Customer Experience Specialists In Banks Need To Find A New Job

Observations from the FinTech ECH Snark AR Tank

I’m going to get grief for this, but many (if not most) customer experience specialists are really just website designers.

There’s nothing wrong with being a website designer. But designing a website does not mean you’re designing a customer experience (CX).

The jig is up. Changes in the banking industry will force today’s customer experience experts to look for new jobs.

Embedded Finance’s Impact on Customer Experience

For the past 20 years, bankers have bought into the notion that products are commodities and that the path to competitive advantage (or parity) is through a better customer experience.

They’re wrong for two reasons.

The first reason is that embedded finance—where financial products from banks are embedded into fintech's’ and non-financial companies’ offerings—shifts the control of “customer experience” from the bank to the non-financial company.

Relegating a sponsor bank to just being a provider of financial products misses the nuances of what embedded finance really changes, however.

In Does Your BaaS Sponsor Act Like a Founder?, Chris Rigoni, of Webster Bank WBS writes about methodologies like jobs-to-be-done (JTBD) and design thinking:

“Most often, JTBD is inserted into a design thinking framework to deliver products and services that best solve customers’ problems while delivering the best customer experience. These approaches force you to put yourself in the shoes of the client—to think like they think and make decisions as they would.”

Spot on. And, as Rigoni goes on to explain:

“Fintechs and other non-financial firms don’t use data or services the same way financial institutions do. They exist to create a niche or innovative experience that doesn’t exist today. They’ll need to consume data and offer services in a custom and more agile manner than a financial institution would today.”

Three CX Realities of Embedded Finance

There are three important implications from this:

• The fintech or non-financial firm is the creator of the end customer experience.
• The fintech or non-financial firm is the financial institution’s new customer.
• The customer experience that financial institutions provide needs to change (because they have a new customer).

For banks pursuing an embedded finance strategy, their key differentiator is their product—how well does it support the needs of the fintech's’ or brands’ customers, and how well integrated is it in the fintech's’ or brands’ processes and offerings.

Embedded Fintech’s Impact on Customer Experience

The second reason why customer experience-obsessed bank execs are wrong has to do with the economics of CX: Banks with less than $100 billion in assets can’t keep up with the CX-related spending of the 20 largest US banks.

When Capital One COF wanted to improve its customer experience, it didn’t simply hire a consulting firm with design skills—it acquired the whole design firm.

The largest banks in the US consistently offer a wider range of digital banking feature than smaller institutions do. Granted, having more features doesn’t necessarily mean they provide a better overall experience, but it helps.

For banks with a relatively weak customer experience, incremental improvements in CX is playing catch up—and those investments aren’t likely to pay off in term of competitive advantage or parity.

As a result, most financial institutions will have to compete on product innovation, not customer experience improvements.

Product innovation doesn’t have to be new product development, however.

It can take the form of product reconfiguration—bundling capabilities from a related set of products into an offering that appeals to a particular market segment. This is fundamentally what fintech's like Square Cash App and Yotta have done.

For banks, this is embedded fintech (the flip side of the embedded finance coin): The integration of fintech products and servicesinto a bank’swebsite, mobile app,and business processes.

The New Customer Experience Gurus in Banking

What does this mean for CX experts in banking? Website and mobile app design skills take a back seat to a new skillset. Banks’ new customer experience gurus will be the:

• Partnership experts. These are the folks who understand the bank’s partners’ businesses, customers, and products—and how the financial institution’s products fit in. This is an underestimated and overlooked skill.
• Integration specialists. These people will write and manage APIs, and will ensure that the institution is tightly integrated with partners (or customers on the embedded finance side of the coin). Some banks will outsource this capability to BaaS platforms, but will still need some in-house support.
• Data managers. This is already an important skillset for banks. But the role’s importance grows when the data that shapes the end customer’s experience is coming from (and going out to) multiple organizations.

The Product is the Experience

For banks pursuing either an embedded finance or embedded fintech strategy (and those are the only two choices), the product will be the key differentiator—i.e., how well the product supports the bank’s customers’ needs (whether the customer is a fintech, non-financial brand, consumer, or small business).

Today’s focus on customer experience will give way to a focus on product design. Alex Johnson captures this notion in his newsletter when he says:

“[The] most important challenge in financial services is manufacturing. The financial products we’ve gotten so good at efficiently manufacturing only address a small percentage of customers’ holistic financial challenges.”

Today’s financial products are like horse buggies—they’re last century’s products.

Improving the customer experience of an outdated product is like attaching an escalator to a horse buggy. Yes, it provides added convenience, and yes, it can be considered an “innovation.”

But it’s the wrong thing to be building right now.