Bad Habits That Stifle UX Innovation at Banks & Credit Unions

Banks and credit unions could deliver user experiences that rival anything fintechs offer, but most don't. Budgets aren't the issue. Legacy management, risk aversion and skewed KPIs are the real problems.

Today, every bank and credit union is expected to offer digital services. But simply having a mobile app or online portal for customers is not longer enough. These platforms also have to deliver the services customers actually want and keep those customers engaged.

Call it the Netflix effect. Thanks to the video streaming platform (and other digital giants like Amazon and Apple), today’s customers expect a seamless, highly personalized user experience (UX) on any platform, including the ones they use for banking.

A financial institution whose UX doesn’t live up to customers’ standards will find itself losing business to digital-native startups. The proof: a Salesforce study found that 57% of today’s consumers admit to moving their business to competitors that offer better experiences.

Here’s a look at why many banks and credit unions struggle with user experience, and what they can do to shore up their UX so they can hold on to and continue serving their customers.

Digital Banking Platforms Work… But Don’t Engage

Bank customers know what outcome they want and they want a relevant, personalized experience along the way. According to a study from Epsilon, 90% of consumers find personalization appealing, but only 6% of banking firms are able to deliver on their personalization promise.

The problem is that UX professionals at banks are often constrained when it comes to implementing new ideas that would improve a user’s experience on a platform. Specifically, industry regulations and complex internal structures at banks make it difficult for UX professionals to deliver solutions that customers actually want.

Right now, customers get banking platforms that work but don’t necessarily meet expectations around personalization and usability. The result is lower customer engagement and money lost on projects that don’t make an impact.

It follows that the key to better engagement is to allow UX professionals the opportunity, resources, and flexibility to research customers’ pain points to inform any design decisions.

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3 Persistent Challenges of UX Design in Banking

To improve their digital UX, legacy financial institutions first have to understand what gets in the way. There are three common hurdles that keep banks from moving faster:

1. Top-down Processes. Traditional institutions tend to stick to established strategies that worked in the past. One such strategy is to rely on department heads and executives as the single source of new ideas.

The problem with this approach is that these leaders are typically removed from the everyday decisions and end user interactions involved in UX design. As a result, a top-down approach can lead to product development processes that…

  • Take a long time to complete.
  • Stick to one idea.
  • Fail to address real customer needs.
  • Cause UX professionals to lose sight of the business context of their designs.

2. Risk aversion. The path to designing the best UX is through UX professionals performing repeated trials, failing (learning), and trying new things. Unfortunately, many legacy banks have a culture of risk aversion that filters down to UX teams, meaning that risk taking — even in design settings — is frowned upon.

3. Flawed measures of success. Often, banks measure success for product development team members, including UX professionals, by the number of new features shipped to customers. This has a negative impact in two ways:

  • Product team members, including UXers, fixate on the release and not on customer value.
  • Customers get features they don’t necessarily want or need.

The good news is that it’s possible to clear these hurdles. The first step in that process is recognizing that they exist.

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Specific Ways to Improve Your UX Performance

Better UX design comes from a culture that encourages the product team to learn as much as they can throughout the product development process. This culture doesn’t appear overnight. It requires banks and credit unions to address each hurdle mentioned above and for everyone, from executives to designers, to buy into the culture. Here are three suggestions:

1. Financial institutions can solve the issues of top-down processes by including UX professionals in product conversations early on and giving them greater autonomy. If early customer feedback shows that an idea doesn’t resonate with users, UXers should be able to pivot with discretion and pursue different concepts that show more promise. This helps speed up their UX lifecycle as well.

2. To combat risk aversion, department heads can make a deliberate practice of considering new ideas. These ideas should not be viewed as risks, but as opportunities for a product team to think outside the box.

UX professionals can spearhead this kind of thinking by initiating important conversations that generate new ideas. The more these conversations happen, the more innovative solutions an institution can discover that might actually appeal to customers.

3. A more constructive way of measuring success in UX (and other areas) is to focus on outcomes over outputs. The goal of UX, after all, is to change behavior, not inundate users with new features that don’t gain traction.

Banks that successfully implement these strategies can establish a culture of learning and provide a user experience that engages customers and adds value to their lives.

When banks and credit unions do this, they’ll find that their platforms engage customers and keep them from leaving for the competition.

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