At the end of 2019, a national bank approached Markswebb with a strategic goal: to motivate clients to perform as many digital transactions as possible and to discourage cash withdrawals. The challenge was particularly complex due to the bank’s target region, where cash turnover is traditionally strong, and the penetration of digital services lags behind the central regions of the country.
Markswebb specialists approached the task comprehensively. First, they thoroughly examined the bank’s processes, analyzed the customer journey, and audited online channels, comparing the results with market metrics and identifying growth points for the product. In January 2020, they traveled to the region and spent a week studying the behavior of the bank's actual and potential clients, uncovering why residents of this region still preferred cash. The collected data helped identify user problems and select the best market practices to remove barriers, taking into account the specifics of the bank’s products, clients, and processes.
This case study focuses on the most insightful phase of the project: the in-depth user research.
Main challenge and strategy
Researchers began the project by studying the context and conditions in which clients address their financial tasks. They formulated groups of questions about cash and non-cash transactions and the use of online banking. Each question touched on a specific scenario where the individual had to choose between using cash or a card.
For the interviews, 20 respondents were selected from the client bank’s customer base. The initial sample was composed based on formal criteria extracted from the bank’s systems. All respondents fell into six different behavioral characteristics:
- Withdraw cash as soon as they receive their salary.
- Actively use their card for paying for goods and services.
- Obtained a card from the bank not for receiving a salary.
- Perform all their payments in the mobile bank.
- Make payments in the online bank instead of the mobile bank.
- Recently obtained a credit product: a loan or a credit card.
The initial interviews revealed a correlation between how people receive money and how they spend it. Clients do not seek to top up their cards or withdraw cash unless absolutely necessary, preferring to spend money in the same way they receive it.
Conversations with clients helped determine how they handle money, pay for purchases, transfer funds, and store balances. Researchers tried to replicate most of the scenarios described by clients on-site.
Why do people still use cash?
The vast cash circulation can be explained by the nature of the region where a lot of small and micro businesses are represented. These businesses prefer using cash: taxi drivers, private tour guides, small vendors, street sellers, etc. It can also be explained by the lack of habitual digital services as the region is poorly developed digitally. The bank can affect most of these factors only indirectly by teaching customers and forming new digital habits.
- People store cash because there are a lot of places that only accept this type of payment. The travelers withdraw cash in advance, and the locals don’t seek to replenish their bank cards as they don’t want to take extra action with money.
- The interest on the deposit doesn’t provide any benefits and cannot motivate people to store money in a bank account as most people live paycheck to paycheck and don’t have much money.
- A lot of customers don’t know that non-cash payments are easy and convenient. Financial institutions refuse to tell people about the possibilities and convenience of digital services, and they don’t use onboarding within digital services.
- Customers don’t understand the profit provided by the loyalty program as the bank explains its details very poorly, the discounts can’t be accumulated, and the amount of cashback isn’t that big. Customers can only wonder how much they can save.
- Small businesses aren’t interested in cards acquiring and using POS -terminals. The free-of-charge acquiring conditions are very high, and this type of payment and its pros are alien to entrepreneurs as customers continue using cash.
- Customers aren’t used to transferring money to friends as it’s easier and more convenient to exchange cash. Some people even hesitate and think that money transfers can attract too much attention from the bank and the tax authorities. Furthermore, wire transfers take more time than exchanging cash.
- The bank doesn’t make it clear for customers that bank cards can be used for online shopping. Usually, customers get cards from other banks which they can surely use for online purchases.
- Customers don’t think that the mobile banking app is easy and convenient to use for regular tasks. For example, one can’t fill in the description of the money transfer or add comments for recipients.
- Some important services aren’t available in digital channels. Online payments and services are a crucial driver for the use of digital banking but customers couldn’t use these services because of some UX problems.
The audience thresholds for using non-cash payments remain because of the region’s nature, low financial literacy and inconvenient digital banking services.
Framework for digital transactions’ growth
To retain customers from withdrawing cash and motivate them to use digital channels, we needed to solve 3 global tasks:
- Make more payment features, and make payments easier and more convenient — for those who already use digital channels.
- Make it possible to switch to digital channels, increase motivation and lower the entry thresholds — for those who prefer using cash.
- Establish conditions throughout the region to involve as many participants ininto digital transactions as possible.
Solution: what a bank can do?
- Provide more education for customers and remove mistrust to P2P money transfers and make new money transfer habits. Digital channels must process all the actions immediately and tell customers about success; the entry fields should include tips, and the operation must be clearly visible in the list of transactions. These can be the next steps: adding template comments to a transfer, splitting the amount of a transaction, and fundraising.
- Make more communications about the bank cards usage in online shopping. To motivate people to use their cards online, the bank can offer additional cashback or bonuses for purchases at the popular retailers. The stores are also interested in geographical expansion, so they could collaborate with the bank in the field of sales events.
- Implement convenient personal finance management features into the mobile banking app. The bank can help customers make conscious and profitable purchases using tips, financial reports, setting goals and transaction limits. The autosave money feature upon some events, like receiving a salary or reaching a specific account balance, would also be useful.
- Motivate businesses to use digital payments. The cost of service should be affordable and consider the income level and the account balance. Entrepreneurs should be provided with more ways to accept payments without POS terminals, like QR-code payments. These payment methods would be convenient and lower the entry thresholds.
- Make the payroll projects more affordable for local businesses and more profitable for customers, offer special tariffs for cards: increased level of cashback, private support line, lowered cash withdrawal fees, and lowered cash and settlement service fees for the business. Only then the bank can accomplish the needed customers’ behavior pattern: when they spend money the way they get it.
The motivation for non-cash habits must be clear, and it should consider the income level. For example, the bank can calculate the number of purchases made with all the client’s cards and then show the profit the customer can take. Banks can also implement some visual elements throughout the app that show if the terms (for benefits) of a loan or a deposit are met.
The visual design makes the value of digital payments more clear: customers can clearly see if the conditions of the benefit program are met, and what they get by choosing digital payments and keeping account balances.
Bottom line
This case study highlights the importance of understanding customer behavior and addressing barriers to digital adoption to increase non-cash transactions. By focusing on customer education, enhancing personal finance management, and incentivizing businesses, the project successfully developed a strategy to boost digital transactions and improve the overall user experience. The comprehensive approach ensures that both customers and businesses see the value in digital payments, leading to increased adoption and usage.
