The startup revolution is changing paradigms in every industry including financial software. The term fintech was coined to refer to all companies providing financial services through technology. Fintech startups compete with established industry players in a fight where financial power is not the key differentiator. To set themselves apart, the smaller fintech players placed a bet on design and user experience, and as it turns out, it was a winning bet that helped them acquire and delight new customers.
Credits to Charles Moldow from Foundation Capital. Full presentation here.
As user-centric approaches to software development became more popular in the industry, design driven development became the norm , and software creation shifted from feature richness to simplicity. The financial industry is becoming part of this trend, adjusting its direction and focusing more on providing not only secure, but also easy and fast access to information.
The ‘black on white’ legacy
Financial software products are known to be less innovative, due to the restrictions and regulations that govern this complex industry. Legacy from years back still finds its place in today’s design, even though it was created for a technology that is no longer in use. Black text on white backgrounds is one of these ghosts from the past. The financial industry has always been paper intensive, mainly because workers needed to switch between screen and paper as part of daily routine. The transition between the two had to be as natural as possible in order to have a minimum effect on efficiency and health. What we now know is that displaying color charts has to be done on dark backgrounds, as research points out it is easier to perceive color and shades. If we are thinking at the solutions being implemented, most of them were used in trading, reporting and data management. Data accuracy and speed was much more important than design, and, 10 years ago, screens were still offering a basic experience in colors, resolutions, contrast and brightness. But today, next generation hardware and software tools are powering the online experience, and financial systems are no longer just back-end software. Tools like financial management solutions, trading software, digital banking and online payments systems are now available to everyone. Good design can make a critical difference in the success or failure of any financial product, and best example is Mint.com, who grew their business by focusing on design and user experience.
WHY is design so important?
One of the beliefs in the 90’s and even early 2000 was that feature-rich products are a symbol for a robust software solution. To capitalize on that belief, software developers focused on the number of features to drive sales and adoption. As a result, software solutions came with extensive user manuals and training. While the costs of rolling out such a solution were high, there was no driver for change, so feature-rich software became the industry standard. A good example is Microsoft Money, which is part of the personal finance movement. Although it is an all-in-one solution, the time required to set it up and start using it is too high compared to new generation solutions. Mint.com envisioned personal finance to be simple, fast and secure and user experience played an important role in their success.
The rise of consumer Internet increased competition amongst software publishers, and internet users started to be more information avid. In 2014 concepts as ‘Zero Patience’ users are being discussed and considered when designing and developing applications. Zero Patience revolves around the speed, accuracy and simplicity of web design as users no longer accept long loading times, missing information or unclear interfaces. They expect things to work fast, and interaction to be natural as soon as they started using the service. Fintech is one sector that currently does not worry about user patience, as security is still higher on the priority list. But players in the market as Apple Pay, PayPal or TransferWise are focusing on making transactions as simple and fast as possible while preserving security.
The new focus of financial software design
The future challenge for this industry will be to create software that works the way a consumer expects it to, before they move on to the next available option. In banking for example, the online channel is already one of the main drivers for customer satisfaction according to a recent study by The Financial Brand. If you look at the data, you’ll notice that a great user experience can have a significant positive influence on customer referrals for that bank. While security is and will remain the core focus when developing financial software, new fintech companies successfully added design and user experience in the mix.
Speed and simplicity
Fast page-load from new online services is a must, and Internet consumers no longer tolerate 10-20 seconds waiting times. Also, as the Zero Patience user community grows, they expect to get a relevant result through the simplest possible interaction, in the shortest period of time.
Financial services of the future are placing high value on transparency and clarity. Not only are they open about internal service fees, and where the user is in the process, but they help the user understand context and make informed decisions. A good example is www.simple.com that aims to be a virtual bank. Unlike traditional banking systems, they focus more on the personal money-management side of banking. The focus on transparency is clear from the screenshot below. Instead of just displaying basic account information such as account balance, Simple takes a proactive approach and highlights “Safe-To-Spend” amount, which tells the user how much money can be spent considering payment behavior and planned expenses.
Reassurance / Constant Feedback
Consumers need constant feedback when using financial solutions. This creates the feeling of safety and trust in a context where they need it most. Ensuring that users know what is happening at all time is part of designing a good user experience. TransferWise has done a great job at achieving a good balance in their money transfer process. At any point in time, the user knows where they are in the process, and what is next. Visual clues and aid are present throughout the entire process to make sure the sense of safety is achieved.
Financial institutions are behind the curve in offering personalized solutions to customers. Personalization, in this context, is more than just offering a user his/her own data in a nice format. It is about creating a customer experience. Ensuring that each user receives relevant information every time the service is used plays a key role in creating a good personalized solution. Strands.com is one example in this area. Strands Finance Suite solution offers financial services a simple way to create personalized experiences. Using a service like Strands removes most obstacles and the last piece of the puzzle remains displaying the right information, in the right location at the right time.
Design for mobile
According to Statista, mobile payment transactions topped 53 billion USD in 2010 and grew more than 6 times by 2014 to 320 billion USD. The current forecast is that by 2017 the volume will double to reach 721 billion. Mobile is part of the future financial systems and software systems need to cater to a good user experience across these new platforms.
Find more statistics at Statista
A great experience goes beyond software
User experience in the financial sector today is becoming more than a trend. Large and small enterprises have started using it as a differentiator across all their services, be it online or offline. Designing a strong offline customer experience, integrated with the online system is turning heads and driving revenue. Umpqua has redesigned their branches to be more customer friendly and human. Ziba, the company that supported the bank in the redesign process, combined ideas from boutique hotels and coffee shops with retail and banking to achieve a perfect experience. As a result, the first branch opened to the public banked $50 million in deposits in first 9 months alone, making 2.25 times more than any other branch. Umpqua’s branches are maximizing the amount of time people spend in the bank, offering visitors free coffee or reading areas where tablets with subscriptions to important magazines as Harvard Business Review can be found.
Credit: Photo credits marketcontractors
ING Direct in Toronto has opened their office to the outside world and delivered a very accessible co-work space where clients and non-clients alike can work over a cup of coffee. Capital One 360 also launched a coffee like experience in their retail offices, just like Commonwealth bank did with their espresso bar. Many of them have bank employees serving coffee to those that walk in, and open up conversations over financial services and how the bank can support.
Finance by design is still in its infancy, but I am excited to see all these trends coming together. Within the next years, as the distinction between online and offline fades, the user’s experience will be a focus and more a differentiator than it has ever been.
9 November 2023
Navigating the Risks and Impact of Web Security in the Fintech Sector
A Comprehensive Developer Guide to Web Security Challenges
Navigating the Complex World of Web Vulnerabilities