In September 2017, Amazon.com’s patent for “1-Click” checkout lapsed. It was a foundational moment in e-commerce. Waves of digital retailers streamlined their purchasing processes. The moment reframed customer expectations. And meeting those expectations became a matter of survival.
Simplifying the checkout process, Amazon chairman and CEO Jeff Bezos believed, would reduce cart abandonment and increase conversion rates — the percentage of shoppers who complete the purchasing process. Cart abandonment is a huge problem in retail, where an estimated 69.5% of digital carts go unclaimed.
Online merchants of books and sweaters aren’t the only businesses that need to care about this; banks do too.
Customer expectations are fluid, flowing from one industry to the next. Amazon and other tech giants set the standard for the digital experience; banks and other companies must now follow it. Customers expect to acquire their new credit card as easily as they can download the latest Taylor Swift album.
Banks may not obsess about cart abandonment and conversion rates to the extent that other e-commerce companies do, but the same concepts apply to making loans and attracting deposits over digital channels. That’s why the principles of modern design are so important. Taking cues from companies like Amazon isn’t just a best practice; increasingly, it’s a matter of success and failure.
The report unpacks mobile bank design: why an attractively designed experience will be critical to growing engagement, and the processes that have guided regional and community banks in creating their respective apps. It includes:
The rise of mobile banking
An overview of key features and functions
How modern design affects usability
Q&A with USAA’s chief design officer
A digital checklist to evaluate a bank’s offerings and approach
One of my key forecasts for 2017 is that the fintech buzz will continue, but not in the United States. We need to look to China instead. This is fairly obvious as that country saw the biggest rise in fintech investments in 2016, while investments in the U.S. cooled off. This is pretty well summed up in Citigroup’s Digital Disruptionreport. The second edition just appeared, and opens with:
The rise of the Chinese dragons reflects a unique combination over the past decade of incredibly rapid digitization and the simultaneous rise of the Chinese mass middle class, along with poorly prepared incumbent financial institutions facing off against entrepreneurial e-commerce and social media ecosystems. It is no surprise to us that China accounted for over 50 percent of total fintech investments globally in the first nine months of 2016 and was the only major region where fintech investments increased in 2016–in fact doubling in China in the first nine months of 2016 versus the same period in 2015.
Most notably, China saw one of its fintech giants emerge on the world stage as Alibaba—the country’s largest online e-commerce company—went global. Payments powerhouse Ant Financial (once a subsidiary if Alibaba just as PayPal was once a unit of Ebay) announced that it seeks European and American clients using its AliPay service. And Alibaba founder and Executive Chairman Jack Ma has risen to the same heady heights as Amazon founder Jeff Bezos, or even higher if this year’s World Economic Forum in Davos, Switzerland is anything to go by. Ant is already growing at a phenomenal rate, having gained about 100 million new users in 2016, which took its total above 500 million—or nearly 10 times larger than the world’s biggest banks. Its ambitions don’t stop there. In an interview with CNBC at Davos, Ant Financial CEO Eric Jing said that “we have an ambition to be a global company. My vision (is) that we want to serve 2 billion people in the next 10 years by using technology, by working together with partners _ to serve those underserved.”
The company has never been understated in its ambitions—but to its credit has realized most of them. This is because Chinese internet giants like Tencent, Baidu and Alibaba started in a very different place compared to American internet giants like Facebook, Amazon and Google. The American companies formed to replace old institutions like bookshops. They had a strong, integrated financial system in place, and a well ordered commercial structure. When the Chinese firms began, there was nothing in place to replace. Sure, there were big banks, but these were state owned and had little focus upon customer service or innovation. That has all changed in the last 20 years.
Maybe that’s why, when the chairman of one of the world’s biggest banks was asked recently how technology would change finance, he pointed to the rise of Ant Financial. The veteran chairman—who was not willing to be quoted by name—noted that the Chinese group had acquired a “huge amount of data” and “a great ability to make credit decisions.” The tone of jealousy was hard to miss.
This is because the Chinese internet giants began with a clean sheet of paper and have expanded across China and now the world with their innovative designs. That design began with commerce and communication—Alibaba started as a platform for mum and pop stores to sell their wares—and has expanded into a social and financial ecosystem that can serve all needs through a mobile app. Alibaba and Tencent run not just an internet service, but a payments platform, a social network and more. It is all embracing and fully networked, far more than anything seen outside China.
Between the data analytics that can be applied in that ecosystem, deep learning and contextual commerce capabilities, it’s no wonder the banks are jealous. They should also be concerned, as the Chinese payment model is bound to expand globally and then be copied by the likes of Facebook and Amazon. Happy Chinese New Year!
Consider two of the most prevalent digital trends over the last decade or so: social media and e-commerce. A growing number of users are interacting with companies on social media platforms such as Facebook, Pinterest and Instagram. An increasing number of people are also turning to the internet and e-commerce to purchase virtually any item, for any occasion. For these reasons, the emerging “social commerce” trend makes a lot of sense.
Social commerce is roughly defined as the intersection of social media and e-commerce. For example, Facebook has added a “buy” button, so consumers can make purchases directly without ever leaving the social network. In many ways, 2016 was the “Year of Social Commerce.” Worldwide, revenue earned directly through e-commerce using social media totaled $20 billion dollars in 2014, according to the software provider ReadyCloud.
As social commerce grows, so will the demand for products and services to manage the flow of payments from social networks to vendors and institutions on the back end. Fintech startups and banks are coming up with new ways to meet these demands. Here are three examples.
There’s something inherently social about gift giving. Over the years, gift cards have become popular among both consumers and brands of all shapes and sizes. While gift cards might seem tailor-made for social commerce on a surface level, for the most part, people are still buying physical gift cards at retail locations and gifting them to friends and family, who then have to keep them in their wallet with countless others, which can be inconvenient.
That’s the problem that Texas social commerce startup Swych is aiming to solve. Swych has created a digital platform where consumers can send, manage and redeem their gift cards all in one place. Currently, Swych is available as an iOS app for U.S. consumers, and major retailers such as Amazon, REI and Sephora offer gift cards through the platform. Swych users can eliminate their physical gift cards by uploading them into the application if the retailer is on Swych. The company also introduced “Swychable” gift cards that can be redeemed with any retailer within the Swych ecosystem.
Swych aims to transform the gift card market from obsolete technology and a clunky user experience to a convenient and connected social future. Users can view friends’ profiles on Swych, see what brands they prefer and give a gift card that closely matches those preferences. Swych is tackling an outdated industry and making the experience better for both consumers and retailers.
Social Banking Apps
Many banks are wrestling with exactly how to adopt new technologies to capitalize on the social commerce phenomenon. Rather than spending the resources to develop social commerce technologies in-house, many banks are turning to white-label solutions. Urban FT helps banks integrate social commerce features into their online and mobile banking applications.
Specifically, Urban FT helps banks build social payment capabilities into the banks’ own apps, similar to what Venmo accomplishes. Moreover, banks can use Urban FT to provide retail customers with Yelp-style reviews, geolocation, coupons and other social features that people would typically find in third-party apps such as Foursquare or Groupon. Users can even make restaurant reservations or purchase gifts through banking apps that utilize Urban FT’s social commerce technology. Banks partnering with Urban FT realize that if they can offer these services within their own online and mobile banking ecosystem, they’ll be able to increase the lifetime value of those customers and learn more about their social commerce preferences.
Shopify Gets Social
Shopify is one of the largest players in back-end merchant e-commerce services. Anyone who wants to set up an online store, sell goods or services and collect payments recognizes that Shopify is probably the most comprehensive solution available. So it’s no surprise that Shopify is now introducing technologies that will make buying and selling on social media easy for everyday people. The company has developed a free app-based platform called Sello that allows anyone to easily set up an online store, share products on social networks and allow people to purchase these products on their mobile devices.
Sello exemplifies a broader movement within social commerce, which is the democratization of buying and selling, as social media has also done for content creation. Anyone can start a blog and share what they’ve written quickly and easily, so shouldn’t setting up a shop in order to sell something you’ve made be just as simple? Unlike online retailers like Etsy, Shopify has built Sello with social commerce at its core. The most direct purchase path of the future will be creating products, sharing them on social media and enabling a direct purchase from that point. In the future, Shopify hopes that novice Sello users become successful enough to start their own e-commerce business and migrate onto the full Shopify business platform.
Social media may be mature, but social commerce is still in a stage of growth and experimentation. The challenges of the future will be to make purchasing even more frictionless and leveraging social networks to better personalize product offerings. With innovations like social gifting and white label in-app social commerce for banks, it’s clear that our experiences on social media will likely involve much more buying and selling in the near future.