Payments UX: Catching Up with Digital Transformation

“It's really taken a catalyst like COVID for a lot of these institutions to take more of an introspective look at their technology.” - Michael Bank

This past year brought a great deal of upheaval and just as much digital transformation. The physical separation forced everyone to come up with new ideas to solve the problems that social distancing created, which made for a lot of growth in the financial industry, especially as it pertains to the user experience. 

Michael Bank and Seth Fenster, co-founders of Blip, are doing great work to empower positive financial health for people and have a lot to say about the user experience of making payments as well as technology in the financial sector. 

A Future Based on Financial Health and Wellness

Consumers can't effectively save, spend, or invest without taking care of their bills and their immediate needs first. Coming to this realization, Michael and Seth have devoted their time and energy to empowering positive consumer financial health, working to address the lack of education around financial management. 

Michael and Seth’s organization, Blip, helps its users look at their whole financial future — instead of solely on historical trends — to create a sense of financial health and wellness. Essentially, Blip is future-focused. 

Financially, it’s easy to get stuck in the present moment by making decisions based on past transactions. However, looking at a post-COVID world, things have evolved so rapidly, which creates a lot of financial stress for consumers. Michael and Seth are working to help consumers get ahead of these kinds of problems before the problems even exist. 

This has been a tough year for so many people, and there have been so many changes happening much faster than anticipated, including the timelines of digital adoption within financial services. It feels like a brand new world. 

Seth explained this idea, “It's really about bringing in that digital point of view to the forward-looking aspects of financial management.”

In the past, so much focus has been placed on historical spending. However, this doesn’t amount to much more than budgeting, which doesn’t gain a lot of traction with most consumers. But as Seth and Michael have observed, consumers care about the bills they have each month, and so this is where they are putting their attention. 

Why is Budgeting Such a Challenge?

As a culture and as a society, people in the U.S. tend to be very consumption-based. This has a lot to do with the existing consumer culture. And truthfully, many don’t know when they are spending money on things that aren’t in their best long-term interest. This makes it hard to make budgeting appealing. 

Having a budget is great, but just by calling it a budget, many consumers think about sitting down and balancing a checkbook and running through their banking statements.

And really? No one wants to do that

Seth and Michael are re-framing this idea, looking less at the ledger in a checkbook and more at automating the process to help their consumers manage their finances. By taking a forward look at users’ upcoming bills, they are providing more proactive financial advice — around making positive changes rather than viewing financial mistakes in the rearview mirror. 

It’s a lot like going to the physician. No one wants to go to the doctor because it's painful and takes too long. But even the healthcare industry is shifting its focus towards preventative medicine and getting ahead of problems before they happen. 

How does this apply to financial services? In one survey from a few years ago, many respondents stated that they would rather go to the dentist than visit their financial institution. Talking about budgets is hard and uncomfortable, but Michael and Seth are working hard to transform that perspective. One way they are doing this is by working with companies to digitize their work. 

Michael elaborated on this, “It's really taken a catalyst like COVID, for a lot of these institutions to take more of an introspective look at their technology. But I think that they really are actively thinking about ways to improve their experiences for customers.”

Modern Digital Experiences and Legacy Payment Systems 

Traditionally, bill pay for incumbent financial institutions has been challenging. These legacy bill pay systems are expensive and rely on outdated processes like ACH transfers and writing checks on the customer's behalf. 

This is an expensive, inefficient way to pay a bill, and it doesn't quite fit with the more digitally native consumers who expect instant notification that they made a payment — and many consumers want flexible options like using their debit and credit cards. 

On average, consumers have to pay around 7 bills per month, which means they either have to manually submit these payments through their bank’s clunky bill pay or visit seven different websites to handle them all — almost all of which are time-consuming and not optimized for mobile use. 

Michael and Seth are working to improve this experience by rebuilding this system from the ground up. And as Michael explained, “It's really going to enable the financial institutions to bring customers back to the organizations because they're predominantly not paying bills through the banks and credit unions currently.”

By getting consumers to come back and pay through their banks and credit union, that reinforces the positive relationship they have with their financial institution. Their financial partner is simplifying the complexities of their lives, saving them valuable time, and eliminating their financial frustrations. 

Consumers have expectations of being able to move money very quickly thanks to services like Zelle, CashApp, and Venmo. They want this same kind of convenience from their financial institution, who should be leading the charge instead of trailing behind.  

Seth shared that there are 15.4 billion bills paid every year — about 488 bills per second. Each one of these is a unique opportunity for financial brands to make a positive impact on their customers. 

Creating Opportunity for Your Customers 

There’s a lot of internal discussion between Michael and Seth and their team about a world where a bank approaches consumers with various kinds of services, including notices to authorize a balance transfer from a credit card with a high-interest rate to save a specific amount of money.

This all fits with a theme that creates customers for life: “Help first, sell second,” and applying this methodology to a fully digital-financial world, including credit cards, auto payments, mortgages, and all recurring payments.

Seth explained it as, “How do we let you manage your finances in a way that's like a controlled autopilot?” This service becomes an automated way for users to build financial security, learn about managing their accounts, and save money. 

The next step for Seth, Michael, and Blip? Finding a way to help banks, credit unions, and other financial institutions to implement this into their existing app so that the customer experience of adopting Blip is a cinch.

Creating Consumer Value

Michael and Seth have spent a great deal of time in beta testing evaluating the overall user experience. There can be a lot of aggravation surrounding bill pay with banks and credit unions, and the Blip team has set out to ease a lot of these pain points. 

Michael shared some of these discoveries. “Typically, the banks and credit unions, if they're using a bill pay provider, the user needs to add their card number, their payee address information, and even finding, ‘What is my account number?’ is a difficult task. And so you just give up on it.”

Blip is determined to make this easier. As a solution, they can look at a user’s transaction history to pinpoint all the billers that needed to be added to their Blip account. This is the kind of attention to customer needs that will make all the difference. 

Other ways Michael, Seth, and their colleagues are adding value is by helping their users see their entire month at a glance — including things like upcoming bills and more detailed information from their credit card statements like the current balance, minimum balance, and statement balance to better understand their entire financial picture and see their bills in real and future time.  

Michael shared that some consumers will visit their bank’s app, look at what their current checking account balance is, and think that that's their safe to spend amount without consideration for upcoming expenses. He explained that they will see this balance and think,  "This is the money that I've got in my account. So I'm good to go." 

But as he shared, this isn’t always the full picture. “If somebody has $400 in their checking account when they go out and buy a TV for $300, they think, ‘Great — about $100 leftover,’ where they're not actually thinking about… that proactive upcoming nature of bills they have throughout the rest of the month.” Then very quickly, these consumers are actually in the red. 

Michael continued, “And so we visually show what [their] current balance is, but then show what those upcoming bills are due. And then we'll basically [subtract] those two numbers to give you almost a leftover safe to spend amount.” 

In this way, Blip is almost acting as a financial crystal ball for consumers to foresee their financial future. 

Embrace the Change

The pandemic has opened the eyes of many leaders in the financial industry that they need to change their habits and operations. After all, if people aren’t going to be stepping foot inside a branch, how can they connect with their customers?

Michael’s solution is to “Roll with the punches of changes that are coming.”

Even well over a year after the onset of the pandemic, consumers are experiencing a lot of change with every aspect of their lives. Being able to quickly buy something on the internet and it arrives several hours later is the experience that people have come to expect, and so they expect the same from their banking experience, too.

The problem? The financial industry isn’t fully there yet, which means financial institutions shouldn’t be afraid to make changes to keep up with this rapid digital transformation and shifting consumer expectations. 

Seth added to this idea, “It would be very helpful to stop thinking that you can't do something just because historically it was challenging or difficult and that it might be hard to do financial services digitally — and maybe there are some aspects that are true — but for the most part, we can make it happen.” 

As for Blip? They are creating a platform that really can be used by any institution, any financial brand. 

Seth and Michael understand the power of what their service can do, and they are finding ways to turn consumer bills into opportunities no matter the challenges. How are they making it happen? It’s about their outlook. Seth shared, “It really just kind of starts with the mindset of, ‘We can do this. Our institution can change, it should change, and we're going to make it happen.’" 

When financial brands put the transformation of account holders over the commoditized transaction of dollars and cents, that's when real transformation happens — and what better time than now to make that commitment. Money is stressful, and that stress is taking a toll on people's health, their relationships, and their overall sense of wellbeing. 

If they embrace change, financial brands have an opportunity in a post-COVID world to guide their customers beyond that financial stress and toward a bigger, better, and brighter future.