By Niels Pedersen, senior lecturer at Manchester Metropolitan University and the author of ‘Financial Technology: Case Studies in Fintech Innovation.’
In spite of accelerating digitization, we humans will still require personal contact in a world without social distancing. The last time someone asked how you were, did you respond with a platitude such as ‘not bad’ or ‘fine’? If you are like most people, you probably did.
Now, let me guess: that exchange was definitely not the highlight of your day. So what happens if you change a variable in a routine interaction like this?
For example, I recently ordered a coffee by addressing the barista as follows: “Hi Alex, can I get a black Americano to go?” He smiles, and I get a coffee on the house. By reading his name tag and using his first name, I had broken the algorithm.
Breaking the algorithm of day-to-day life
On the surface, it should be easy for machines to automate such interactions. However, computers still struggle to understand (and respond to) the messages that people, consciously and unconsciously, express with their tonality, rhythm of speech and facial expressions.
That’s why I got a free coffee. When we interact through routine social patterns, life becomes predictable and boring. So if someone breaks a pattern – even in a small way – it makes an impact. As the saying goes: people remember how you make them feel, not what you say. How many customers use the barista’s first name when ordering coffee?
Not many I suspect, and therein lies the point: we form genuine connections with other people (and brands) via unique, and personal, interactions with them. Even though lockdowns have accelerated digitization in many sectors, customers still want to engage with other human beings, not just digital interfaces.
Don’t neglect human interaction
Thus, many fintechs are missing a trick. If they focus too much on optimizing digital engagement, they risk neglecting a core part of the customer experience: the human touch. Moreover, with more people working from home because of the pandemic, screen time is through the roof. As a result, engaging customers on a human level is an opportunity for fintechs to differentiate themselves in the tired eyes of their customers.
Indeed, some academic research suggests that apps employing a human touch outperform purely digital-only solutions in terms of customer retention. No surprise then that Starling Bank has a partnership with the UK’s Post Office, which allows users to deposit cash at one of its 11,500 branches. As this network has more branches than the UK’s top five banks combined, it enables Starling to offer its customers the convenience of longer opening hours, not to mention a human touch.
Maintaining focus on what users need
What’s more, as similar design interventions are used to optimize digital engagement across the industry, there is a risk of overuse. Consumers notice patterns: exposing them to engagement techniques that they have seen before will only bore them.
For this reason, the colour scheme of Microsoft’s Teams app is a mistake. The white ‘T’ on a dark-blue background is all too similar to Facebook’s logo, not to mention the stress-inducing red circles that notify users of new messages. Whether deliberate or not, this apparent mimicry of Facebook is jarring.
After all, a messaging app for work and a social medium are two very different things, even though the types of user input (i.e. clicks, files and messages) may be very similar. Thus, treating all digital engagement as the same is a non-starter. In doing so, we risk losing sight of user needs.
In this way, there is a fundamental problem in fintechs relying exclusively on digital interfaces: this biases them towards defining their users in terms of their engagement with an app, rather than by their individual needs and preferences.
Addressing issues on a practical and emotional level
So how can fintechs address this? According to a global PwC survey of more than 19,000 people, businesses can gain the favour of consumers by prioritizing their well-being and innovation.
As part of this, fintechs can take a task-based approach to product design. This involves looking at the customer’s reality as a series of ‘jobs’ that need to be completed and come up with solutions that facilitate these. However, this approach must address customer needs from both practical and emotional perspectives.
For example, Starling Bank does not charge its current account customers for making payments or ATM withdrawals abroad. What’s more, it applies benchmark exchange rates, so customers do not face excessive currency spreads. On a practical level, this helps users reduce their holiday expenditures; on an emotional one, it decreases uncertainty, as they do not have to worry about unforeseen transaction costs.
Understanding customers as we emerge from COVID is key
When designing solutions like these, fintechs must be keenly aware of what consumers are looking for when seeking a human touch. As an example, I recently walked past a bank branch one rainy winter morning, which had a long queue outside. Seemingly, the fear of COVID is not enough to dissuade some people from going to the branch, even when it rains. That said, many of these people probably didn’t have a choice: according to a recent study by Lloyds Bank, 9 million people in the UK are unable to use the internet without assistance. That rules out a lot of fintechs.
Whether it is a matter of preference or necessity, some customers will continue to require a human touch; for fintechs, the key is to understand why. This question will become increasingly pertinent after the pandemic. While British banks were reducing their branch estates at a rate of around 7-9% a year before COVID-19 came along, this trend cannot continue indefinitely. Indeed, some institutions were expanding: in 2019, C. Hoare & Co. opened its first branch outside London, to get closer to Cambridge’s entrepreneurial community. After roughly 350 years in business, perhaps this small, family-run bank knows more about the importance of a human touch in finance than most fintechs do.
About Niels Pedersen
Niels Pedersen is a Chartered Accountant and Senior Lecturer at Manchester Metropolitan University, the home of England’s first, and longest-running, post-graduate financial technology course. Before coming to academia, he worked at PwC and the Bank of England. His thoughts have been featured in Newsweek and on BBC Radio Scotland. His first book, Financial Technology: Case Studies in Fintech Innovation was released on December 3 2020.