UX in the Digital Age and Extreme Customer-Centricity - Akio Isowa of SMBC Talks with Yasufumi Fujii of beBit

Akio Isowa, head of the Digital Solution Division at Sumitomo Mitsui Banking Corporation (“SMBC”), has carried out a number of projects that break ordinary banking conventions. Examples include revamping SMBC Direct to be in line with the smartphone age; developing Bank Pay, which is embedded in UNIQLO Pay; and creating COTRA, a service that enables customers to send money to a bank account from an app. Isowa has been recruiting designers since even before the spotlight was on the importance of designers in the digital age, and he creates services with a no-compromise approach to UI (user interface) and UX (user experience). One thing all of these services have in common is an extreme customer-centric approach that pursues customer needs and convenience.

Isowa talked with Yasufumi Fujii, well-known UX specialist and CCO and Sales Director of East Asia Division of beBit, Inc., to shed light on the importance of UX and the changing relationship between banks and customers in the digital age.

The birth of the UI- and UX-centered SMBC Direct app - Moving designers and engineers in house from 2015

Fujii

I use the SMBC app quite frequently. Were you involved in developing the SMBC Direct internet banking service?

Isowa

I was. I worked on the legal aspects of the development of the SMBC Direct internet banking service launched by SMBC in the late 1990s. Then, in 2015, we established the Retail Marketing Department and Retail IT Strategy Department, and I went back to working in retail. When I did, I was surprised that the usability of SMBC Direct had not changed at all since the 1990s. In 2015, smartphones were already widespread and the use rate of SMBC Direct on smartphones had nearly exceeded the use rate on computers. IT companies at the time were launching apps at lightning speed—the age of apps was here no matter how you looked at it.

SMBC Direct was an app, but the design was rather old, and the UX had not significantly changed since I was involved over ten years before. I knew it couldn’t keep going like this, so I decided to bring the app up to date in one fell swoop by eliminating the PIN card and switching from a desktop browser-based screen to a mobile app-based screen.

Users at the time accessed SMBC Direct for about an average of three times per month, but we want them to use it daily. In order to turn it into a service that users would want to use every day, we would need to focus on the design, and to do that we would need a team that could fix things the instant they noticed a problem without delay. At the time, there were no designers at the bank, so we recruited web designers and established an in-house team.

Akio Isowa, Sumitomo Mitsui Banking Corporation
Fujii

2015 was pretty early to move design in-house. That’s earlier than other industry sectors.

Isowa

Right. At the time, there were a lot of web designers in the job market, so we decided to create a new position and hired some designers. We also brought in full-time coding engineers and built a system enabling quick responses if we needed to change something. To improve the UI and UX, we created a room to test usability and had people review its usability before releasing it. The production team wasn’t used to being reviewed, so that was really hard for them. [laughs]

Fujii

As a UX specialist, to me, it’s unthinkable to not get reviewed. In fact, I’m like, “Yes!” when something that needs improvement is found.

Isowa

Exactly. We also made it possible for people to open ordinary savings accounts in the app. To me it was crazy that you had to go to a branch and fill out a paper form. At the time, the use rate was only 2–3%, even though we did our best to promote it on TV commercials and such, but today the use rate is 40–50%. But no one praises me for being the person who made it first. [laughs]

Fujii

You made a pretty bold transformation, but what made you take that approach?

Yasufumi Fujii, beBit, Inc.
Isowa

It was leapfrogging* in a sense. I think the reason I took this bold change of course was that I saw that SMBC Direct, which we had put quite a lot into, had not been improved in over ten years and it made me keenly aware of how much we lagged behind.

*Leapfrogging: The phenomenon in which a specific technology or infrastructure develops and spreads at an accelerated rate by not conflicting with existing systems or infrastructure. It is often used to refer to a new digital technology that rapidly becomes widespread in an emerging nation.

Fujii

That’s interesting. Most who can undertake bold initiatives tend to be people who have experience working internationally or were hand-picked. Maybe the fact that you were not always in retail and experienced how interesting it is to make websites in the early days of the internet had a big impact on you.

Wire transfer forms disappear from bank counters as the app replaces the counter

Isowa

The number of SMBC Direct users had remained at about 3 million for a long time, but when we changed the design to support smartphones, eliminated the complicated PIN card, and implemented biometric authentication, the number grew to 4 million in no time.

When this happened, ideas started coming in from different departments. It was like a tiny snowball started rolling on its own and grew bigger and bigger. Bankers are better at making an existing service bigger and bigger than starting from scratch. Ideas keep coming and coming once a basic framework is in place. What was really groundbreaking was that we eliminated the use of paper forms at branches for wire transfers. Once I went into a branch to make a wire transfer and was surprised that there were no wire transfer forms. [laughs] When I asked a teller, they directed me to SMBC Direct. Before I knew it, the app had replaced the bank counter.

Fujii

The app and bank counter work well together, don’t they? In the last few years, I’ve been using SMBC Direct often, too. I can find the service I’m looking for quickly, and it has such a simple layout that I was surprised at how many functions it has. I think the service shows an outstanding balance of UX, business, and technology. UX tends to be overlooked when compared to cutting-edge technologies like AI, but an outstanding UX enables people to use technology naturally. That’s where I think its innovation lies.

Changing customer touchpoints so they won’t have to go to the bank in 2015 was pretty pioneering. Most companies in Japan didn’t realize the importance of digital touchpoints until 2019 or 2020. In the US, digital advertising costs exceeded traditional advertising costs in 2019. Then the COVID-19 pandemic made it difficult for people to go out, so online touchpoints came to be emphasized even more. Many realized that new customer touchpoints were needed when smartphones emerged, but not many were able to invest in it. You made the big decision to do that in 2015, and it is great you have been able to continue this usability-focused service that can solve customers’ problems to this day.

Helping build the cashless payment service, UNIQLO Pay

Isowa

In 2018, I became General Manager of the Transaction Business Planning Department in the Transaction Business Division, where I was in charge of corporate payments. There, I felt that the bank lacked the services it could provide in the area of BtoBtoC.

At the time, retail, eating out, and other industries already offered apps to retain customers, but none of them had a payment function. The reason was that credit card processing fees for merchants are fairly high, making it hard to turn a profit. So, we created Bank Pay using the existing functions of J-Debit*.

*J-Debit: Adebit card service in Japan.

Understandably, credit card companies were against it. But it is normal for new digital-based services to surpass existing services—that’s just the nature of it. Around that same time, Uniqlo started implementing self-checkouts to streamline the checkout process, making them one of the first to do so. They were also considering adding a payment function to their Uniqlo app which served as a membership card. Bank Pay was still in the conceptual stage, but we told Uniqlo about it and they adopted it as a way to make payments directly from your bank account. Combining the self-checkout function with UNIQLO Pay allows customers to make payments by just scanning their smartphone. It’s convenient and interesting. I had finally accomplished something I had wanted to do personally since I thought of doing BtoBtoC.

Fujii

That’s great. From a brand perspective,bringing customer touchpoints in-house as much as possible is important. However, when in a partnership, you have to think about profit, but there are also difficulties that come with collaborating with another company. Having a service where you can easily add functions to your app yourself while maintaining profit is really sought after. But it is usually startups that think up services like these, so it’s impressive that a big company like yours did it.

Isowa

Now, initiatives like ours have spread to other banks. But even if users use another service, we receive a fee as long as they pay from a SMBC account. If the market gets big, people will switch from cash to cashless payment and the profits will be distributed to the banking sector. So other banks launching similar services is a great development for us.

I think that is what digital technology is all about. If you make an amazing digital service, you can be on top for an instant, but it’s pretty difficult to maintain that position forever. However, I think a system where everyone wins will spread easier and last a long time.

Fujii

It’s important to have a mindset that “everyone wins.” As online and offline worlds merge, the number of stakeholders will increase even further. Until now, the main ones were companies and consumers, but implementing services like Bank Pay will involve everyone from SMEs to shopping districts, landowners, and local governments. Those who don’t develop a vision that is best for everyone will be left behind when the online and offline worlds merge.

Encouraging cashless payment by providing the COTRA service

Isowa

The next thing I was involved in was the COTRA service. J-Debit is a function for withdrawing money from your bank account, and one day a subordinate of mine at the time told me that we may be able tosend money with it by entering negative amounts. So from there, I came up with the idea of COTRA, a service that lets individuals send up to 100,000 yen to others at no charge. Of course, there were some people at SMBC who were vehemently against it. We receive a fee when people make wire transfers via SMBC Direct, which alone comes to several hundred million yen per year. They were against not getting that profit anymore, but after doing some research, I found that the overall cost of managing cash for SMBC was estimated to be over tens of billion yen per year.

If more people switched to cashless, it would reduce the cost of transporting cash and paying security companies, so we would easily be able to make a few hundred million. Plus, it would increase customer convenience. I also want to link it with a QR code payment service. Digital payment of salaries will probably be implemented soon, so if we don’t make bank accounts more convenient, we will lose users.

Fujii

I use the term “UX competition,” but striving for a good UX and making things convenient for people is a given, and we also need to make it advantageous for us. Earlier, you mentioned that you can reduce the expenses paid to security companies, but according to conventional logic, people tend to think that digital service only takes place digitally without the involvement of people. To me thinking about the involvement of people is a more suitable logic for the digital age. In reality it’s really hard though. [laughs]

What does “customer-centric” mean in the digital age?

Fujii

Earlier, you mentioned usability tests. When I conduct tests, I sometimes learn the perspective of people I’ve never met and don’t even understand. Now the “mass” approach has begun to collapse. When you have the perspectives of people far away from you, you can have a market size as large as the number of those perspectives, and you will be able to see the market to reach those people as well.

Isowa

That’s really true. To me, terms like “customer-centric” and “customer-oriented” are sophistry. [laughs] For example, there is no way that all attorneys and doctors who are considered professionals have the same needs. A doctor with a private practice that has been passed down for generations and a doctor who raised money to open a private practice themselves will have totally different needs. So far, the term “customer-centric” has been used when someone wanted to express in a logical way that they were providing a certain product or service to a certain group.

Fujii

I can really relate to that. Going forward there will be a switch from “targeting attributes” to “targeting situations.” People don’t want to be understood based just on “attributes,” do they? One person’s needs will change significantly depending on their situation, such as their business, family, and the music they listen to. Understanding the situation and environment a person is in rather than attributes will be the basis for a digital society. The widespread use of smartphones has made it possible to collect data with precise timing that was not possible before, so going forward, changing from attribute-based to situation-based marketing will be key.

Isowa

So far, the finance industry has done business with asymmetric information, but digitalization makes it possible to connect with every company and individual, and this will gradually reduce asymmetric information. The age of providing personalized solutions to customers is imminent. Products targeting everyone will no longer be viable, and it won’t even be necessary to make them. Even if a product only sells a few units in Japan, as long as it has some feature that stands out, there is a chance you’ll be able to sell it by expanding the market worldwide. All customer needs will be treated as data, and accuracy will increase. That will be what “customer-centric” means going forward.

SPEAKER BIO
* The departments, titles, etc. of the people introduced in this story are as of the time of writing.
  • Chief Communication Officer beBit, Inc.

    Yasufumi Fujii

    Received a master's degree from Tokyo University. Based in Shanghai, Taipei, and Tokyo. Explores UX philosophy in Japan and abroad while advising companies and governments as a practitioner. He exchanges opinions with experts in AI, smart cities, media, and culture in order to search for a new way of being for people and society. The sequels to the “After Digital” series (Nikkei BP), “UX Growth Model”, which describes practical methodologies, and “After Digital Sessions”, that summarizes the discussions of the world’s top leaders, were published in September 2021. The newsletter "After Digital Inspiration Letter" provides the latest UX, business, marketing, and culture information.

  • Senior Managing Executive Officer and Head of Digital Solution Division Sumitomo Mitsui Banking Corporation

    Akio Isowa

    Akio Isowa graduated from University of Tokyo Faculty of Law in 1990. After joining Sumitomo Mitsui Banking Corporation, he worked in the corporate business, legal, corporate planning, and HR departments. He then established the Retail Marketing Department and Retail IT Strategy Department, becoming General Manager of the Retail Marketing Department. There he worked on projects that include issuing debit cards and improving the UX of online banking apps. After that Isowa became head of the Transaction Business Division where he directed product and sales planning for online payment services such as Bank Pay and COTRA. Since 2022 he has been driving the digital efforts of SMBC Group as head of the Digital Solution Division.