The post-digital world has fundamentally changed the landscape for a lot of different sectors and industries, and banking is no exception. Since the dawn of the digital revolution, banking has faced the challenge of having to transform themselves and their services, bringing in innovative business approaches and technologies. But the primary challenge is to become a preferred digital brand offering a seamless user experience and builds an emotional resonance with the customers.

Traditional banking practices have to be molded into this new avatar, in order to be ahead of the curve. Banking is a service that customers interact with almost on a daily basis, and they are constantly comparing the UI/UX with the other apps they use daily, like social media, chat, email etc. If traditional banking services cannot live up to these standards of seamless and smooth user experience, they run the risk of obsolescence. 

Here are some challenges that banking faces and how UX/UI can tackle these.

Growth in Customer Expectation

As explained above, customers are expecting their banking partners to up their game and be on the edge of digital innovation. A study in the United States says that more 77% of banking customers feel that banking services fall short of their expectations. They expect their bankers to solve their problems but do it in the best and most efficient way possible.

UX Solution: One important step in trying to ensure customers have the kind of stellar experience they expect from the bank is to hire a team of UX specialists who can operate as the customer’s advocates within the organisation. The responsibility of this team will be to incorporate customer-centric processes and values across all levels of the organisation. This UX team will also ensure that Design Thinking approach is ingrained in all processes of the company, whether strategic or operational.

Design Thinking can be some UX Strategies

Switching Brands

In the age of digital gratification, customers are more difficult to impress, and it takes just a small slip for them to switch and choose the competition. In some studies it has been demonstrated that even one negative product experience can demolish customer loyalty and have them choose the competitor. Customers are known to choose brands that simplify their lives, not complicate them. There was always a choice but now it is easier than ever to switch.

UX Solution: It is an established fact that customers are loyal to brands which can provide them value. And the better this value aligns with customer’s expectations, the more loyal they’ll be. Great customer experiences (UX) generate great value, and that in turn, builds trust between the seller and the buyer. And trust is a glue stronger than anything else. 

The value depends on five different elements which have to be integrated into the processes and product development: functionality; usability; aesthetics; status, and mission. 

Product value pyramid can be some UX Strategies

All these elements together come to build products and processes that ensure long-term customer loyalty. For instance, functionality alone might not be adequate, usability is important as well. Aesthetics are equally important, and so is the need to position the product as the symbol of a customer’s status. 

Financial UX Design can transform negative product experiences into positive ones. The way to do this is to break down the user journey of the customer, and specifically identify the areas that generate emotional reactions. By reducing friction or dissonance in these areas, one can successfully convert bad experiences into great ones.

New digital platforms are transforming consumption

Technologies and consumption patterns are transforming at the speed of thought. Just a couple of years ago, digital payments were a novelty, only accepted by select entities. Nowadays, even vegetable vendors and grocers accept UPI payments. But the future holds even more dynamic changes in technology which will keep transforming user behaviour and consumption.

Voice assistants like Alexa and Google Assistant, Internet of Things (IoT), Augmented Reality (AR) and Virtual Reality (VR), Robotics etc. will be more and more integral to modern lifestyles, a process that has already begun, to a certain extent. 

UX Solution: Banks have to keep pace with this rapidly changing world and these technologies. Banking companies have to adopt a culture which practices and encourages this kind of innovation. This new culture will ensure that the bank is able to reinvent the UX from a customer point of view, by accepting these new and disruptive technologies into its processes.

This needs constant monitoring of user behaviour and consumption patterns. If there is a change in these parameters, the brand needs to be nimble-footed enough to turn around and reflect these changes in their own product and processes, so the customer has a stellar user experience.

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Marketing is substituted by digital channels

By now, almost all brands – including banks – have realised the importance of Digital platforms as the easiest and the most cost-efficient way of reaching their customers. But this also means the user often forms an impression of the bank and its services merely through their digital presence. If that experience is sub-par, it can have ramifications on the brand’s overall brand image.

UX Solution: This requires a whole new outlook towards business and business strategy. Gone are the days when a product, a business model and a go-to-market strategy was enough to launch a product. The brand’s value and its attributes have to be communicated through digital channels. In order to achieve this, certain parameters have to be considered: experience, design, value and experience mindset. 

Formula of digital financial product can be some UX Strategies

A proper focus and combination of these parameters will help create a spectacular experience on digital whereby the user will have an extremely positive and experiential opinion about the brand. 

Big tech and emotional disruption

In 2023 and beyond, the world is and will be dominated by big tech conglomerates. Tech giants like Google, Facebook, Apple and Microsoft are the brands that constantly pervade the lifes of consumers. And since people are using their products day in and day out, banking apps are being compared to these services, and thereby falling short. A global survey by Bain & Co. concluded that 54% of the respondents trust at least one big tech company more than banks in general, and 29% trust at least one tech company more than their own primary bank.

Elements of Value can be some UX Strategies

UX Solution: Users are driven more by emotion than rationality. So, banks need to speak the language of emotions and emotional cues in order to be favoured by their customers at par with their tech counterparts. And a very important aspect of this is to enrich their services with rich UI and intuitive UX, which would resonate with the users at an emotional level. Find out what the big tech services employ that makes users react emotionally, and try to find a way to evoke the same emotions through the banking apps. This doesn’t mean that the feature has to be copied wholesale, but the idea is to get inspired by these features and employ them suitably. One of the ways, for example, most companies do this is by incorporating gaming elements.

Some use cases of Digital Banking innovation across the world

Banking and IoT: Bank of America and FitPayTo collaborated on a solution that allowed customers of the bank to make contactless payments through wearable devices directly at NFC-enabled retailers and at more than 9000 different Bank of America ATM centres.

Banking in the Clouds: Capital One Bank in the US recently moved their traditional server-based data centres to Amazon Web Services so they no longer have to maintain physical servers and conduct business from the cloud.

Physical to Digital A fast-emerging trend in many countries is of the Neo Banks. These are banking companies that have ditched physical branches in favour of a complete digital existence. Most of us conduct a majority of our banking business online anyway!

FAQs For UX Strategies and Challenges for Digital Banking

What are the Challenges of Digital Banking?

Digital Banking faces challenges such as shifting banking habits, marketing being substituted by digital channels, big tech, emotional disruption, and sticky customers.

Why is UX Strategy Important for Digital Banking?

UX strategy is important for digital banking because creating an easy user journey and experience will help build better impact and customer relations.

What are Digital Channels?

Digital channels are different mediums where consumers are reached.
Digital channels are more accessible to many users.

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Pursued Communication design specialized in UX/UI design. His love for sketching, doodles, technology, and communication through storytelling with help of visual aids have always driven him to be a creative geek. For him, photography, playing with fonts, exploring different archives on typeface specimens, and reading become the next companion in his spare time.