I read Joel Oxman's article titled "Should More Banks Acquire UX Design Firms?" where he commented on Capital One's acquisition
of Adaptive Path.
Joel made a very interesting point wondering why legacy service-oriented enterprises such as financial institutions, healthcare, transportation failed their customers in digital experiences while the airline industry made strides in offering engaging user experiences.
He attributed the financial services industry hesitation and slow response to "the lack of understanding and appreciation by financial institutions
for the financial return on investment they can expect from improving the
digital customer experience." He also said that "Banking executives will need both the intel and
bravado necessary to respond to emerging challenges and affect broad changes."
I explain the difference in behaviour differently. The airline industry has the same type of executives we find in finance, transportation or healthcare. They all lack vision, intel and bravado when it comes to digital transformation. The difference is that companies such as Travelocity (since 1996) pushed the airline industry to compete on price and experience. Companies such as Porter understood its users and started to focus on user experience beyond digital by picking an airport location that is convenient to its target audience and offer a unique travel experience.
It is very probable that the same is starting to happen in the financial space. Joel clarified it when he said: "There are certainly new contenders in the space who provide the key elements of simplicity, engagement and contextuality, such as Moven, mBank and EverBank. Even more telling can be BBVA’s recent $117 million acquisition of Simple, much like Intuit’s $170 million acquisition of Mint."
I agree with Joel that "Capital One is paving the way for others in this new digital era." and that "For those financial services companies on the sidelines watching … the stakes are high. With a return on investment that will be seen in the form of higher customer retention, lower cost customer acquisition and even lower cost delivery of services, can organizations afford to not move in the same direction?"
Financial institutions may not realize how fast things are moving around them. They may be able to acquire new contenders such as Bank of Nova Scotia's acquisition of ING Direct Canada (now Tangerine), or acquire design or technology firms. There will still be new bigger and smarter contenders. Large technology companies are already contenders and they are hard to swallow. Take Google Wallet as an example. New technologies such as Bitcoin and Ethereum can also change the way the whole industry works.
Financial institutions will be pushed into digital and beyond digital transformations. The push will come from existential factors such as competition and technologies that will change the game. This is when UX, new technologies that can allow for UX and innovation in general will shine.
Many financial institutions already have the right talent and do not need to acquire external firms. They also understand the UX ROI. Their problem is their executives lack vision and do not understand technology. Their management is locked into the hierarchical thinking and is totally unable to recognize and make use of the good talent in UX and technology they already have. This talent ends up leaving to more innovative companies and the financial institutions are left with those who only care about their raise, title and stability.
Only when financial institutions realize the severity of the changes around them, they will start to innovate, hire executives that truly understand technology and UX, and management that knows how to lead transformations. They will also learn to see skills instead of positions and will be able to manage large teams of technology and UX (or be managed by them). When this happens, they lead, reinvent their industry, and will not need to acquire UX Design or technology firms. They will create them.
