Big numbers, small benefit
A study conducted by Goldman Sachs found that online banking provides more revenue per customer and costs less per transaction than other methods of access. Yet online banking has not yet hit its potential. Numerous studies have shown that the financial services industry have spent more on Internet-based e-com development than any other sector. Expenditures for this year lead all other industry categories and are projected at $2 billion or more. Many banks and large financial service providers have undergone at least 4 major site re-designs in the last 6 years. Despite the intense effort, no major financial institution produced a highly engaging and usable site. Clearly customer acquisition numbers prove this point. Why did this happen? It may be concluded that migrating financial products and services to screen-based delivery is far more complex than originally imagined.
Visual branding vs. cognitive models: the skill set bias
Research shows clearly that the core issue in creating successful interaction models for screen-based delivery cannot be based primarily on visual branding. If professional human factors engineering research literature has taught us anything over the past 25 years, it is that screen-based customer experiences must be based on a complex and illusive aspect of human-computer interaction: the cognitive model. The failure of the first round of Internet-based financial service applications can be traced to one simple factor: skill set bias. The firms and development groups that created screen-based interfaces for financial service products did so from a "visual design" skill set. But this is to be expected since the majority of the development teams believed that "visual style" was the starting point for customer experience design. This assumption was an artifact of the original "page-based" interaction model brought about by the initial design of the web browser. Therefore, financial institutions and their many development firms adopted a "page-based" interaction model and believed that visual design optimization was the appropriate starting point for customer experience design. This left the customers with attractive, but mostly ineffective, interaction experiences, which are not a good foundation for building a new service delivery model.
The web designer's model is not the customer's model
However, when viewed from the customer's perspective, supported by laboratory testing of web-user interface models, it is clear that customers do not view web site interaction in a "page-based" manner. Optimized customer interactions are based on a far more fluid and interactive model, which is much closer to a "conversation." The reason for this is well known in the professional usability engineering field. Customers come to web-based interactions with a pre-existing set of assumptions, which are generally known as "transfer effects." There are well-established methods and models for documenting what these effects are and how they should be modeled to produce a psychologically engaging online customer experience. It is important to note that neither group focus research nor other traditional market research methods can get at the "transfer effects" design criteria. In order to produce a highly successful online financial product, the design process must start with a transfer effects analysis, but it cannot stop here. The transfer from traditional delivery models, which were human-mediated, into machine-mediated without careful analysis and design, produced exceptional levels of "negative transfer." This resulted in poor usability ratings and low customer acquisition numbers. A secondary but equally expensive side effect has been the tremendous growth in customer call centers and the propagation of complex CRM systems. These are quick-fix solutions to serious usability problems that can be solved during development. Every time a customer makes an inquiry to a call center, it costs an average of $15.00. The more troubling issue is that if customers make one call, they are 90% more likely to make repeat calls because they are comfortable with "human-mediated" interactions. The unfortunate aspect of these types of solutions is that they often become part of the corporate cost structure and eat away at profit. Not only do you have a poorly designed online system, you also have massive backend support costs. Over the long term, this is a no-win strategy.
Task analysis: cognition first, "Use Case" last
A typical online banking/insurance system is comprised of about 180 tasks. These range from entering a password to buying shares of a mutual fund for an IRA account. Psychologically, each of these tasks has a series of sub-tasks that must be mapped to the customer's expectations and needs in terms of decision-making. This process can be very well defined by using a methodology common to all professionally trained usability engineers called "cognitive task analysis" (CTA). Such an analysis creates a powerful and highly useful model for determining what is critical in the creation of a powerful and engaging online financial product. This baseline task analysis is complex and time consuming, but it only needs to be executed once. The CTA is only updated when new features are added to the system. It is important to note that many web development groups employ a popular methodology known as "Use Case" modeling. This is not the same as "cognitive task analysis." In fact, implementing a "Use Case" approach is one of the fastest ways to insure that a product will have a poor customer experience design, be dramatically over budget, and late.
It is important to expand the CTA with a well-documented and tested "critical incident analysis." A component of a professionally executed CTA, critical incident analysis provides detailed information about which tasks are most important and how critical feedback and related data must be structured in the online experience. The end result is customers are never left hanging when executing these mission-critical tasks.
Formal usability research verifies problems and needs
In numerous usability studies conducted by MauroNewMedia over the last 3 years, it has been shown that online financial service sites are among the lowest rated in terms of usability and customer acceptance. These studies include detailed examination of online banking, trading, insurance and financial planning/aggregation. Among these various types of services, online banking was consistently the lowest rated in terms of customer acceptance, followed by financial planning and trading. A recent McKinsey study found "Adoption is much, much greater with online brokerage services than with online banking. And customer satisfaction is much lower for online banking." It is interesting to note that purely objective usability testing measures, such as "detected and undetected errors" and overall "failure to complete" measures, were much higher for online banking than other types of online financial services. However, on absolute terms, all financial service sites tested for usability by MauroNewMedia were near the bottom in terms of usability and customer satisfaction. The primary reason for such low ratings is the failure of online financial service providers to develop sites that properly matched the "cognitive model" of the consumer. Clearly, the entire sector needs to dramatically improve the design of the online customer experience. Unfortunately, regulatory advances for the industry overall will make the creation of highly engaging and usable sites even more difficult.
Repeal of Glass-Steagall Act: opportunity impedes usability
With the ability to integrate a wider range of products and services, large financial institutions now have greater business opportunity. However, the integration and presentation of these services online has dramatically complicated the task of creating psychologically relevant online delivery systems. This makes the use of formal "user-centered" design methods important. Such methodologies, when properly applied, dramatically increase the probability that online solutions will meet the overall business objectives of the sponsoring organization. Methods like UCD/Z, the copyrighted process model used by MauroNewMedia, require realignment of the decision models for developing online customer experiences. When such methods are applied they often face strong resistance from IT departments and other internal disciplines previously responsible for customer experience design. However, when UCD/Z is properly applied it insures customer acceptability. Further complicating the design of financial service sites is the recent trend toward migrating financial data into hand-held devices such as PDA and wireless applications. The professional human factors engineering research on the use of these devices is very clear. Small screens mean big usability problems.
Existing methods, new applications
There is really nothing new about these methods or models. They have been used extensively in complex commercial and military interface design projects for 20 years. Use of such methods is, to a large extent, responsible for the dramatic efficiency and productivity of our commercial and military systems. For example, all complex military software applications now have mandated professional usability engineering methods and process models as part of the development effort. However, these process methods are totally foreign to web development firms and internal IT teams. Until recently, such methods were not necessary for consumer financial service applications because the main interface with customers was always conditioned by a human-mediated "conversation." As top executives now know, the day of human-mediated "conversations" is no longer cost effective or reliable enough for high levels of customer satisfaction and related profit. In the future, powerful and effective "machine-mediated" conversations will be the only way for profits and market share grow.
The numbers are huge, the benefits greater yet
In a study published by the Financial Times, it is projected that 2 billion people will be Internet enabled by 2005. This constitutes over 90% of the worlds purchasing power. All of these individuals have formal financial needs and expectations. Need we say more?
Charles L. Mauro
July 25, 2001
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