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User experience is disrupting the financial industry

by Carl Beien , 26.02.2015

New services are focusing on impeccable design in web, mobile, and broader support services to allow them to engage consumers in new ways. On the one hand, we are seeing services overcome the hurdles of expensive financial advice by promoting their use of “robo-advisors,” or asset allocation algorithms that replace traditional money managers. On the other, we are seeing services decrease costs by stripping out components that consumers are willing to forego in the name of saving money.

An interesting case in point is Betterment, a personal investing service. Rather than provide physical locations with advisors who give clear explanations, Betterment identified that many consumers are comfortable investing without this interaction. They streamlined the personal advisor out of the system entirely. Instead, Betterment advertises their use of robo-advisors. While these dramatic cost savings allows anyone with $100 to receive institutional quality investment advice, this leaves the asset management process relatively hidden from the user. Their bet that customers would give up personal service for decreased costs has paid off, as evidenced by their 50,000 users. This success is also attributed to their fully functional website and mobile app that made waves by ensuring both had highly engaging user interfaces (UIs). While this model of investing is catching on, their commitment to robust cross channel interfaces isn’t a foregone conclusion.

Like Betterment, another financial service provider Acorns, also uses robo-advisors. Acorns, however, identified a new hurdle to overcome – actually getting people to make contributions to their investment accounts. Rather than require users to take the step of setting aside money for savings, it automatically does so by taking the “change” from users’ credit card transactions allocating it to that user’s account. For example, if a purchase cost $22.49, then an additional $.51 is placed into investments. In this way, along with telling customers not to worry about how their money is being managed, Acorn also tells customers not to worry about contributions either. Acorns also made a bold move with its digital presence – it developed its primary customer interface for mobile, and has yet to develop a user-facing website.

Perhaps the most daring service in this arena is Digit. Digit went a step further than Acorns by identifying the users typically make conservative savings targets. To overcome this hurdle, Digit developed an algorithm that determines how much money users are unlikely to miss, and then withdraws those amounts from users’ checking accounts whenever it pleases. While Acorns is akin to a change jar, Digit is more like a pickpocket. Furthermore, Digit is even more specific in its offering in that it does not have an app or a website at all. Without a digital interface to view or log into, Digit floats even more seamlessly in the background. While the automated SMS service for managing the account is engaging, it is not a place to dwell. While this may seem stunningly Spartan, it is also a recognition of the user experience beyond the service itself – target Digitusers likely already use other online tools to help visualize their expenses, allowing Digit to prosper without their own investment in a digital UI.

In each of these examples, rather than present complex ideas simply, these finance companies have, to an increasing degree, declined to present the ideas at all. Instead, they have relied on changing customer requirements to reduce the perceived complexity of their offerings. Sometimes this is at the heart of a positive user experience. Finance isn’t the first place we’ve seen it occur, and it isn’t likely to be the last.

For more information please contact Carl Beien at carl.beien@gfk.com.