Digital leads to millions of bankers' job cuts, billions-worth mistakes, and maximizing customer value

Digital technology is disrupting the financial industry. It requires not only technological transformation but also cultural, strategic, and even mindset transformation. Thousands of branches are closed due to digitalization, and millions of bankers will lose their jobs due to AI.

Changes are already happening, and even more are waiting for us soon. With the dominance of digital services, customer experience has come to the fore. Any mistake, cruelty, or greed instantly becomes known to millions and can lead to billions of dollars in losses for financial companies.

Therefore, the ability to provide maximum value to digital customers is not an advantage, but a must for financial businesses in the digital age.

And today in my newsletter there are three articles exploring each of these topics in detail.

I'm Alex Kreger from the financial UX design agency UXDA. Welcome to this exclusive newsletter for industry professionals who don't miss out on the opportunity to stay up-to-date with the next generation of product design in the banking and fintech industry. If you have a challenge – let us know >>

Banking Industry Cuts Millions of Jobs due to Digitalization and AI

Many job titles have disappeared throughout history, and the reason for that is technology. The idea behind technology is to make human life much easier and more convenient. All the technological progress we see is done just to raise our comfort level. The banking industry is no exception: digitalization has already closed thousands of branches, and millions of banking jobs will be eliminated due to AI.

In recent time, we see that news with frightening headlines appear more often:

• Bank of America is closing more than 100 branches this year | Yahoo Finance, 2023
• Lloyds Banking Group to close 123 branches in 2024 | Which, 2023
• TD Bank to cut about 3,000 jobs; profit misses estimate | Reuters, 2023
• Metro Bank to cut about 800 jobs and review opening hours | The Guardian, 2023
• HSBC accelerates 35,000 job cuts amid Covid-19 profit plunge | The Guardian, 2020
• Robots to Cut 200,000 U.S. Bank Jobs in next decade | Bloomberg, 2019
• Global banks cutting nearly 80,000 jobs this year, most since 2015 | American Banker, 2019
• Europe's banks slash 60,000 jobs as outlook turns negative | Financial Times, 2019
• UniCredit could cut around 10,000 jobs under new plan | Reuters, 2019
• Deutsche Bank confirms plan to cut 18,000 jobs | BBC News, 2019
• U.S. Bank to cut thousands of branch workers in digital push | American Banker, 2019

Read full article >>

Banking Customer Experience Failure: Sales-Driven Strategy Costs $23 Billion

Huge budgets are spent on promoting products that users do not need, and that are not easy and pleasant to use. Product designers and user experience specialists often work under marketing departments in banks and become hostages to the race for profit. Unfortunately, a profit-driven mindset and culture ruin the banks' digital transformation and banking customer experience. Because in the world of technology products, profits and success await those who do exactly the opposite.?

It is a question of priorities affected by the executive mindset. For many incumbent financial companies, banking customer experience design tools are just a part of their marketing. For them, it is important to push sales, explore triggers, and design an attractive package to make a profit. For the digital age companies, it's the other way around, marketing becomes just a tool in their customer experience strategy - a way to ensure maximal value to the customer and get profit as a reward.

Profit-driven mindset could lead to a bad customer experience in banking and cost banks billions:

Wells Fargo creates fake accounts for customers

• September 2016.
• Due to an aggressive, pressure-filled sales culture, Wells Fargo employees created an estimated 3.5 million fraudulent accounts for customers without their knowledge.
• Though stock prices weren't impacted for long, Wells Fargo had to pay $185 million in fines and $142 million to a class action lawsuit. This event also caused CEO John Stumpf to retire.
• Stock price impacted for 2 months and declined -9%.
• A loss of -$23.3 billion in value.

Explore more examples >>

Provide Maximum Value to Digital Customers in Finance

Let's imagine a company at the tipping point. They notice that their business performance is deteriorating. From a continuous state of growth, suddenly they find the business in a state of war. Everyone is looking for someone to blame and attack.

At first, they think it’s all because of competitors, and begin to fight them. When this doesn't help, they shift the focus inside and start seeking the guilty among the employees. But the figures are still inevitably falling. Then they decide to attack customers by increasing advertising and aggressively pushing sales of their product.

Such situation demotivates the partners of the company, employees and customers. Ultimately, the business loses demand entirely, wastes all of its resources and becomes unprofitable. Could the same happen to financial companies?

The answer would be “no” for those financial institutions that investigate the root of the problem by looking inward, not seeking a scapegoat outward. It means - exploring what's wrong with your product or service, what's missing, why do the customers reject it?

You can’t force the world to adapt to your product, but you can adapt your product to the world.

Find out how to maximize value for digital customers >>