> Posted by Ignacio Mas

Digital has killed many products (think of the music CD, then the newspaper, and next, possibly, the book) but enables much broader, more flexible customer experiences (think iTunes, Google Alerts, the Kindle).

After reading just the first sentence of this post you may already be squirming: that marketing buzzword again, customer experience. Like all good terms, it is so often abused that it has come to represent an almost mystical quality that tautologically defines successful products and services: you can detect it but only in hindsight (think of the iPhone, Uber), and it´s oh so hard to put your finger on it during the development process. I think a large part of the failure of digital financial services to entice the poor, informal majority of people in the developing world beyond making/receiving the occasional remote payment and paying the odd bill has been a failure to recognize the difference between products and experiences.

Let me try to give meaning to the term customer experience with reference to the Kindle. In an old post I explained the three things I really like about the Kindle, and the Paperwhite 3G version in particular: (i) I can buy and download books wherever I am, whenever I am feeling bored; (ii) I can always read it wherever I am without needing any kind of supplementary reading aids (no need to wear reading glasses as I can increase —and standardize— the font size, no need to find light as I can illuminate the screen); and (iii) I can instantly look up the dictionary and other books referenced, thus preventing my inherent laziness getting in the way of learning about new words and works.

And yet there are certain important ways in which the Kindle presents a clearly degraded reading experience relative to the old fashioned book: (i) I cannot write things on the margin of the page, flexibly and visibly (notes must be in text form and hidden under a highlighted passage); (ii) the difficulty in browsing (the e-book is structured as the codex of former millennia, when you could only scroll through text sequentially); and (iii) how invisible the e-book (as opposed to the e-book reader) is when you are in fact not reading it, to the point that I often do not remember the author and title of the book I am currently reading.

Notice that my perceived disadvantages all have to do with the book as a distinct entity: writing on its pages, flipping its pages, casually gazing at the book cover. The superiority of traditional books is contained within the physical book itself. Any deficiencies in the environment are not held to be the book´s fault. How could one possibly judge the quality of a book by the amount of light in the room you happen to be in or the absence of a bookstore nearby?

In sharp contrast, the advantages of the Kindle all have to do with things that are extraneous to the book itself: a bookstore at your fingertips, no need to scramble for eye glasses or light, the incorporated dictionary and the seamless bundling and interconnecting of books. The Kindle does more for me than just convey the text in any given book.

So when staunch physical book readers tell us (usually rather self righteously) that they will never give up the touch and smell of books, they are talking about a particular experience – that of the book itself. They really are comparing the Kindle with one book. And when I counter with some pro-Kindle advocacy, I am talking about a much broader experience: it´s a book + bookstore + eyesight correction + lighting + dictionary combo. To me, a device that improves my experience on all these fronts is well worth sacrificing some browsing and margin-scribbling flexibility – important as these are.

In general, for physical goods the experience is limited by the product itself. One didn´t use to talk about experiences in the analog world where product = experience. But when that product is digitized, the opportunity is to create experiences that go well beyond the particular job that the analog product was designed for.

You can analyze what is so seductive about Uber in exactly the same way: it gives you more than just the ride from point a to point b (peace of mind around seamless booking, invisible payment, transparency of route taken, etc.).

But in the world of financial services, digital still tends to be seen as either an extension or a cheaper alternative of what financial institutions have always done. We are building digital products, not experiences.

If you design digital savings pots with the narrow idea of making them better than recycled jam jars, you are likely to fail. If you design digital merry-go-rounds with the narrow idea of making them better than the physical group meeting, you are likely to fail. If you design a merchant or bill payment system with the narrow idea of making that more convenient than pulling out a few bills from your pocket to pay for the school fee, you are (only slightly less) likely to fail.

You might have a much higher chance of succeeding if you broaden the definition of the problem that you are trying to solve. For instance: making sure that somehow you have enough money available to pay the school fees when they are due next month, by making it natural for you to be setting some money aside whenever you can, to borrow some money when you can´t get there all the way on your own, and to pay it conveniently once the money has been put together.

One job that financial services ought to do is to help people manage their money gaps – getting the money they don’t now have but which they know they´ll need at some point in the future. Digital ought to be well placed to support solutions that deal with that more holistically than your standard bank products.

Ultimately, the main challenge digital financial service providers face is to build customer propositions in a way that goes well beyond that savings account, that overdraft, and that life insurance policy. What aspects of people´s life are you aspiring to make easier or less anxiety ridden? Or, to use Clayton Christensen´s formulation, what is the real job you want them to hire you for?

Ignacio Mas is Executive Director at the Digital Frontiers Institute.

Image credit: Accion

Have you read?

Why Digital Wallets Stay Empty – and Six Ways Providers Can Help

Putting Users in Control of Their (Digital) Identity

Reality Check: Three Ways We Hype Up Financial Inclusion Breakthroughs