It is no longer a surprise that Fintech firms are shaking up the financial service industry. The most recent example is Ant Group, who has been making news for a potential record-breaking IPO, which some analysts believe could surpass $35 billion USD. Though the offering is currently on hold as the company responds to changing regulations in China, there is no denying that Ant is a superstar. But what does this mean for commercial banks? In what ways can design adapt to the trend?
Little Ant, Big Profits – What is Ant’s Business Model?
Ant’s revenue mainly comes from its two business lines: “digital payment and merchant services” and a “digital Fintech platform.” To put it in plain words, transaction fees (similar to a credit card transaction fee), and financial products (including loans, wealth management and insurance) are their bread and butter. These business lines are not unlike what a traditional bank does, but Ant is making these tasks faster and easier for customers by heavily leveraging technology.
Design for a Digital Ecosystem
There are probably thousands of Fintech firms operating in the world, but their biggest differentiator is whether they aim to make products or a platform. Apple without the App Store, for example, would only be deemed a tech company that makes phones and computers, and would be valued against other hardware makers. It is really the App Store that reveals Apple’s true ambition: creating a universe instead of a single star. A digital ecosystem can connect users with millions of digital suppliers.
For banks, a typical digital ecosystem could also be made to include mobile wallets, payment, banking, wealth management, credit service, scheduling and so much more. The term “financial” can also be used loosely, as other associated services could be included, such as insurance, medical care and financial literacy.
Creating such an enormous ecosystem may sound intimidating, but here are some things to keep in mind:
Design for Scenarios
Scenario-based applications (a buzz-term in the tech industry) most frequently appears in product design. It reflects a shift from function-based thinking to scenario-based thinking, from company-centric to customer-centric. For example, borrowing money from a friend and then paying them back is a typical financial scenario for most people. To help make this process easier, Ant launched a new function based on QR-code scanning and payment passwords that enables transferring a small amount of money between anyone in just three clicks. There is no need to type in name or email; all you need is a camera phone and a payment password. Across the board, Ant is still identifying financial scenarios and creating corresponding services, including a condo-renting scenario for individual users and fast supply-chain financing for SME customers.
A great judge of scenario-based design is whether customers would think of using a bank’s service in a particular life scenario. We believe that the future of bricks-and-mortar branch design is to become a regional service center for everyday life and local business needs, putting banks in the center of life and commerce scenarios. But again, where should we start and what should we do? It starts with mining customer insights and identifying untapped customer needs.
Design for Insight Extraction
The biggest profit driver of Ant is not just collecting transaction fees and playing the game of economy of scale, but its ability to translate customer data into better customer service. For example, Ant is able to generate a more reliable credit evaluation for a loan application with an applicant’s e-wallet transaction history. If a sandwich shop owner with steady revenue cash flow wishes to apply for a loan to expand their business, a big bank might reject them if the owner is not good at presenting their business plan. Ant, on the other hand, can approve the loan in seconds because that little sandwich shop collects customer payments every day using Ant’s e-wallet, which could serve as proof of credit-worthiness.
With proper user consent, banks that leverage AI can turn themselves into digital advisors who generate timely recommendations. They could reposition themselves as clients’ long-term trusted advisors that can accompany the customers through every life stage. Without consumer data, this is not possible. Banks have a wealth of data at their fingertips – making use of it is a matter of strategy and innovation.
Design for Seamless User Experience
When it comes to client retention, a smooth, glitch-free user experience is critical. If an elderly customer has to click left and right to find a frequently used function, you are probably going to lose that demographic. We have observed that some banks have upgraded their in-branch wifi connection portal and integrated queuing systems, mobile banking functions, new product marketing, entertainment and even online shopping. It makes visiting a bank less boring and waiting less painful.
Another way to think about revamping experience design is to leverage 5G network upgrades. Branches could become a virtual service hub that provides access to remote consultants or even a VR experience. But all experience-based designs share one consistent goal: to make purchasing more convenient, relaxing and personalized. To achieve this, it is wise to learn from the success of Fintech’s like Ant.
Whatever the future of Ant’s IPO will be, it is undeniable that Fintech’s have transformed our banking expectations for good, and this tech-driven momentum will only accelerate across the financial sector. The pandemic might serve as a final push for banks to overhaul their strategy of customer experience and branding, moving towards a more customer-centric system that solves existing pain points.