Digital Quality Considerations for Banks, Financial Service Providers and FinTechs
For the second year in a row, Applause analyzed testing data across banking, insurance, financial service and fintech providers, evaluating the most common flaws in digital experiences. We assessed mobile and desktop apps running on thousands of devices and almost endless combinations of networks, browsers, payment instruments and integrations. In this blog post, we focus on industry-specific observations and recommendations – you can find broader, more overarching trends in the recent blog, Improving Digital Quality in 2023: Where to Focus.
Explore digital quality recommendations and insights guiding the financial industry:
Create frictionless experiences
Seamless customer experiences are essential for new customer acquisition and retention, as well as upsell and cross-sell. With complex – and often cumbersome – application processes in place thanks to Know Your Customer requirements, many potential account holders give up and seek providers with simpler onboarding processes. Often, financial institutions struggle to test all the possible scenarios a customer may encounter when attempting to open an account, apply for a loan, or access auxiliary services. Assessing the omnichannel experience for different customer profiles moving through all those scenarios, across myriad devices and configurations, adds even more complexity.
A Forbes study found that 78% of American adults prefer to bank online, with mobile banking serving as the most frequent means of accessing accounts. In Europe, the share of mobile payments more than tripled between 2019 and 2022, according to research from the European Central Bank. Payments, loans, credit cards and mortgages are increasingly being managed online as well, with many members of Gen Z relying entirely on mobile devices. One report states that the global digital lending market was valued at $12.6 billion in 2022, and is projected to reach $71.8 billion by 2032, growing at a CAGR of 19.4% over the next decade.
All too often, functional issues or poor user experiences prevent customers from easily managing their money online and can prompt them to switch providers. A Kearney Banking and Payments Study reported the following number of consumers switching providers, with an impact of $80 billion in annual revenue, or $640 billion in customer lifetime value (CLTV):
primary credit card provider: 13%
mortgage provider: 12%
checking account provider: 10%
investment account provider: 8%
Loyalty initiatives can only do so much to help retain customers, and even the most-loved rewards may not be enough to offset a poor user experience.
With financial services providers subject to limitations about who can open accounts and how they can test transactions, many struggle to make sure that all workflows have been tested and all customer journeys have been thoroughly vetted before release – particularly for specific, highly granular customer profiles. Without this testing, however, it’s impossible to uncover and remove friction.
Insurance providers face similar challenges in testing a broad range of experiences. Understanding how telematics and safe-driving apps perform for policyholders driving different types of vehicles in varying climates and real-world traffic conditions takes more than a handful of testers in a single market. When a policyholder submits a claim online, they’re probably already stressed in the wake of an accident or loss – the last thing they want to deal with is a clunky app or difficult process. It’s essential to identify ways to streamline the user experience.
How Applause testers helped a global bank ensure consistent revenue streams when onboarding new customers.
Put payments through their paces
When it comes to making payments, customers seek simplicity. That’s why increasing numbers of customers are turning to payment apps like PayPal, according to a survey by Pew Research Center. Roughly six in ten of the 76% of Americans who have ever used a payment app say a major reason for doing so is because it makes paying for things easier. Mobile payment vehicles like digital wallets and real-time payments are gaining popularity due to their convenience.
However, convenience is not enough to win over more traditional customers, who have concerns about security with this new breed of payment provider. The same survey shows that 58% of Americans who have never used a payment app simply do not trust them with their money. This is a common theme in the finance sector: when faced with novelty, customers err on the side of caution. This conservative mindset makes a robust payments testing approach critical for payment apps, mobile wallets and fintechs. Only through building their reputation and proving that they consistently offer the same level of security as a bank or traditional credit card can these apps start to win new customers. One error in a transaction is all it takes to convince already nervous users that these apps cannot be trusted.
It’s a similar story with crypto. While the market is markedly more volatile than for payments apps, crypto payments are not slowing down. According to the World Economic Forum, customers in some European countries have invested just or nearly as much in crypto as they have in funds, stocks or bonds. However, crypto investment is lowest in the most developed European nations, suggesting customers with the most spending power still see crypto as more risky than traditional investments. A Pew Research Center survey found that nearly three quarters of American adults lack confidence that current ways to invest in, trade or use cryptocurrencies are reliable and safe. This may have something to do with the fact that, owing to their relative novelty, many crypto wallet apps have yet to establish a robust testing strategy.
Sometimes, the anonymous nature of crypto means that banks can block payments to and from wallets when they do not recognize the sender or receiver. To prevent these errors, crypto wallets and exchanges must test connections between different bank accounts before launching in a new market. To do so, they must find testers with specific bank accounts in the relevant countries, which can often pose a challenge.
Concerns around security in payments have recently given rise to authentication protocols like 3D Secure (3DS), which enables customers to add an extra verification step when making an online purchase. This enhances security for customers and vendors alike, with 3D referring to the three actors in the transaction: the card issuer, the retailer receiving the payment and the 3DS infrastructure platform that acts as a secure go-between. While this is good news for all parties involved in transactions, it adds complexity to testing. Are customers successfully redirected to a 3DS page? Can they enter their PIN or password? Do they receive one-off pins via SMS? Can they still complete the transaction?
Real-time payments (RTP) are also on the rise, with 63% year-over-year growth in 2022. As banks work to reduce co-opetition from digital wallets, cash apps and buy now pay later (BNPL) providers to bypass the fees for partners within the payments ecosystem, more institutions are working to implement RTP capabilities.
Case Study: A global card network validates seamless payments
Over the last five years, Applause has helped a global card network conduct in-store and ecommerce testing with cards across various bin ranges, merchants and markets in 46 countries. In addition, the company has worked with Applause to test mobile wallet transactions at various merchants. The Applause testers increase scalability and elasticity of the card network’s acceptance validation program. With test results including actionable feedback delivered in a matter of days, the organization can immediately remediate any issues to ensure cardholders can transact successfully. Applause executes retests after issues have been addressed to help the card network ensure higher acceptance rates and avoid payment downtime. Applause’s testing capabilities provide many opportunities for different teams to get real-world insights into their customers’ everyday payment experiences, as well as edge cases.
Ensure accessibility and inclusivity
In the financial services realm, the notion of access has traditionally centered around the unbanked and underbanked. With the World Bank’s Global Findex database reporting that as many as 1.4 billion adults worldwide do not have an account at a financial institution or a mobile money app, it’s clear that’s still an issue, though access has improved in recent years. Beyond making sure people have the ability to create accounts, however, the industry has recently begun to focus on delivering a better experience for people with disabilities (PWD).
Digital accessibility is becoming a higher priority in part due to the European Accessibility Act, which covers consumer banking. While a European directive, the act applies to any products produced, sold or used in the EU, which means that even companies operating outside of Europe could fall under its jurisdiction. The act states that consumer banking services must:
provide identification methods, electronic signatures, security, and payment services which are perceivable, operable, understandable and robust;
ensure that the information is understandable, without exceeding a level of complexity superior to level B2 (upper intermediate) of the Council of Europe’s Common European Framework of Reference for Languages.
While at a minimum, applications should also conform to the most current Web Content Accessibility Guidelines (WCAG), leading organizations understand that designing products and digital experiences with inclusivity in mind from the start delivers a better user experience overall. Understanding how account holders with various disabilities experience an application and complete tasks with adaptive technologies changes the way designers approach product development. Empathy-based inclusive design centers around creating fully accessible experiences and a seamless UX from the earliest stages of creating a product. Ensuring that screen readers, keyboard navigation and other crucial tools for PWD work properly is essential for financial organizations to stay competitive.
Case study: How BBVA creates a culture of inclusivity
Spanish multinational financial services company BBVA recognizes the value of involving people with disabilities (PWD) in software development and driving inclusivity from top leadership so that it permeates the whole business. It approaches accessibility for app and web on different levels: through its design system, product planning and internal training and awareness. Beyond supporting PWD, BBVA also focuses on making its products understandable for people with little or no financial literacy through a ‘TCR’ program to ensure its content, from product pages to advertising, is transparent, clear and responsible.
As BBVA adds new functionalities monthly, ensuring a consistent level of quality for all users on tight development timelines poses a challenge. It is also difficult to maintain quality over time as requirements change. Applause helps BBVA audit, verify and indicate the level of accessibility on its apps and websites and ensure the best possible experience for PWD. However, BBVA’s biggest learning came from PWD themselves, who voiced that they did not want different, adapted applications, but to have equal access to the same digital products as all customers.
Think locally while serving global audiences
To build credibility and gain customers in local markets, organizations must go beyond simple translations in their apps. While translation is certainly part of the process, true localization calls for a deeper understanding of cultural norms. When operating in different countries, make sure that native, in-market testers validate that language, imagery, workflows and other elements of your application will resonate with customers in that region.
Companies transacting across borders encounter far more friction when making and receiving payments than those only operating domestically. Cross-border payments are infamously slow, expensive and uncertain. Delays and fluctuating exchange rates can cause issues with cash flow and liquidity, which, combined with concerns around fraud, hold companies back from making the most of business opportunities abroad. In order to alleviate some of these challenges, many are investing in payment innovations to streamline cross-border payments.
A report by PYMNTS and Visa found that a considerable number of US and UK companies that do business abroad plan to automate cross-border payables and receivables, digitize invoicing, optimize APIs and prioritize payments to digital wallets over the next three years. Yet the more customers engage in cross-border payments, the harder testing becomes. In addition to staying on top of fluctuating exchange rates and complying with legal requirements that vary across jurisdictions, the number of devices, payment instruments, and players potentially involved in a given transaction expands test matrices to daunting proportions.
As companies work to integrate new payment methods in various countries and stay current with the preferred options in each region, they need boots on the ground to test them. Without local, in-market testers with the relevant payment instruments, it’s impossible to validate that connections, APIs, and redirections work properly (like being redirected to a different payment solution app or mobile wallet). Workflows can vary significantly from one payment method and country to the next, yet organizations must ensure they work seamlessly for all customers.
For financial service providers, it’s not enough to know the requirements, fees, and transaction limits for each market they serve. They must ensure that all transactions work properly and comply with relevant regulations and business processes. Consider foreign ATM transaction fees and withdrawal limits… What happens if a person in the U.S. who holds an account in Singapore withdraws $60 from an ATM? What if that person attempts to withdraw $60 6 times in the same day? Does the limit kick in when split across multiple transactions?
Add AI to processes where it can elevate the experience
Financial companies have unique access to swathes of anonymized data that represents customers’ real, unedited lives — from how much they usually spend in a restaurant to how often they go on vacation. Until now, this data was mainly used to identify patterns to help better target products to certain customer groups. Today, machine learning (ML) is changing the game. Financial services companies can now map a single customer’s journey onto the journeys of thousands of other customers to make very accurate predictions about future financial circumstances. Organizations can predict how much an account holder will earn, how much debt they will accrue, etc. — information that can help personalize offerings like retirement or investment plans.
This is good news for customers, who will benefit from increasingly tailored products — at least, in theory. In reality, not everyone is experiencing these advantages to the same degree. Bias in AI continues to be a problem and the financial sector is no exception. Only last month, the Director of the U.S. Consumer Financial Protection Bureau announced that he is collaborating with his European counterpart to explore bias in lending decisions. The concern is that AI could further the risk of minority groups being blocked from applications (digital redlining) or being targeted with more expensive or inferior products (reverse redlining). Ensuring high-quality training data, as well as a robust testing strategy, remains critical to minimizing bias in AI.
While AI has the power to increase personalization and streamline customer support, the algorithms need regular updates and fine-tuning. As natural language evolves, it’s critical to update chatbots and voice assistants to reflect those changes, in addition to your company’s latest offerings.
Join Applause & Voicebot.ai to discuss the risks, challenges, and testing strategies for safely deploying generative AI applications.Watch now
Explore recommendations on how to improve digital quality
When dealing with money, trust is paramount. Financial services providers, banks and fintechs can’t afford even the slightest misstep lest they jeopardize that trust – and the bottom line along with it. Invest in thorough testing processes and ongoing studies to ensure apps deliver a strong return.
Focus on creating seamless journeys for all customers: Ease and simplicity are the name of the game. Robust functional testing on its own isn’t enough. UX has become a priority as consumers – and businesses – have more choices than ever in banks, lenders, card networks, POS systems, e-commerce platforms and more. Every release offers an opportunity to alleviate – or introduce – friction at different points of the customer journey. Carefully assess the ways different customers complete tasks to determine how to serve them most efficiently and effectively.
Assess the entire payment process: Testing payments calls for attention to detail that extends beyond the monetary transaction; it also encompasses post-payment communication and documentation. Do the payer and payee each receive some sort of communication from the bank or payment app? How does the transaction appear on a statement? Do the statement details comply with local laws? What about refunds or split transactions involving multiple payment instruments? Post-payment workflows may be customized based on the customer, type or transaction, or country. Testing to ensure every step of the payment process flows smoothly for parties on both sides of the transaction is critical.
Blend in with the locals: Use local, in-market testers with real payment instruments to get insight into how transactions work in different countries. Consider multiple aspects of the experience, such as preferred payment methods, workflows, and transaction verification messages in each market. Ensure your processes and apps don’t feel foreign to customers outside your home country.
Look at loyalty through a new lens: As banks, credit unions, and even fintechs like Shopify look to compete with credit card providers to earn top-of-wallet status, a robust loyalty program is an essential part of the strategy. Flexible rewards that resonate with different audiences are becoming more important for financial institutions who want to remain competitive.
Carefully consider how AI impacts the user experience: While AI can drive efficiency, many customers are skeptical and have concerns about data privacy and security. Test AI applications thoroughly to ensure accuracy and reduce risk before releasing them to the public. Again, trust is paramount and all too easily broken.
Index and data references
Use this blog and related report to benchmark your organization’s capabilities and processes and understand where you can improve. With that information in hand, map out a plan to improve – no matter what your current state.
For a complete view of the finance, banking and fintech industry’s state of digital quality data, visit the 2023 State of Digital Quality in Finance report. It contains details on the following key areas:
Bug type definitions
Bug breakdown charts
Charts illustrating browser and OS combinations (desktop) and device and OS combination (mobile & tablets) and more
The global State of Digital Quality 2023 summary report offers more detail, including digital quality frameworks which outline core capabilities and typical processes for organizations at different stages on the journey to excellence. Read the full report for concrete guidance on how to make your digital quality efforts more efficient and effective.