1103. Insights: Who’s winning the US digital banking race?

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0:34Welcome to Fintech Insider Insights. I'm Benjamin Ensor, Director of Research and Strategy at 11FS. Now, the United States banking market offers customers more choice than ever. Large established banks compete not only with each other, but with credit unions, small community banks, digital first banks, fintechs, credit card providers, and digital wallets, all of which play an increasing role in Americans' everyday financial lives. But more choice doesn't necessarily mean that customers' needs are being better served. So for its latest U.S. benchmarking research, 11FS Pulse has looked beyond individual mobile banking features to assess how effectively different types of banking provider and different individual firms are helping customers accomplish the financial jobs to be done that matter to them.

1:26So in this episode, we're going to explore the broader trends emerging from that research, where American banking services are delivering strong digital experiences, where customers remain underserved, and what different types of provider can learn from each other. And as customers increasingly spread their financial lives across multiple providers, we're going to ask, what does it actually mean to be a great banking provider today? So to unpack these topics, I'm delighted to be joined by two of my colleagues, First of all, we have a welcome back to the show to Joe Colchester, Head of Product at 11FS Pulse.

2:03Joe, welcome back to the show. Please can you remind listeners about you and your role at Pulse? Thank you so much for having me back. Yes, so I'm Joe Colchester, Head of Product here at 11FS Pulse. And I lead on the content team, but also execute on the roadmap that we have. And today we're talking about the US feature benchmarking tool that we will have launched by the time of publishing this episode. And it's a delight to be here. Welcome. And I'm also delighted to welcome my colleague Olivia Vasek, who is product manager and benchmark lead at 11FS Pulse. Welcome, Olivia. Could you also tell our listeners a little bit about you and a little bit about your role at Pulse?

2:48Yeah, morning. I'm happy to be here. And yeah, in my role as product lead, I'm in charge of basically running the research behind the benchmarking and making sure that it is accurate and that we have everything we need. Fantastic. Well, welcome to both of you. Okay, well, let's dive in. So when we talk about the best digital banking experiences, people sometimes focus on individual features, The fastest onboarding process, the widest range of payments, the most intelligent savings features, or the newest AI-powered chatbot. But a mere checklist of individual features doesn't necessarily tell us how well a banking provider is serving its customers overall.

3:30So for the latest benchmarking research focusing on the United States, 11FS Pulse has taken a jobs-to-be-done approach, looking at how effectively different providers help customers accomplish specific financial needs or jobs to be done. And importantly, that means looking beyond just the large established branch-based banks like Bank of America, Chase and Wells Fargo, but also covering other providers. And so the research covers 24 different providers from the US, including banks, fintechs, credit unions, credit card providers, and digital wallets. Olivia, I'd love to start with you and start by thinking about how are customers' everyday banking needs changing?

4:15I mean, are people's needs the same as they were, or have they sort of evolved over time? And why have you taken this Jobs to be Done lens to think about what a great experience looks like? Yeah, of course. So I think expectations have shifted, primarily because our financial lives are so much more fragmented today. So previously where you would have your primary financial provider and this is usually where your salary would land and this is where the majority of your financial life would kind of revolve around. Today people are using a variety of products, a variety of providers to manage their financial lives.

4:52And also along with that, because the majority of our lives are sort of conducted on our mobile phones, we are also rising these expectations to our banks so that we don't need to be going to a branch so much or even using online banking. So, yeah, I see the expectation changing from just opening your bank up to see your bank balance and maybe making a transfer to having a kind of, I don't want to overuse that term, it's very popular right now, but a financial coach that will kind of tell you, help you understand where your money is going anticipate what's coming and maybe also help you plan for your financial future.

5:33And in terms of taking a jobs to be done approach, I think it changes the kind of question and answer that you get slightly because although we're counting features and banks are designing features, customers don't go to their bank wanting a feature. They want to accomplish a task. They want to do something right. They want to pay a bill or they want to avoid running out of money. They want to save for something. So a jobs to be done approach lets us group these features around customer outcomes. And that can reveal something quite different. So for example, a provider might not have the broadest proposition that you've ever seen, but actually they have narrowed down a really important kind of high value and high frequency customer job that they have nailed.

6:22And this is a really strong proposition. and in the UK, I think Chase has done it. So they came in with a very paired back app, but it was very kind of simple, so you can easy to use and they had a really strong product proposition. And I think a similar case is maybe Alibank. In the US, it doesn't have the broadest feature set in the benchmark, but it actually is very good around particular customer needs, especially saving and everyday money management. So taking a jobs-to-be-done approach allows us to see how they perform in that way. Thank you. It's really interesting to see how banks have, over the past sort of few years, understood that their role has changed.

7:08Because I've been talking about this for sort of 15 plus years, that banks need to stop thinking of themselves as a place where customers store money and they sell products. and instead understand that customers come to banks and come to other providers looking for help making better financial decisions, looking for help improving their financial well-being. And it's great that many of the leading banks are starting to understand that. But, Joe, let's cut to the chase. Which firms stood out in this new benchmark? I've got my own ideas on who might have done really well, but who stood out? Who are the leading players delivering the best experiences to American customers today?

7:46Well, it was really interesting to see this because we only just got the results in. And it was the first time that I think anyone's done this, especially with the jobs to be done approach, where they've mixed together branch based, digital first, credit unions, fintechs. And we really didn't know what to expect. And some of the results which I'll go into now were quite surprising. So right there at the top, we've got U.S. Bank scoring a real surprise, but scoring very high on features on their pulse feature score. which is an aggregated score of all the features that best serve those important jobs to be done that we had identified.

8:23And their UX score wasn't too bad either. It was by no means leading, but not so bad. But they really do have a lot of those features that customers are looking for. And in many ways, some of them are delivered quite well. Quite well, it's very British. How would you say that in American? Not too bad, not too bad. But I think where we saw a real standout was SoFi. So SoFi was also right there at the top, not quite top, but kind of run second, digital first, and also had a very high UX score. So that's an example of an institution combining the Pulse feature score and the Pulse UX score to really, really deliver for their customers, which I think helps to explain the success that they've been seeing in terms of account openings and people using it as their primary everyday banking account and really serving all of those jobs to be done very, very well.

9:20um yeah so so i think uh those two stand out and then um i'd say there's a lot of branch-based uh banks there in the top 10 which was a bit of a surprise as well you might expect some of the challenges to be higher up it's that's i mean that's fascinating because i think you know people do sometimes sort of assume that fintechs will or new digital banks will design and develop and deliver better digital experiences and that sometimes is true because you know if you are starting from scratch, if you haven't got those sort of legacy systems that many of the older firms have, it is somewhat easier.

9:53But I think that sort of assumption that people sometimes make that newer firms necessarily deliver better experiences is false. There are plenty of super smart people working incredibly hard in established firms. And actually, I'm secretly quite pleased that one of those firms has done so well. But it's actually interesting that you've got US Bank and SoFi. So you've got an established firm and a new firm competing right at the top to deliver the best experiences to Americans. I love what you were saying about the sort of balance between the user experience and the features. Maybe, Olivia, maybe you want to comment on this, but you know, because it's not just about cramming more features into the app to deliver a better experience.

10:33I mean, who do you think is managing to get a good balance between that sort of ever-widening range of features while still having a sort of easy-to-use or even joyful banking experience? That's a really good question because, you know, doing the research also with users, so our participants, we try to select people whose primary bank account this is. So they self-describe that this is their primary bank account and then we see how they interact with the banking app. And what we see time and time again is just the amount of times it takes people to find features. So, you know, you'll see somebody You'll see people on the screen like, okay, looking for budgets, does it live in some sort of special name that the bank has?

11:22Something like Lifecycle or Track and Plan or something else. Does it live in maybe like Profile or is there, you know, they're asking the chatbot to try to find something. And a lot of the times the feedback will be like, oh, I didn't know that my bank could do that. So I think it points to the fact that even when you have a really broad set of features and a really good proposition, if your users can't find it, what good is it for them? So if you're trying to meet all of these customer goals, you really do need to make it actually simpler than having five or six different accounts and different apps.

12:03People would do it very well. is SoFi is also, I think, Alibank, really nice kind of simple to use. UI, the fintechs are doing, as you kind of might expect, are doing better in terms of design just because it is more modern, kind of more pleasing. But Bank of America with their Erica chatbot is a good example of a kind of established institution doing it well because the chatbot is actually really helpful. So users don't have to kind of continually refer to menu items and trying to find something. The chatbot does work and actually brings up what you want it to bring up. So I think one of the...

12:50Sorry, you wanted to come in. No, I was just going to say that that's so interesting because when you were saying that people are struggling to find features through the menus, which I understand because it's really hard to design menus that sort of encompass everything with really clear and simple terms. I'm sort of surprised that there are customers who are not just going straight to search or not just going straight to the chatbot when they're looking for something. Yeah, I've seen some kind of curious examples of chatbots. So for example, for Wells Fargo, our participant was interacting with the chatbot to find a feature, and the chatbot was absolutely useless at finding the feature.

13:26What it was really good at was actually returning kind of a really detailed overview of spending and finances that was, you know, really nicely categorized by color. And it was really quite informative. So I was like, oh, this is interesting. So it works really well for this quite a complex sort of task, but really simple queries it really struggled with. So I think people are just having very mixed experiences. and I think that also adds to the confusion because if you've had a bad experience with chatbot on one app, you're not going to maybe ask it again for something else. Yeah, I think that is absolutely going to be the focus over the next few years, isn't it?

14:11As customers increasingly turn to the chatbot or the conversational interface to look for things and some of those chatbots, as you say, have been designed to do certain tasks brilliantly but then maybe struggle with other tasks. I think that's going to be one of the big focuses over the next few years, isn't it, as firms do that. But where are customers sort of still underserved? So, you know, you've talked about some of the things that are really great, some of the things that banks are doing well, and you've given some examples. Where are some of the opportunities for firms to differentiate?

14:44Were there things that were sort of missing in some of the banking or credit union apps, or things that were sort of disappointing? I think the largest underserved area is definitely long-term financial planning because that job to be done averages around 40 in the benchmark out of 100. So I think maybe because of the complexity of product and also the kind of silo that established institutions have around combining different product types, we found that You still need to, for the majority of trying to manage your investments or your IRAs or your retirement, that wasn't very well done through the app.

15:30Even though apps that specifically are investment apps do it very well, but that has not translated to banks yet. So for that... Yeah, so historically banks didn't really do that, did they? Yeah. so that's what they can be forgiven for let's say but understanding and tracking spending and finances is also averaging around 66 I think 65 and once you kind of drill down you can understand why so for example only less than 10 providers I think around eight or nine provide budgeting and even less than that cash flow forecasting which is really what people kind of want out of an app. What they want to know is, am I going to be okay at the end of the month?

16:18And yet so few people do it. And I wonder whether that's because they're not taking a jobs-to-be-done approach and they're not really spending enough time listening to and talking to their customers about what their customers want. I mean, I get that cash flow forecasting is technically hard, but I wonder if it's also sort of a, it's something to do with the setup of some of the digital teams that they're perhaps not spending enough time talking to and listening to customers and they're just sort of checklisting rather than talking to customers. Joe, I'd love to bring you back in. What surprised you during this recession?

16:50I mean, I realize you're quite a hard guy to surprise because you spend your life, as does Olivia, looking at digital financial interfaces. But were there some things that you came across, you're like, wow, that's cool. I haven't seen that. That's really innovative. Or just things that surprised you? Yeah, I think that the dominance of branch-based banks at the top of the leaderboard, other than SoFi as the outlier. I mean, when you compare it to the UK, three challenger banks are in the top five, Monzo, Starling and Revolut, whilst only SoFi are in the top five. So I think that was quite surprising.

17:26But then it did speak to the progress, I think, required from any opportunity that the fintechs and the digital first banks have in the US. with Chime finishing kind of, I thought Chime might finish a bit higher when it came to their feature score. They were sort of upper mid table, but they also have the highest UX score on the leaderboard, which shows how much of an appetite that there is for that. And with 10 million active users, you can see hundreds of thousands of new accounts being made. You can see how far that goes and how delivering those fewer features, but delivering them very well can go a long way.

18:12So can you just unpack the highest UX score for listeners? Yeah. So you mean the highest user experience score, but what does that mean? Does that mean the app is sort of easy to use? What sort of feeds into that? Yeah, so we have a team of UX analysts who will analyze each individual journey and score them on usability and visual design. And then provide pros and improvements to justify those scores. And they're each held against a criteria to make sure that the scoring is consistent throughout. And we will analyze for the last six months of mobile journeys from that brand. That will contribute towards the UX score.

18:54And these are all just videos that users can access as well from the benchmarking feature. So it wasn't a big surprise to see how high they were in their UX score. We know that they've got to differentiate there. But just to see actually how much of an impact that has and how even having a significantly lower feature score doesn't matter given the appetite of that region. So you told us that US Bank was top and SoFi was second. But you didn't tell us who three, four, and five were. You just told us they were sort of established banks. So who are the other three in the top five? So for number three, we have Chase.

19:37I feel like I should be doing a drum roll here. Yeah, exactly. And actually, I mean, talk about Chase, no big surprises. I mean, one of the most popular banks, if not the most popular bank. And they have a decent feature score, very decent feature score, and a quite good UX score. And then when it comes to fourth and fifth, I think this might be quite surprising, is Truist and Navy Federal. And you might be surprised to see a credit union coming in at fifth as well, I think. Personally, I'm not surprised at all. I have a lot of respect for Navy Federal. So, that doesn't surprise me. I'm really pleased.

20:16Because sometimes, you know, some of the bigger banks have more resources than some of the smaller firms. I mean, Navy Federal is pretty big as credit unions go. So personally, I'm not surprised. I'm delighted to hear it. Because I suppose, you know, to your point about Chase being popular, being popular and having lots of customers doesn't necessarily mean you're delivering good experiences. It just means you've had very good marketing and distribution in the past. But it's great to hear that Chase is doing really well, among others. If I can cut in on the subject of credit unions. So maybe Federal actually has a perfect score on money management and insights.

20:54So they are serving customers exactly where the customers need it. And then another credit union we have is Alliant, which when I was contacting participants for research, I got an overwhelmingly positive response. People were excited that Alliant was kind of, that we were taking an interest in Alliant. And they were kind of telling me that, you know, this is such a great credit union and that they have these features that are free of charge. You know, you can check your credit score and you have to pay for that in other apps. So I think there is a lot of, and Alliant is lost in the benchmark, but clearly, even if your kind of, you know, feature score is down low in the table, there is a lot of love and a lot of customer loyalty to credit unions.

21:41You're right. There is a lot of love for credit unions among their customers. Okay, well, we will take a short break here. So we talked a little bit about where the leading sort of U.S. banks and credit unions are meeting customers needs well through their mobile apps and where there are some gaps. And after the break, we'll talk about what that means for the industry more widely and what it takes to win customer relationships. Fall has never looked or tasted this good. Sweetgreen's fall harvest menu is back with seasonal favorites dressed to impress and made to be devoured. Warm roasted sweet potatoes, crisp apples, maple glazed Brussels, and crave worthy flavors in the autumn harvest bowl, maple glazed salmon plate, and roasted bacon Brussels side.

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22:40So before the break, we talked about where leading U.S. banking providers are serving customers well and where there are still opportunities to improve. But there are lots of other themes running through this research by 11FS Pulse. One of them is that many customers don't rely on a single bank for their entire financial lives anymore. They might deposit their salary at one bank, spend on a credit card, send money through a digital wallet, and turn to a fintech for yet another financial need. So that makes the question of who provides the best banking experience and even where to Americans bank much more complicated than it perhaps was in the past.

23:14And as those relationships become more fragmented, what does it really mean to win, earn, and retain customer relationships? Yes. Olivia, I sometimes sort of think the terms like main bank are no longer useful because I'm not sure that everyone has a primary financial provider. I mean, do you think that term still has value? Do you think customers do still think about a firm as their primary financial provider? Or do you think more and more people are deliberately or accidentally distributing their money across more than one firm? I think both are true. So I think, again, historically, I think primary might have just meant, okay, where does your salary get paid?

23:59But today, it could be the provider that the customer opens first, that they interact with the most, or that they trust the most. Trust them to make their decisions or help them plan. I think the kind of the fragmentation of our financial lives is

24:22I can't decide if it's a feature or a bug because I think in some ways I think in some ways it's a response to the primary provider let's say not giving people what they actually need right so people will use multiple bank accounts to budget not because they not because they have like a I don't know, like a need to have all these different accounts, but, you know, their salary get paid and they will send some funds spending money to one account. And there's also a credit card that they will put kind of rewards spending on. And then another chunk will go into their investment account, which is with somebody else.

25:01And that's because we have so much choice, but also because this fragmentation actually makes it easier. So if there was a provider that did all of it well and actually consolidating all of this into one experience was smoother and better and worked for you, then you would do that, which I think is what we're seeing with success of apps like SoFi. So they are catering to a lot of these needs and they're doing it well. And so people are moving over or living more of their financial lives inside that ecosystem. It's interesting you use the term ecosystem because the way I think about this, is that each of us assembles our own ecosystem of apps and other services, not just in financial services, but throughout our lives.

25:48You know, we find the apps, the services, the things that we enjoy, the things that suit the work for how our brains work or whatever. And we each sort of assemble and make different choices. And we assemble sort of different ecosystems that work for us, or sometimes don't work for us, that we hope will work for us. Joe, so it's fantastic that US Bank has come top it's a highly competitive market as we said, there's a lot of banks competing and as you've got more and more national players so the competition from state to state is increasing and so on but of course, coming top in the 11FS Pulse benchmark fantastic, though that is not really the goal I mean, what is or should be the goal so for chief digital officers at American banks and American credit unions listening to this you know what does winning actually mean what do you think they should be thinking about well i think if you were to sort by ux score um coming top should should always be a priority um for for any financial service provider um and hopefully they can use the 11fs pulse platform to help them get there um but you're right it's not always about finishing top when it comes to the feature score.

27:01It depends on your strategy. So if you are trying to be that holistic financial ecosystem, that financial super app, then yes, you do want to score high. If you want to aspire to be SoFi and beyond or Revolut in Europe, then yes, that should be a name. But I think other than that, it should really align with your strategy and the kind of features you want to deliver well on and the customers that you want to go after. I mean, for example, we're not going to point the finger at American Express and say, why aren't you introducing savings features? Because that's just not where they excel. They need to deliver credit features as good as they possibly can.