Service Design as a Solution to the Financial Industry’s Woes

Bill Holland
Nov 1, 2016 · 8 min read
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Karaka Bay, northwest of Auckland, New Zealand

Legacy brokerages are at a turning point. Their traditional customers, entrusting their life’s savings to a human financial advisor, are getting wise and either leaving for less obviously biased alternatives, or trying new robo-advising platforms offered by their own brokerage if available. Even the Department of Labor has weighed in, declaring advisors will have to be fiduciaries (a 50-cent word meaning someone who must act in the customer’s financial best interest) when managing retirement accounts. The rapid popularity rise of low-cost ETFs reflects a more knowledgeable investing public, enlightened as to how their broker has been paying for that yacht. Turns out most fund managers can’t beat the market anyway. And more companies are investigating alternatives for their employees, such as Uber’s partnership with Betterment for their drivers’ IRAs. The legacy players, back on their heels, are seeing customer loss on the horizon and even more regulation at play. Without drastic action, they will aspire to a slightly-used rowboat instead.

So what’s a bank to do?

With the commoditization and questionable return of many financial products, it’s no longer possible to merely compete on price. Like with other product industries, it’s a race to the bottom where only one competitor wins, at the expense of the customer.

The solution? Rather than being product-centric, successful firms will become service-centric, and quickly.

Service design encompasses the entire customer experience. Traditional UX design focuses on the digital realm with device-independent responsiveness, interaction design, and automated personalization. With Capital One’s acquisition of Adaptive Path, it signaled the importance of examining and designing for the customer experience from a holistic perspective — that of the customer — even as it identifies back-end processes which contribute to, and detract from, the intended experience.

Typically, legacy financial companies tend to be segmented by business unit. Of course, customers don’t naturally think of brands by sales, product, customer support, or R&D, yet segmented is how they experience the brand. So, despite best intentions among some employees, the institutional structure impedes their ability to act nimbly to better serve their customers.

As Kerry Bodine and Harley Manning explain in Outside In, their groundbreaking work on customer experiences, within each organization, there must be a Chief Customer Officer (CCO) or Chief Experience Officer (CXO). With the CEO’s mandate, they facilitate efforts across the various business units to design for a holistic customer experience.

This does not happen by accident — the best and most consistent experiences are thoughtfully designed.

The Product-Oriented Approach

Log into any financial institution’s web site and you’ll likely see unhelpful lists of products like:
- 401(k) or 403(b)
- Standard or Roth IRA
- Brokerage account
- Checking and savings accounts
- Certificates of Deposit
- Credit cards, and more

Unless someone has given knowledge to the customer, how are they to know what kind of products they should have, especially when investigating this online? As you’d expect, they typically don’t. And in this online world, why would it be necessary to visit a branch just to gain this knowledge? And what questions would a customer know to ask anyway? How would they relate these products to their own financial and life goals? And just as importantly, how do these businesses demonstrate to clients they can trust them? They’ve often not performed well here.

Product-oriented banks erroneously leave this basic service — understanding and confidence-building — up to the customer with half-hearted efforts (“Oh, but there’s a knowledge base!”). As Wells Fargo showed, they still achieved their internal goals of signing up customers for yet more products, but at a steep cost in trust. And whether it helped achieve the customer’s goals was another question altogether. It’s this lack of intersection between customer and business goals that directly contributed to their $185MM fine and worse, customer exodus because it fed into the bank’s incentive structure.

So what, on the other hand, does a service design approach look like?

The Service-Oriented Approach

Log in to Schwab’s Intelligent Portfolios or Betterment, and the same product — let’s take an IRA for example — shows the balance, holdings, gains and losses, dividends, etc. Nothing new there.

But look…what’s that? A customer-defined goal. Supporting that goal are all the typical components, but Betterment goes further to relate how the current status relates to goal achievement, what actions, if any, the customer needs to take to get back on track, and periodic status emails indicating dividends. Schwab will send an email reminder when their customer needs to make a contribution to achieve their goal. This guidance and updates all reinforce the customer’s decision to invest with these better brokerages, because now it’s less about the portfolio, and more about how that portfolio can help them achieve their financial goals. They become a trusted partner in the process because the company’s shown to have their customers’ best (not to mention fiduciary) interests at heart. Let’s face it, the suitability standard is for chumps, and Schwab and Betterment go further by effectively designing for their customers’ journey to financial independence. For consumers, goal-based investing goes hand-in-hand with service design.

Understanding the Customer Journey

The first step is to understand the end-to-end journey their customers have. Even in a product-centric experience, the customer still has a journey surrounding that product and brand, and it’s up to us to determine their related delight and pain points.

Techniques such as ethnography and interviews help us learn more about one’s customers, including their desires and motivations. Creating a customer journey map, one of two primary tools of service designers, helps illustrate each touchpoint and highlights Moments of Truth — those instances where a bank can either lose a customer or increase their loyalty. Because each bank has several different types of customers and different experiences, having one map for each unique persona and primary goal is the ideal. This provides clarity for each map, illustrating each persona’s point of view and their unique experiences.

Customer Journey Maps support a business goal; they’re otherwise a pointless waste of time. Done properly, they illustrate how well the intended and real customer experiences match up. This facilitates organizational and process changes to reduce or eliminate gaps.

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A simple customer journey map for rolling over an IRA.

See that Line of Visibility? Below that are the processes and policies that affect Lydia, even if they’re not visible to her. The curved line indicates her emotional state at each of the touchpoints for this IRA rollover for a fictional bank. The high and low points are Moments of Truth, because they indicate significant risk of abandonment -or- likelihood of increased loyalty. These points reflect what you may have heard before: Get Out of the Building when doing research. There’s no way, short of interviews and/or ethnography, to glean these insights. Without it, a journey map is an assumption. It’s simply a pretty representation of bullshit. Actually, it’s worse — it’s misleading to decision-makers, and thus runs the risk of leading everyone involved to incorrect solutions.

Journey maps can be complex beasts requiring input and information from several sources, about most of which the designer will not be an expert. So it’s best to share the map with your colleagues or client as it’s being built, checking for accuracy, making sure it covers all the points, etc. A collaborative map is a successful map, and will be more likely to actually be used for good.

Ok, great. Now what?

There’s no greater motivator for a CEO than witnessing for herself how painful it is to use her company’s products.

Achieve mapping high and low touchpoints to internal processes through process blueprints. What issues to tackle first? Compare the low touchpoints and lost opportunity costs with the explicit cost of changing the process. It could also be a low touchpoint may be common among one’s competitors, in which case transformation can translate to a brand differentiator. These calculations and decisions are unlikely to be made by the designer, but the designer can facilitate the process and guide appropriate outcomes.

Measure progress and adjust the journey map as changes and new initiatives are completed. Verify your decisions by measuring outcomes. Always. Following the process and measuring outcomes ensures your service design efforts are not just a one-off experiment.

Designing experiences beyond the screen

Service design as a discipline is intended to enable positive customer experiences across every channel at each touchpoint. Returning to Betterment as an example, I recently received an email from them detailing some dividends I had received on my IRA. I replied to the email expressing my pleasure at getting these little dollops of encouragement and confirmation my investments were adding up to financial independence in retirement.

The email address was unlike other addresses in that Betterment uses it as a channel for customer support. They understand a customer may need help at any of their touchpoints, not just the web site’s support section or contact page.

When they replied ten minutes later, they thanked me for my input and asked if I could tell them my shirt size and mailing address so they could send me a free t-shirt. After that interaction was over, they sent a “how did we do” email with a simple, five-star scale. Upon clicking the 5th star, I was taken to their web site where they said they’d like to reward Max, their rep, for his good work, and could I please suggest the type of reward? The options were coffee, lunch, or a gift card. I chose lunch because experiences trump cash. That last touchpoint became a Moment of Truth for me, further cementing my relationship with Betterment. The t-shirt arrived a couple of days later, folded and carefully wrapped in dark blue tissue paper. That, and the accompanying thank you note created yet another positive touchpoint.

All this isn’t intended to necessarily be an endorsement of Betterment. But it does serve to illustrate what good service design can look like in financial services.

As designers, we’re uniquely positioned to make a crucial difference in our clients’ success and their customers’ financial and life goals. Service design and its ever-evolving set of tools is the road we can take to get there. Let’s achieve this together!

(My opinions/suggestions are my own and don’t necessarily reflect the views of my employer.)

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