global chain or a small independent retailer. The app also differentiates the type of purchase, from eating out, to supermarket shopping or attending events. Professionals can then use this to ease the strain of sorting through expenses, as it becomes obvious exactly what has been purchased and where.

Customers using these features can offer feedback on their experiences and how they feel the UX could be improved. This directly influences the development team’s decision making, as offering the highest quality, most innovative UX on the market is the main driving force behind the project. This couldn’t be further from the approach to innovation taken by traditional banks and as such, this is already acting to differentiate the likes of Mondo and Monese, which is taking a similar UX first approach, from the rest of the market.

Modelling user experience around products

The second approach emerging banks and Fintechs are using to disrupt the banking industry still revolves around UX, although it sees companies model this around products, rather than the other way around. Emerging banks will discuss how the products its customers require can offer a frictionless, flexible experience before building platforms which offer exactly that.

The most high profile business using this approach is Atom Bank. It was founded by bankers who feel traditional banks are stuck in a rut and not looking to truly innovate to offer its customers a quality UX. They wanted to rebel and put the customer first, and modelling UX around products enables this.

To both remove themselves from the traditional market and offer the best products, Atom Bank’s founders decided to build their platform around the idea of play. If like most people you can’t think of an industry further removed from play than banking, you wouldn’t be alone. It’s this juxtaposition which acts to set the business apart from its traditional rivals. All products will be built on Unity, a game-design platform which offers the type of view on development traditional banks wouldn’t even consider. Banking may be a serious necessity, but why can’t businesses base its experience on something fun many are passionate about? This may be the way to change the negative perception which has plagued the banking industry for years.

Aldermore is also using a similar approach, by looking at traditional products such as mortgages and small business current accounts, and designing its digital banking services and the UX on these products. Emerging banks know their customers will require these services and that not offering them would likely result in failure, but they are ensuring the UX within the products is as seamless as possible to stand out from the crowd.

Both of these approaches are viable and clearly working in the digital age – there is enough buzz around emerging banks that it’s clear people are disillusioned with traditional banks and looking for an alternative. While these emerging banks are finding a niche in the market, the rest of the market must begin to question their own platforms and exactly how they can compete with the exciting and innovative platforms currently being developed. If they continue to bury their heads in the sand, it won’t be long before the “emerging” banks are the industry leaders, while the rest of the sector plays catch up.

By Rebekah Cooper, head of experience at Radical Company