Retail banking trends today include a heavy focus on what it means to be customer-centric in the digital age. In the finance industry, it’s often interpreted as conducting research and delivering products to meet customer needs. However, this narrow take on what it means to be customer-centered — within the lens of your existing product line and channels — no longer works. According to the March 2016 issue of Harvard Business Review, banking has the third (out of 13 industries) highest risk of digital disruption.

Taking Inspiration From Startups

The consensus at events like Money20/20 and in commentary by thought leaders like Bradley Leimer, head of innovation at Santander Bank, is that real customer-centric innovators aren’t traditional service providers, but rather startups that aren’t even associated with financial services. Uber is perhaps the most innovative in terms of rethinking the payment process, as Uber customers can exit the car without having to scramble for their card or pay by phone.

Rather than seeking to protect their base, retail financial services providers can benefit by learning from startups such as Uber. Banks shouldn’t seek to find new ways to provide digital access to the same products or solutions that have always been provided to consumers. Instead, they should learn from the flexibility of Wells Fargo’s mobile solutions, which offer “an app for you,” whether it’s text banking, mobile sites or apps for Android and other platforms.

Embracing the User Experience

As recently observed by Jim Marous of The Financial Brand, a leading trend is the shift away from a product-centric mindset toward a true embrace of the user experience across multiple channels in time, as well as a focus on what’s new in the app economy. Consumers don’t want the same functionality in a mobile website that they do in a desktop.

Marous also identifies the decision point around the scope of mobile apps: Should they be comprehensive, or point solutions? Although both can be right, depending on the institution, it’s worthwhile to again consider a few lessons learned from Uber. In 2016, Uber is aiming to embed its app within other contexts so that customers are able to call an Uber from within a map application like Google Maps using the Uber API.

Banks seeking to build next-generation, customer-centered mobile solutions for platforms like Android running on Samsung Galaxy smartphones should explore whether they can take relevant lessons from open solutions such as Wells Fargo’s yourLoanTracker, which stands out as a focused solution for important customer needs like gathering all the documents required to complete a loan.

The Importance of Innovation

Retail financial services — with its inherent need to focus on security, privacy, process and control — is often at odds with the hallmarks of innovation: imagination, play, “no judgment” approaches to failure, collaboration and taking inspiration from all levels of the organization.

However, to succeed at building modern mobile solutions, retail financial services providers should step outside their industry and ask questions that might, at first, seem impossible to answer. Simply designing around customer needs isn’t enough. Today, in a world where both startups and retail banks agree that between 20 to 30 percent of traditional services can be taken over by new entrants, it’s more important than ever for retail banking trends to involve collaborating with startups, as UBS has with its Future of Finance competition, and encouraging innovation across the enterprise through initiatives like Citi’s Citi Ventures unit.

Every innovation strategy can be different, depending on the market context, but in the retail banking world, embracing a new and broader understanding of what it means to be customer-centered is a good foundation for collaboration between banks and startups.

Learn about how magnetic secure transmission technology is helping to boost the popularity of mobile payments.

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Michael Halloran

Michael Halloran publishes the FinTech Blog on innovation and trends in financial services firms and startups, and is head of partnerships and business development at Previously, he was with Morgan Stanley, where he managed partner relationships in the wealth management division. He began his career as a consultant at Gemini Consulting, where he helped launch the U.K.'s first online bank. He was also a managing director at Scient (now Razorfish). Follow him on Twitter: @fintechblogger

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