5 Digital-First Strategies That Can Turn Banks Into UX Disruptors

The difference between digitally vulnerable incumbents and digital-first challengers is the strategic perspective they take on user experience. True disruptors gain their competitive advantage by following consumer-focused strategies and treating 'design' as a user-centered business approach, not 'packaging' that just puts lipstick on the pig.

Thousands of companies regularly improve their digital product usability and make sure it lives up to the needs and expectations of modern consumers. This delivers great results, but covers only a small part of the true power that user experience (UX) design can bring. Meanwhile, some digital-first challengers are gaining a significantly greater competitive advantage from UX strategy. How?

The simple answer: By integrating customer-centricity in a way that brings optimal results.

The main difference is that incumbent institutions apply customer-centricity in separate stages of their digital product development, but to realize the full potential of UX it should be integrated into the heart of the company. This is what digital-first challengers are very focused on doing.

If user-centricity isn’t a cornerstone of a financial institution’s values and culture, then the possibility of creating customer service that would attract consumers like a magnet decreases dramatically. To help maximize the power of financial UX, we have compiled the top five strategies from digital-first challengers that have mastered UX implementation.

1. Empower Digital-First Business Strategy Through Design

Industrial-Age Strategy: Design is executed only as the product user interface or as a visual tool for marketing purposes that helps to increase sales.

Digital-First Strategy: Design is perceived as a customer-centered business approach that’s integrated into the company culture, inner processes and the development of products.

Companies that have been massively successful in the digital era, like Netflix, Apple and Facebook, understood a long time ago that design is so much more than just a pretty package. Design is the key behind successful digital products. In financial services, UX design is — or should be — a methodology and ideology behind creating a financial brand that is truly user-centered.


Design is also the foundation of digital disruptors. They perceive design not as a package but as an approach. That helps to integrate user-centricity into every level of the company, including the way executives and employees think and act to create real value and benefit for the people using their products. It’s no wonder that client-centric companies are 60% more profitable compared to companies not focused on their users, according to Deloitte.

Progressive financial institutions understand this very clearly and are currently leveraging the power of UX over competitors that haven’t yet gotten there.

One of the core principles of financial institutions that are eager to succeed on their digital goals is to perceive design as a mindset that puts the consumer at the center of all business operations. It would inspire and push the institution to constantly strive to make the world a better place for people to live in.

Using design as a process, not as a tool, allows banks and credit unions to maximize their full potential. That involves using the entire institution in seeking and executing innovative ideas on how to better solve customer problems. It’s an approach for creating financial digital products that live up to the customer needs and expectations.

To use UX design to accelerate a financial institution’s success, there are five key aspects to focus on:

  1. Transform a business model into one that puts the processes of user-centricity first.
  2. Implement UX expertise that will ensure a financial product or service brings true value to the consumer.
  3. Execute the right actions guided by UX experts who are able to impact in-depth processes in the institution.
  4. Have the correct criteria to evaluate the results your team is producing — whether the focus is on presentation or delivering exceptional experience.
  5. Define and focus the authentic value your products and services will provide to the consumer.
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2. Unite Digital Assets Into a Consistent Ecosystem

Industrial-Age Strategy: Banks and credit unions create multiple departments that develop products separately, thus increasing the chance of broken, fragmented user experiences.

Digital-First Strategy: Digital-first institutions from the start have a vision how to grow a holistic ecosystem that leads to a smooth and intuitive user experience.

In the process of digital transformation, incumbent institutions usually complete each digitization project with a separate team of project managers and designers, executing different visions and setting different goals not connected by the overall digital ecosystem. This causes high fragmentation within the customer experience. It might not harm the financial institution from the inside but will probably increase digital friction, leading to customer confusion and frustration — and ultimately to switching. Consumers have come to expect the brand experience to be a connected, holistic flow, not separate fragments.

To avoid this, digital-first team members work side-by-side (literally when possible, or remotely otherwise) to improve the customer experience that unites all of their products into a user-friendly ecosystem. A user-centric design ensures everyone is on the same page and can easily develop consistent digital solutions in their specific areas of responsibility.

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3. Take an Extra Step to Relate to Consumer Needs

Industrial-Age Strategy: Incumbent institutions often have their primary focus on portfolio strategy, marketing strategy and product strategy.

Digital-First Strategy: Financial challengers actively explore the needs, wants and feelings of users and base their strategy on that and invest heavily in upgrading the product user experience.

There are always some banks or credit unions that are eager to skip the user experience research and get right to the product design as quickly as possible. This can lead to unpleasant consequences when the product gets launched including no demand or many complaints from dissatisfied consumers.

Alex Keger boring bank products reason for challenger growth

The tricky part here is that often there is a disconnect between the institutions’ and end users’ perceptions of the brand and the experience it provides. Some time ago, there was a study by Bain & Company, indicating that 80% of CEOs believed they deliver a superior experience, while only 8% of customers agreed with that assumption. This is still true due to cognitive bias. A digital financial service that might seem easy to use for an institution’s product owners can be perceived as a nightmare from the customers’ viewpoint.

Three quarters of consumers expect companies to understand their needs and expectations and deliver according to those, according to Salesforce. It’s crucial for financial institutions to understand their customers and start feeling their pain in order to be able to address it, but it’s impossible to do that without user research that allows the creation of banking products that solve consumer problems in a manner that’s quick and completely understandable.

Digital-first companies know that a single negative product experience can be enough to damage the way a brand is viewed in the eyes of consumers, causing them to switch to another provider. This is why most fintechs first find out the user’s context to create the value proposition of their products based on the users’ needs, then use data analysis, information architecture and user experience engineering to build the product. After the product is released, customer feedback is regularly collected from social networks, the App Store and Google Play, and leveraged to improve the product accordingly.

Consumers using digital banking are real people with real-life stories, and they expect their issues to be heard. Going deep on analyzing customers — who they are, where they come from, their daily activities, other services they are using and what job they expect of your service is the foundation of creating user-centered products.

4. Provide a Unique Value That’s Adapted to The Future

Industrial-Age Strategy: Traditional institutions protect themselves by relying on bureaucracy and legacy.

Digital-First Strategy: Disruptors challenge everything to create an authentic value proposition that’s based not only on consumer needs but the trends of the future.

Nearly eight in ten consumers (79%) in the U.S. are certain that brands should demonstrate understanding and care toward their customers, according to Wunderman, and nearly nine in ten (89%) are willing to engage with businesses that not only show care but go above and beyond that.

Successful companies relate and adapt to changing customer values. They recognize that past victories don’t mean anything if they fail to adapt to the future. (Blockbuster, Kodak and Nokia were so focused on their established revenue sources that they ignored consumer trend switches, and we all know what happened to them!)

63% of consumers state that the best brands are the ones that exceed expectations throughout the customer journey, according to Wunderman. The best way to exceed expectations and show consumers that the financial brand cares about them is by offering a true value and benefit that is tailored to the specific needs the customers face.

Unfortunately, very often, instead of delivering a specific value through a financial product, a template solution is created. There are quite a lot of inconvenient, faceless and boring banking products that have almost no benefit for consumers. This is one of the reasons why the growth rate of challengers has been so rapid. In an industry in which complexity and similarity have dominated for years, it’s not so difficult to attract customer attention with a brand new level of customer experience, possibilities and personalization.

To create digital products that people want, it’s essential to know the meaning of why the brand exists. What is the unique value that it brings to the people opening this particular banking app or using an online bank? There are quite a few financial institutions that have never actually thought about these kinds of questions, but they can provide a huge market advantage. As Simon Sinek said, people don’t buy what you do; they buy why you do it.

In the digital age, the one-size-fits-all approach doesn’t work anymore as consumers demand and are surrounded by a more personalized experience. That’s why the majority of businesses (around 62%, according to a study by Walker) are investing in individual customer characteristics.

And it’s why challengers craft unique solutions that evoke positive emotions in their customers. Consumers who have an emotional connection with a brand have a 306% higher lifetime value, stay with a brand for an average of 5.1 years (versus 3.4 years) and will recommend brands at a much higher rate (71% versus 45%), according to Motista.

How Incumbent Financial Institutions Can Meet the Challenge
The digital age is a time of authentic solutions. Banks and credit unions can power up their brand advantage by crafting a unique digital banking experience that evokes positive emotions and leads to long-term loyalty. The design approach helps incumbents to find the particular uniqueness of their products and brands. Here are five UX tips to define and create an exceptional value for the consumer:

  1. If the product’s functionality is not enough to ensure value, seek ways to provide better usability.
  2. If all your competitors have the same functionality and usability, add aesthetics to inspire and “wow” your customers.
  3. If you need an even better competitive advantage, connect the product with the customer’s lifestyle by personalizing it.
  4. Go even further by turning the financial product into a symbol of the customer’s status (e.g., VIP, family, student, entrepreneur, Millennial).
  5. Finally, provide ultimate value through stating a mission with your financial brand that aims to make the world a better place and build a community around it.

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5. Have Customer-Oriented Measurements and Process

Industrial-Age Strategy: Focuses on the quantity of the deliverables and the speed of execution.

Digital-First Strategy: Prioritizes and evaluates the results based on customer satisfaction.

The goal is as important as the way we measure it. Instead of focusing on the number of interface screens designed per day, for example, create an intuitive banking experience and think carefully about every element on each screen.

The proper outcome criteria define the level of value a product is able to provide for the users. Often, a clever and user-centered architecture of a digital product can significantly reduce the number of screens, while increasing user satisfaction.

Only when financial product design and the key user scenarios are in agreement can the experience be understandable and enjoyable for consumers. Naturally, this requires an investment of more time and resources into analysis, research and UX architecture, but it’s definitely worth it.

Fintech startups and challenger banks use an iterative process while designing and developing digital financial products. This allows them to make the most significant changes in the earliest stages of design, thus making the overall process more efficient and reducing excess costs.

This agile approach could also be used by banks and credit unions to ensure a sharp user-centered focus in their digital products. (For more information on this, see the Manifesto for Agile Software Development.)

There are several key performance indicators (KPIs) that banks and credit unions can focus on to measure the satisfaction of their customers and seek ways to improve it. These are:

  • App ratings on Google Play and the App Store.
  • Reviews and feedback on social media platforms, forums and other sites.
  • Customer satisfaction ratings and NPS (Net Promoter Score) — how likely customers are to recommend this banking product.
  • Customer lifetime value (CLV) — helps to understand the value of investing in long-term relationships with the customers.
  • Reasons why most users contact the support center.
  • Retention and switch rate.

It’s very important for financial institutions to be aware of these measurements and act upon them. Long-lasting emotional connections with consumers are formed when they gain support not only in words but also actions. Consumers want to feel that their banking provider truly cares about them, takes into account their problems and solves them as quickly as possible.

Road to Digital-Empowered Banking Excellence

The Qualtrics Banking Report found that consumers ranked poor service as the number one reason they were leaving their financial institution, but more than half (56%) who have left say the institution could have changed their mind.

With their deep resources, enormous amounts of collected data and impressive product variety, there are so many advantages that banks and credit unions could offer to their customers. All it takes is transforming an outdated mindset into a power that trumps fintechs with something the challengers aren’t able to compete with: expertise, stability and trust that’s built over decades.

If banking incumbents can turn their weak points into market advantages by using the power of UX, there’s no need to worry about emerging financial challengers. The place for user-centered banks is secure in the future.

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