Inspiration for Innovation: Considerations for Financial Application Design Webinar – The Recap

In our latest webinar, renowned financial technologist and Vice President of Online and Mobile Strategy at Mechanics Bank, Bradley Leimer stopped by to share his thoughts on the inspiration behind the latest innovations in financial application design. He talked about how customer behavior and expectations are being affected by fast changing technologies, and what the potential knock-on effects are for banks.

Bradley started the webinar by asking what the motivations that drive innovation in financial industry are. He went on to say that the primary driving force is, or should be, providing a better service to customers and helping them to pursue their life’s passions by removing friction from financial applications.

He then spoke briefly about his role at Mechanics Bank and how it is a fascinating time to be involved in the financial services industry and at a bank that is leaning forward to meet the latest fintech developments. However, he noted that banks need to move beyond the type of ‘me too’ thinking they currently have when it comes to financial applications. The concept of banking he believes banks should be focusing on is Engagement Banking, which can be interpreted as a marketing sales and services model or as a way to achieve intimacy through technology as banks scale.

To illustrate what can go wrong if businesses fail to innovate alongside emerging technologies, Bradley talked about being ‘Kodaked’ a term that has recently become popular. Kodak dominated the film industry for over one hundred years, before refusing to move into the the digital camera sector in the late seventies, thinking it a fad. Today they no longer exist. He stated that there are several parallels with banks. He then noted that there are now more mobile devices on the planet than there are people; there are more people with mobile devices than have access to toothbrushes or clean water; and went on to say that the fact that today, we have more computing power in our back pockets than what was used to fly man to the moon yet we are still overdrawing our accounts – something that for Bradley, doesn’t add up. He believes that banks need to understand the context of how pervasive the mobile device culture is to properly contribute to innovation. Bradley gave the example of the underbanked, saying that the penetration of mobile devices is not an indication not that the underbanked don’t want to bank, rather the applications available to them are not meeting their needs. He illustrated this point by talking about the fast adoption rates of pre-paid mobile payment services. He went on to talk about the rise of alternative financial services like crowd sourcing and peer to peer financing. He also made the point that despite the recent challenges, the numbers show that recovery is happening but banks could lose out to newer players who are looking for ways to nibble at the revenue stream of the big players.

Bradley continued by looking at what some banks are doing with the record profits they have recently made. He said that some have invested in fancy new new branches but questions whether or not that’s the right move, quoting Aite’s Ron Shevlin whom Bradley agrees with. He then moved on by asking why banks haven’t been innovating as much as they could be on the digital channels. His belief is that up to now, there hasn’t really been an economic imperative for banks to innovate but that is starting to change. Bradley stated that there needs to be a safe framework for banks begin making the changes. He then spoke about Innotribe, an initiative from SWIFT as a successful example of creating a safe framework for innovation.

Next Bradley moved on to talk about what banking might look like if it was ran by company Apple, Google, Amazon or Facebook. His thought is that if Apple ran a bank, it would be focused more on customer onboarding. For Google, he noted that they are constantly innovating and if they were a bank, they would be forward thinking and making investments in the long term, looking for ways to use data to personalize experiences.Bradley then gave the example of Nerture as a company that is using data to create incredibly personal experiences. When he spoke about the type of bank Facebook might be, he said they would struggle with the regulations banks have but that banks could learn from Facebook’s as a social experiment and the ubiquity of social sharing. Bradley then discussed Amazon’s ability to create a personal experience through their algorithms and their willingness to take big risks, like Kindle.

Banks, he noted, differ from these innovative companies in that they are locked into partnerships with established players in the fintech world and are then forced to innovate at their pace. He wondered why, with banking apps, it’s still possible to do more in a browser than with an app. He said banks really should be offering a consistent experience across all four screens and whatever other screens, like google glasses, that are just around the corner. Bradley drew the conclusion that banks need to free themselves from relationships that are holding them back and choose more agile partners who are driving innovation forward.

He then went on to give inspirational examples of how some financial innovators are changing the face of mobile banking, starting with Simple and their ability to know their customers. This introduced the idea of personalized visualization, with which Bradley used to segue into talking about Moven. He spoke about how Moven allows customers to be more in control of their own finances through better visualization. Bradley also mentioned and highlighted features from Money Desktop, LearnVest, Personal Capital and Plan Wise. Next, he spoke about Narrative Science, a company that uses data to create personal narratives that can be used to learn about customers. He said that without this type of ‘Personetics’ intervention, the concept of Big Data will remain meaningless. Bradley asserted that using data to know what your customers want before they ask and being able to solve their issues quickly is power. Bradley then used USAA as an example that is really tapping into the potential of mobile apps, he gave a brief description of his favorite USAA services and stated that he will not be surprised if they remain an industry leader for some time. He wrapped up by calling on bankers to keep on innovating.

Jelmer de Jong, Global Head of Marketing at Backbase, then introduced Jouk Pleiter, Backbase’s CEO.

Jouk spoke about the Bank 2.0 movement and the need for the financial industries to shift from a product and branch driven model to a customer-derived, or customer-centric approach. He went on to say that Forrester had come up with a simple, easy way for banks to understand the challenge facing them. In order to succeed they would have to become S.U.P.E.R. That is: simple, ubiquitous, personal, empowering and reassuring. Jouk noted that many of the examples Bradley had shared encapsulated each of successfully these points.

He continued by talking about the most necessary change from having an inside-out mentality, where banks just push products at customers, banks must start being outside-in and empowering their customers through interaction. Jouk went on to say that the biggest challenge for banks is how to create a model where customers can get the information they need at the right time and in the right format. This more customer-centric approach optimizes the entire customer experience and creates a seamless journey across multiple devices. Jouk then made the point that this is specifically difficult for banks because of the siloed structure of their business units. Changing a bank’s entire organizational structure is not a realistic short term expectation, making it very hard for banks banks to create an engaging online customer experience that lives up to the type of models shows by Bradley, Jouk observed.

Backbase Bank 2.0 Portal offers a creative solution. The portal sits on top of the bank’s existing systems and creates a rich customer experience layer. All of the innovation then takes place in the customer experience layer and isn’t held back by legacy systems or siloed business structures. Jouk further explained that the portal is loosely coupled with the banks systems and doesn’t interfere in anyway in their functionality. What it does do is create a new environment where the bank can be agile, flexible and experiment with new innovations. This new environment or customer experience layer allows banks to create the kind of experiences that benefit both the customer and the bank in a balanced value exchange. He carried on by talking about the different elements of Engagement Banking and demonstrated how all of these elements and functionalities can take place within the presentation layer with intelligent logic connecting it to the right resources.

Jouk then spoke about how Backbase Bank 2.0 can be integrated into any type of back-end system and uses widgets to create the Engagement Banking experience. Backbase widgets are like little building blocks, which can aggregate anything from banking transactions to payments and from CRM tools to personal finance management capabilities to create any functionality. Backbase Bank 2.0 doesn’t just use widgets to empower the end-customer, it also delivers highly intuitive dashboards for business owners to use. Allowing the front-end and marketing teams to operate without draining valuable IT support. Jouk then demonstrated the capabilities of Backbase by showing the Backbase Bank 2.0 Portal in action with Absa/Barclays and ABN AMRO. Jouk summed up by saying that Backbase has also created Backbase Launchpad as a best case solution to creating unifying content, eliminating silos from the customer experience and creating a seamless, personalized customer journey across all devices.

Jelmer concluded the webinar with a short Q & A session.

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