Frictionless financial processes

Accepting payment

What’s behind innovation and disruption in banking and financial services?

I’ve worked on web or Internet products since 1996, settling as a User Centred Design (UCD) consultant in 2005. My involvement in UCD over that time has focussed on understanding people’s experiences and behaviours. I’ve spent time with successful eBay buyers to understand what could be applied to the wider eBay population. I’ve spent hours talking to retail customers about shopping baskets and checkout flows to understand how to optimise the flow for impulse purchases and rationalised considered procurement processes. Through much of that time insights about customer experience have driven innovation within the constraints of what is possible with website technology and business goals.

I like to imagine that businesses and customers are at opposite ends of a continuum of experience and technology. I believe that the really interesting place on that continuum is increasingly skewed towards the business end rather than the customer. What makes this such an interesting place is that UCD research techniques are just as effective at uncovering insights in business as with customers.

What does become absolutely essential as you approach the business end is a deep understanding of the ecosystem of regulations, constraints, goals and procedures that the business operates within. Nowhere is more interesting in this space than banking and financial service innovation and disruption. What makes these sectors so interesting are centuries of banking tradition and established practice that can be unbundled with the aid of user centred research and design.

Banking innovation is not just about customer experience

Innovation in banking and financial services (FinTech) is driven by the goal of creating frictionless processes. Customers and Bank systems both get better by decreasing friction. Where better can be measured as increased efficiency, effectiveness and satisfaction. Friction in a process can be imagined as a series of Pain Points that the people enacting the process experience. For example the expensive time consuming nature of manual Know Your Customer (KYC) checks or the high costs for transferring currency that individuals experience when using traditional currency exchange via banks.

Innovation in banking is stimulated by two things:

Firstly, the regulatory environment and the associated drive to reduce costs. For example reporting requirements for banks have become increasingly burdensome as regulations are tightened, creaking legacy systems and manual processes become less able to deal with the load. Two startups that focus on providing banks with the ability to spot and understand unusual patterns in data that might constitute fraudulent behaviour are Red Owl Analytics and Pentaho.

The insights that will drive innovation around regulation, risk management, trade finance, and collateral financing (to give a few examples) do not come from the customer and in some cases these insights may never have a direct effect on an individual customer. Innovation here must come from within the bank or financial service, bottom up Human Centred Research techniques like customer experience mapping and hypothesis workshops are effective tools for drawing out these insights from financial service specialists.

Secondly, banking innovation is driven by customer experience. Again, the pain points that are identified through Human Centred Research techniques are the key to identifying and defining the pain points that needs to be fixed. Customers’ experience of the difficulty in opening and managing cross border banking services led to the development of the financial service ipagoo, not a true bank but delivering international accounts in multiple currencies. The customer experience of poor exchange rates compare to those used between banks led to the development of weswap offering exchange rates of just 1% above the mid-market exchange rate. That’s the one you see on websites like The insights that drove these innovations are the classic mix of internal business knowledge and customer insight developed through Human Centred Design.

Startups, disintermediation, and user centred design

There’s a seemingly endless stream of startups and initiatives from established organisations. Innovation labs, incubators, and accelerators are being set up around the world to harness the energy that’s pouring into financial services. And what’s at the core of this change? User Centred Design. UCD is either providing the customer centred impetus for the innovation or is there to smooth away the rough edges of the implementation. Both driven by the competitive edge that User Centred Design delivers to a business.

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