The digitalisation of the banking industry is rising, especially due to ready-to-use digital banking solutions provided by IT vendors. But are these solutions really best for their users? What threats can appear for the financial industry in the future and how to avoid them?
A High-Speed Bridge from Offline to Online
We have been actively working with online banking software vendors and banks for several years. Due to gained experience and knowledge we have now become a leading UX design agency in this field. Throughout our working process with many banks, we still meet banks that hesitate to cooperate with banking software vendors.
And that reminds me of a story.
I once met a businessman who started his business in 1998 by opening an electronics store. His business promptly became profitable, so he opened another store, then another one, until he became the owner of a network with a couple of dozen stores and millions in turnover.
He had been building and developing his business for 10 years. However, decade after the business slowed and his turnover reduced. He confessed to me, that when he saw the first Online electronics shops, he was absolutely confident that they had no future. He believed that people wanted to physically touch the item before buying it, and that they wanted a consultation with a real salesperson. In his opinion, the only advantage of online stores were cheap prices.
Today he has changed his mind, and not just because customers have “voted” for online shops by actively making purchases. Now he enthusiastically lists the various advantages of Online services such as structured descriptions, comparative tables, user and video reviews, ratings, delivery to front door etc.
As you may have guessed, he has changed his business. Now he is building his empire from scratch, but this time selling electronics online. He is not giving up and optimistically looks for the future. There's only one thing he regrets: that the success of Amazon didn’t inspire him to open an online store in his city 10 years ago. At that time he had extra resources, clients, and time for training to invest in his business and grow it. Despite missing out on store digitalization back in the day, now there are available many budget friendly and ready-to-use solutions for him.
Here a parallel can be drawn with banking. Just like in the retail industry, until now, most banks have focused on selling their services offline. Today, many of them, especially small and medium ones, require assistance in the transition from the legacy system to future technology solutions. This transition will help to meet clients’ growing expectations and save the banking business in the future.
Cooperation with digital banking platform vendors will provide banks with the speed and flexibility which are essential in the Fintech era. Such IT companies have large experience, special skills, and are ready for the prompt implementation of digital solutions. As a result, it saves time and resources to banks when implementing new solutions.
Finance VS Technology
Everyone involved with the industry sees that, the domination of digital technologies on the market requires a technological transformation from banks. Banks that are too slow, stuck in the past, too conservative and are unwilling to change are doomed. This is the reason why digital banking software providers have a significant role. They can take over development, new feature implementation, technical support and let the bank focus on digital competencies in financial management services.
Unfortunately, not all banks can handle digitalization on their own on a good level.
Quite often their implemented solutions are just an item in “digitalization to do list” to be considered as modern trendy bank, that also has functional digital channels. This is either PR stunt or as show off to investors and quite often result does not meet customer expectations.
The initiatives introduced by traditional banks aren’t always enough to adjust corporate culture and business processes to the digital age. CX, UX, Design Thinking and a User-Centred Approach are often regarded as purely marketing tools, instead of taking their rightful place in business processes’ transformation.
Banking technology providers developing ready-to-use financial solutions have an advantage over banks. They are getting a lot of experience and expertise each time delivering their digital platform for different bank. Banks are therefore offered a solution based on a professional approach and experience. It helps to avoid the many pitfalls that banks may face in case they try to build a platform themselves.
This stimulates an increase in the demand for vendors’ digital banking solutions. After all, the choice of platform implementation is obvious in terms of hard competition, services globalization, threats from Fintech companies, and users’ growing expectations. As a result, banks expect vendors to integrate modern technologies with minimum time and resources.
Obstacles to the Perfect Digital Banking Platform
When analysing banking industry development, it is obvious that the future of this sector depends on third-party solution providers. They need to integrate innovative technologies to reinvent banks through platforms that meet their business needs and offer the best UX. Yet, some of vendors face complex situations that can slow down or negatively impact progress of banking industry.
Technology giants and Fintech startups have a higher level of users satisfaction than traditional banks do. It’s not only because banks cannot carry out digital transformation on their own. The problem is that digital banking system providers do not always provide users with a cutting-edge experience on their platform.
It’s essential to take a look at the UX of digital banking platforms. It's crucial to perform banking digitalisation as soon as possible, but in the end, the UX defines if the users stay with the bank or prefer another service.
Let's try to identify the main difficulties that prevents some banking vendors from meeting end consumers’ needs and see what can be done about it.
1. Lack of human-centricity
Third-party banking platform development teams usually consist of many engineers. They have great technical skills, as the banking developing process is incredibly complicated, and the highest levels of stability and security has to be implemented. In this corporate culture, the “technical genius” usually gets promotions and becomes the leader. Unfortunately, UX architects as users advocates do not always have a proper place in such development team.
In fact, a strict technical orientation may create a lack of empathy in the whole team, which is a necessary element for user-centered solutions. It gets more complicated when there is a lack of clear understanding for whom the final solution is intended and the end-users who will be employing it. It is very difficult to evaluate user scenarios and provide the best UX while creating universal solution.
Of course, vendor designers can provide a beautiful and modern looking interface. But what looks good for sale doesn't always match the key-user scenarios and may not have good usability. To create the best UX, the team needs to involve cross-disciplinary UX architects with expertise in user psychology, marketing, financial services, business processes, technical solutions, and interface design for different platforms.
2. Functionality obsession
Banks usually choose vendor based on the technical aspects and offered functions. In response to their request, vendors pay special attention to the functionality scale. Extra functions are often necessary as additional tool to sell the platform.
However, recent studies of user behavior indicate that it’s no longer enough to focus on function accessibility. For users it is more important to understand the service and it's usability. If it is too complicated and inconvenient, the user will switch to an alternative - simple service, which may even lack extra functions.
Special attention should be paid to the users needs and desires throughout the whole bank-software vendor chain - from the bank's management to the vendor's management and developers to optimize the product by collecting users feedback and constantly improving the UX.
Realizing this, many banks actively switch from buying just functions to user-centred solutions. Unfortunately, not all online banking providers focus on the user aspect. Therefore, functionality does not always meet users needs. Here, the best advice for vendors is to stop delivering software and start delivering user experience.
3. Outdated technology
The development of complex banking platforms takes years and millions of investment. At the same time, a core banking platform provider should take into account all possible requests of the different banks in advance. Unfortunately, many solutions may become out-of-date at the moment of release, as technologies change rapidly. This leads to a shortage in some ready-to-use solutions.
A modular development approach comes in handy here. The development and delivery of separate modules simplifies the implementation of integrated solutions. It also provides good opportunities for small vendors dealing with a narrow development on the market. But they do not meet the complex needs of large banks and this can cause integration difficulties.
4. Platform limitations
The main goal of an omni channel banking platform is to offer a universal solution. Make one size fit all. But there’s another side of the coin: this solution does not always fulfill every possible need and use case of bank and their user. However, that’s the only way the internet banking vendor can ensure the platform with further support and development and save banks’ resources.
As the IT vendors’ main efforts are focused on creating a universal and stable backend solution, user interface design becomes a platform “hostage”. It’s essential for the bank that the product reflect the bank's image, create an emotional interaction, and strengthen customer loyalty through the best UI solutions and also a perfect UX. But in the limited terms of a standard solution, it is not always possible to ensure that the product meets the needs of the bank and considers all the aspects of user behavior.
Banking vendors can make UX customization an integral part of the platform to compensate this drawback. Also, the development and use of the Design System can provide the flexibility needed for the solution integration into the needs of a particular customer.
The development of a universal ready-to-use banking solution implies a lot of work. This solution should cover different user scenarios from different banks and regions. In its essence, this solution is a complex super-set that can be configured to the request of a particular bank.
It‘s difficult to give a complex solution providing the user with a simple and enjoyable use flow for every scenario. In addition, it gets worse when new elements (not provided in the basic architecture) need to be added at the request of the bank after the sale.
This can lead to an extremely negative UX caused by the information architecture complexity, an increase of the user-learning curve, user cognitive overload, and overall frustration.
Therefore, special attention must be paid to the banking platform information architecture at the initial stage of the development: it must be intuitive and scalable.
Banking Future Depends on User-Centricity of Vendors
From our experience, we can say that vendors are improving their products and they want to make them user-centered. To achieve that, they hire UX Experts to work within their product development team. They also cooperate with external UX agencies and consultants. At the same time, banks are getting more and more active in compensating these drawbacks on their own.
In particular, some banks separate the implementation of the basic platform and the development of the UI. This allows them to use a ready-to-use vendor solution while still providing the best UX on developing the interface with the UX experts.
These market difficulties provide opportunities for small and ambitious newcomers. Despite the large core banking software providers’ domination of the market, more and more “new wave” digital banking vendors are appearing. They are aggressive and trying to “carve out their own piece of the pie”. For that they use an innovative approach and rapid iterations.
Over the past two years we have witnessed many interesting and technically advanced banking platforms emerging on the market. Young digital vendors have faster delivery and a more customized integration, although the scale of these solutions are often inferior to large vendors, and they are not always suitable for complex banking solutions. However, they are of great interest to some smaller banks.
5 UX Values To Look For When Choosing a Digital Banking Vendor
As already mentioned, ready-to-use digital banking solutions have significant advantages. Most banks prefer to integrate them instead of in-house development. Therefore, these solutions greatly determine the future of the banking industry.
Will these digital solutions be able to become sufficiently user-centred and innovative in order to compete with the Fintech startups actively disrupting the financial industry? Banks should pay attention to five key aspects when choosing the ideal digital banking platform especially regarding UX.
1. Platform corresponds to the bank's UX strategy
It is necessary to have a clear UX strategy in order to choose the ideal vendor to maximize the bank's value for customers. What banking products and activities are essential? What form should they have in digital channels? What user emotions and reactions should be according to the bank’s positioning and identity?
A solution that is too formal is not suitable for an informal and revolutionary bank and vice versa. For example, strict lines and a template interface may conflict with the image of a democratic and friendly banking brand. Digital products should represent the key values of the bank.
2. Information Architecture is simple and intuitive
It’s vital to see if it’s easy for users to understand the banking platform information architecture. It’s not just about the interface for bank's customers, but also about the administrative environment. Over-complicated and confusing interfaces increase training costs and the risk of errors. Also, they irritate and discourage users.
Make sure that the sections and content blocks are grouped into clear and user-friendly way. Ideally, you should minimize the number of key sections and modules. This will help the user to quickly frame the actual service mind map. Use clear naming in navigation and avoid professional slang.
3. Solution provides key user scenarios in an easy and fast way
Make a list of priority user scenarios, according to their current behavior. Thus, a list of user expectations is generated for each digital banking product.
Based on this list, it is possible to evaluate to what extent the product offered by the vendor is usable and whether it will meet the real needs of the bank's customers. These scenarios execution should be simple and understandable for any user.
In addition, a user's typical Failure Map can be developed for a deeper analysis. After all, the negative experience is best remembered. Therefore, a good solution must take into account any possible bad scenario.
4. High performance comparing to other market alternatives
The products are launched on a competitive market. Banking users have more and more opportunities to choose from. They compare different solutions with different criteria: technology, visual environment, convenience, cost, clarity, and simplicity.
Make sure that the solution offered to your bank beats your competitors, or is at least at the same level. It should look modern and offer cutting-edge user experience in solving customers’ problems.
5. Opportunity to tune-up UX after users’ feedback
Delivering the best UX does not finish once the digital financial service is launched. Users’ feedback should be a powerful source of insights for constant product improvement.
Therefore, you need to make sure that the banking software vendor is able to make changes after the solution is released and ready for continuous platform development. It may also be important for the bank to get access to the software to improve the product themselves.
Digital banking solution vendors play an important role in banking. This influence will grow in the total digitalisation and open banking age. Taking this into account, banks need to clearly state their needs and encourage IT vendors to develop in the right direction.
Banking platform vendors should consider their responsibility for the financial industry future. The users’ choice of banking service, or their decision to search for a Fintech alternative depends on how innovative, user-centered, delightful and usable banking vendors solutions are.
Founder of UX Design Agency
UX Architect & Strategist