Customer experience must be central to banks’ online offerings

It is hard to think of an industry not turned upside down by the recent surge of technology into its customers’ lives. We now shop, book holidays, order taxis and compare prices online, but the hallmark of all successful companies in the online world is providing a reliable and easy-to-access customer experience. This is still an area in which the financial industry is lagging behind.

“The challenge, and the bar, is always Amazon,” says Shaun Port, CIO at online investment service Nutmeg. “And it is very difficult for financial services firms to come anywhere near Amazon. But it makes customer expectations for what can be delivered online sky high.”

Nutmeg has put considerable resources into making its user experience as smooth as possible. “Our main thrust is ease of use, and that chimes with investors,” he explains, adding that investment performance and low fees come lower down the list of what attracts customers.

Digital investing is close to a tipping point at the moment, believes Mr Port. Nutmeg, which launched in October 2012, has spent the last four years creating a market, convincing customers about a new way of looking after their wealth. “It has been difficult, but over the last 12 months it has become a lot easier,” he says. “That proves there is a lot more interest, and of course there are now a lot more established players looking to come onto the market.”

Although Nutmeg is UK-focused, he believes this is a global phenomenon. “In Japan, when you take money out of a cash machine, you now see an ad for a robo-adviser,” adds Mr Port.

Learning lessons

The fintech concept should be about financial services firms learning lessons from technology companies, believes Gemma Godfrey, founder and CEO of online wealth manager Moo.la. “For tech companies, the starting point is – what is the problem for me to solve? Not, what is the product that I can sell?”

This chimes well with the post-financial crisis world, she explains. “The industry used to be much more focused on pushing products, and keeping things complicated and opaque. You could convince people they could not manage their money themselves, so they had to come to you. You then had the financial crisis, and people started saying not only have you lost me money, but I don’t understand why.”

The new era is more focused on solving clients’ problems and empowering them, says Ms Godfrey. “Rather than trying to sound smart and deliver products, it is about saying can we deliver something that empowers the customer to be smarter.”

This has been a very successful trend in the US in particular, she adds, highlighting the example of robo-adviser Betterment.

Small and nimble

Although most established financial services firms are looking at online propositions and are at varying degrees of development, it is the younger, smaller players which are proving more innovative and delivering simplest solutions, argues Anna Lane, CEO of consumer investment research consultancy The Wisdom Council.

Traditional firms will usually have older systems they need to integrate or migrate from, while also dealing with a mountain of compliance issues. “A lot of established players find it hard to be comfortable removing some of their warnings which make things very difficult for an investor. A customer might be midway through an online process and quite enjoying it and suddenly all these warnings come up, saying ‘read this’, ‘go back to this page’, ‘download and sign this form’. It is not just the financial jargon, it is the time that it takes for investors.”

There is not a single boardroom in the financial industry that is not thinking about the digitalisation trend, says Joe Parkin, head of iShares retail and wealth sales in the UK. “What can be digitalised, will be digitalised over the next five years.”

ETFs and passive solutions will form the cornerstone of many of these digital propositions, he argues. “They are instruments that suit this new world – they are low cost, easy to use and transparent.  And they allow you to talk about the big picture, something that clients really understand, without using some of the jargon associated with our industry.”

But although iShares is a product provider, he agrees the digitalisation story is not really about the products. “The products are like the processor that sits within a computer. You might know it is there, and perhaps be comforted by the brand, but its role is to help deliver the experience you want. This is all about the customer experience, and that is where financial services have to look outside the industry for examples on how to do things better.”