Very frequently, aka every time I log onto my (any one of) my banks’ websites, I’ll be greeted with something like this:
Taking a quick survey of the top banks in America, no matter where you look the login screen seems to be just blown away by the thirst of the banks pushing their credit card products.
Past the scenic login screens, things only get worse. Judging by the responses to my tweet, I’m not the only one constantly frustrated by how terrible bank websites are. Banks are constantly redesigning their websites to “improve end-user experience”, and yet, all they do is create frustration for users.
Who has the competitive advantage in setting up a modern youth-oriented mobile and internet banking service:
a bank, or
not a bank?
The bank has some obvious advantages. Banking is a very regulated business, and if you are already a bank you already have most of the necessary regulatory approvals and the know-how and connections to get the rest.
There are some disadvantages. If you are a bank you probably have a lot of branches and tellers and employees, all of which cost money, money that a pure financial-technology startup doesn’t have to spend to compete with you. Plus your own mobile-and-internet bank might be undermined by your traditional branch-based bank: The old-timey bankers will meddle with your app design, or you’ll worry about cannibalizing the branches, or you’ll have to design the app for a consistent user experience with the branches, etc. If you’re already a biggish bank, you probably have some name recognition, but you’re a bank in 2019; the name recognition is probably bad, and young customers might be more inclined to trust a novel assortment of random letters than your venerable but tarnished name
He goes into some efforts to bring younger people to banking: Finn from JP Morgan Chase, and, most recently, Marcus from Goldman Sachs. Marcus caught my eye because I’d heard a commercial for it on the radio recently. It was a woman signing about how much more money she was saving with Marcus, along the lines of this commercial:
What is Marcus, I thought?
Marcus has been marketing itself aggressively as the cooler startup inside Goldman Sachs that’s more relatable to the masses.
Marcus is also this:
In 1869, an immigrant in Philadelphia who had "worked as a peddler with a horse-drawn cart and later as a shopkeeper," and who was in possession of a terrific beard, moved to New York, where he "hung out a shingle on Pine Street" as a commercial-paper broker. The firm that he founded grew over the years, becoming a massive success, and then an American institution, and then "a great vampire squid wrapped around the face of humanity." Oops! Too far. His successors are trying to dial it back a bit. "Please, call us Marcus," they say, getting back to their roots. "Goldman, Sachs & Co. sounds so stuffy":
After much internal discussion, the Wall Street firm has decided to call the retail banking operation Marcus — the first name of the company’s founder, Marcus Goldman.
Can you imagine if that works? If Goldman Sachs could cure years of accumulated distrust with a hipster-y name for its online retail bank? "You know," young people will say, "back when I associated Goldman Sachs with the last names of two guys, I thought it was a shadowy monstrosity that made money by cheating and gambling and that probably caused the financial crisis. But now that I associate it with the first name of just one guy, I realize how sweet and earnest it actually is, and I've opened a savings account."
But why are all these companies going through digital refreshes to make themselves seem cooler instead of fixing the fundamental issues, for example, taking away egregious predatory fees and, probably the most important for the younger consumers they’re so thirsty for making it easy to do things on their websites?
A couple reasons.
First, for Goldman (and many other major banks), they want you to forget that they were heavily involved in the last recession. They’re friendly now! They’re in full regulatory compliance! They have people who sing.
Bank back-end systems are driven by technologies that are more than 40 years old. Like COBOL. A couple months ago, I asked people on Twitter to share their horror stories about tech stacks:
Vicki Boykis @vboykisSomeday, I want to write about the state of 80% of the IT market, for both companies and candidates. 80% of the market is not using K8s or microservices or doing interviews inverting binary trees. Two cases in point: One: https://t.co/IvOYO21mJy Two: https://t.co/OJr4y9Za5l
And got this answer about banks:
As Matt writes,
"I understand that they tried to separate the tech as much as possible from the JPM core, but they still had to run it on that core," said Todd Baker, a senior fellow at Columbia University who is a managing principal at Broadmoor Consulting LLC. "JPMorgan is sitting on 50 years of COBOL and Fortran," he said, citing old programming languages.
There’s actually a very good reason for this: regulation and stability. If Amazon goes down, people can’t buy stuff. But it’s not the same as if a financial system goes down. So there are rules and regulations around what can and can’t be changed. And, ultimately, banks themselves are extremely risk-averse. COBOL developers remain in insane demand in the sector (a strongly encouraged read of the linked piece, if only to read about the Cobol Cowboys.)
COBOL sits on the mainframe, which is so far away from the modern web development stack it might be in Mars. How do companies integrate that data into modern websites? It’s a slog. (On the other hand, this is really impressive and awesome: )
Second, large companies are disorganized, bureaucratic, and highly driven by politics. This is an extension of my theory, good things don’t scale. Anytime you grow an organization, you grow the amount of communication that has to happen between departments. You also grow the layers of visibility and coordination that have to happen to make anything happen. The number of times you have to hop on a call increase logarithmically. So how do you succeed in these kinds of environments? You have to do projects that are flashy and make sense politically, and, just as important, bring in revenue. If you can point to revenue that your project has brought in, you get a lot of political clout.
Doing website redesigns is a very vague, vacuous thing, because often it’s hard to prove that you’ve “benefited the customer.” How do you prove customer satisfaction? Time spent on the website? More money deposited? The fact that they don’t leave your bank? It’s a hard question, and these metrics are often not even collected after redesigns.
Coupled with the fact that the interests of the UI designers and developers may be exactly at cross-interests with the rest of the business (i.e. creating a good, legible login screen, or pushing credit cards, which make you $$$?), and you get a website design that’s a compromise between UI, bottom-line revenue, politics, and having to deal with COBOL.
More and more companies - and product teams - are encountering new expectations, driven by Big Tech, for how to treat users. For example, I remember giving a talk on my book Customers Included to a user experience team at a well-known hospitality company. At lunch afterward, the UX designers complained to me that leadership was forcing them to deceive users: "We're lying to our customers." I could understand their frustration: the company's emerging business model forced them to deceive and exploit the very people they had trained, as UX designers, to help!
It's cold comfort to note that those designers are not alone. A major study of dark patterns, just released by Princeton professor Arvind Narayanan, shows the widespread deceptive practice online of using corrupted UX principles to trick people into shopping and buying. (See Narayan's thread with more info.)
I’m generally of the belief that large companies are not inherently evil, but that evil mostly just kind of happens by chance in corporate America.
People are generally very bad at forecasting whether something they do will mess up hundreds of thousands of people in the future. By the time they look around, they’re making so much money from their dark patterns (which started out small) that it makes absolutely no sense to change them.
Which is why it makes so much sense to me as someone who has observed industry that bank websites are generally terrible. I get it. They’re already making money hand over fist, they’re regulated to the hilt, they’re rife with organizational battles over who will come out on top, and they’re still trying to fight the stigma of the last recession.
Art: The Banker’s Table, William Michael Hartnett, 1877
What I’m reading lately
A great list of SQL resources:
Licenses on our phones:
A local Philly hospital is shutting down because of bankruptcy
On being a woman who loves math
About the Author and Newsletter
I’m a data scientist in Philadelphia. This newsletter is about tech and everything around tech. Most of my free time is spent kid-wrangling, reading, and writing bad tweets. I also have longer opinions on things. Find out more here or follow me on Twitter.
If you like this newsletter, forward it to friends!