Millions in Profit from Branchless Banking: Fintech Product Design Challenges the Rules

Ten years ago, banks competed for the best locations for their branches; now, banking apps designed by fintech startups are more efficient than the skyscrapers of incumbent banks

The identity of a bank in the modern era is inseparable from its digital presence. Customers no longer measure a bank by the magnificence of its buildings but by the quality of its digital product. The digital user experience (UX) is now the primary lens through which the majority of customers perceive the financial brand, and it plays a critical role in shaping customer loyalty and trust.

Story by Alex Kreger and the team of UXDA

Digital products are becoming the foundation of modern banks and their service offerings. Consequently, leading fintechs and banks are making digital product design and user experience (UX) central to their strategy, brand identity, and profitability.

Digital Product Design: Embracing New Face of Banking

The traditional image of a bank as a grand Main Street building is rapidly fading. Banks are undergoing a transformation that redefines their role and perception, shifting to digital platforms accessible via smartphones, tablets and computers. This evolution, driven by technology and changing customer expectations for convenience, has made digital platforms the primary point of contact. As a result, ease, efficiency and functionality are now the core elements defining a bank’s brand and business.

Customers today perceive a financial brand primarily through their digital experience. Instead of recalling a branch visit or a conversation with a bank teller, they think of the app they use to check balances, transfer funds or pay bills. The quality of this digital interaction shapes their view of the bank’s reliability, innovation and customer focus. A seamless, intuitive digital experience boosts satisfaction and loyalty, while a frustrating interface can push customers toward competitors.

The product design and digital UX are the new face of banking. It is where the brand lives and, through this interface, customers judge the bank’s competence and trustworthiness. In a world where Fintech companies, with no physical branches, are gaining ground by offering superior digital experiences, traditional banks are compelled to prioritize their digital offerings. The digital product is not just an extension of the bank’s services; it is the bank itself. The quality of the digital experience-its speed, security, ease of use and personalization-directly influences how customers feel about the bank as a whole.

This paradigm shift means that a financial brand success is increasingly tied to its digital strategy. A bank’s digital product must not only be functional but also engaging, intuitive and responsive to customer needs. The interface design, ease of navigation, personalization of services and seamless integration of features all contribute to the overall customer experience. In this sense, the digital UX has become the main touchpoint through which the bank’s brand is communicated and experienced.

Product design has emerged as the most important factor impacting profit in modern banking due to several key reasons, all tied to the evolving landscape of the financial industry and customer expectations:

• Shift in Customer Expectations. Modern customers demand seamless, intuitive and personalized experiences across all digital platforms, including banking. With the rise of Fintech startups offering user-friendly, innovative solutions, traditional banks are under pressure to match or exceed these standards. Customers now expect banking products that are easy to use, accessible on multiple devices and tailored to their individual needs. A well-designed product that meets these expectations leads to higher customer satisfaction, loyalty, and retention which directly impacts a bank’s profitability.
• Increased Competition from Fintechs. The financial industry has seen an increase of Fintech companies that focus heavily on user-centric design, offering niche services that cater to specific customer pain points. These companies often have the advantage of agility, allowing them to innovate and iterate quickly. To compete, traditional banks must prioritize product design to attract and retain customers who might otherwise be drawn to more innovative alternatives. A strong focus on design can differentiate a bank’s offerings, making them more appealing and competitive in a crowded market.
• Digital Transformation and Efficiency. As banks undergo digital transformation, product design becomes crucial in ensuring that digital services are not only functional but also intuitive and efficient. Well-designed products streamline operations, reduce the need for extensive customer support and minimize errors, leading to cost savings and higher profit margins. For example, a well-designed mobile banking app can reduce the load on physical branches and call centers by allowing customers to complete transactions and access services independently.
• Enhanced User Engagement and Cross-Selling Opportunities. A well-designed banking product enhances user engagement by making it easier for customers to interact with their accounts, explore new services and manage their finances. Increased engagement opens up opportunities for cross-selling additional services, such as loans, insurance or investment products, which can significantly boost a bank’s revenue. Effective product design also leverages data to personalize these offers, increasing the likelihood of conversion and customer satisfaction.
• Trust and Security. In banking, trust is paramount. A product that is poorly designed, difficult to navigate or perceived as insecure can erode customer trust, leading to attrition and a negative impact on profits. Conversely, a product designed with robust security features, clear communication and a user-friendly interface fosters trust and encourages customers to engage more deeply with the bank’s services. Trustworthy products lead to long-term customer relationships, which are more profitable over time.
• Customer Acquisition and Retention. Customer acquisition costs in banking are high, making it crucial for profitability. A well-designed product reduces churn by providing a positive user experience, making customers more likely to stay with the bank and less likely to switch to competitors. This is supported by a ConsumerAffairs report, which notes that 82% of bank customers cite their financial institution’s online and mobile platforms as a key reason for staying with their current bank. Additionally, an attractive and user-friendly product is more likely to attract new customers, expanding the bank’s market share and revenue base.
• Regulatory Compliance and Risk Management. Product design also plays a critical role in ensuring that banking products comply with regulatory requirements and manage risk effectively. A product that is designed with compliance in mind reduces the risk of costly fines and legal challenges. Moreover, well-designed products can incorporate features that help customers manage their own financial risks, such as budgeting tools or alerts for unusual account activity, which can reduce the bank’s exposure to bad debt and fraud.
• Brand Differentiation and Loyalty. In a market where many banking products offer similar features, UX and product design becomes a key differentiator. A product that provides an exceptional user experience can enhance the bank’s brand reputation and foster customer loyalty. Loyal customers are not only more profitable in the long run but also act as advocates, bringing in new customers through word-of-mouth and positive reviews.
• Scalability and Adaptability. Well-designed banking products are built with scalability and adaptability in mind, enabling banks to quickly respond to market changes and customer demands. In today’s fast-paced digital environment, the ability to rapidly scale services and adapt to new technologies or regulations is crucial for maintaining profitability. A product that is designed to be flexible and scalable can easily incorporate new features, expand to serve more customers and integrate with emerging technologies, all of which contribute to sustained profit growth. Moreover, scalable products can be deployed across multiple markets or regions with minimal modification, maximizing revenue potential.
• Data-Driven Insights and Continuous Improvement. Modern banking products, when designed effectively, collect and utilize customer data to provide actionable insights that drive continuous improvement. A product with built-in analytics capabilities allows banks to monitor user behavior, identify pain points and track the performance of different features. This data-driven approach enables banks to make informed decisions about product updates, new feature rollouts and overall service enhancements. By continuously refining products based on real user feedback, banks can keep their offerings relevant and competitive, which not only enhances customer satisfaction but also ensures that the products remain profitable over time. This iterative process of improvement, supported by a strong design foundation, is key to sustaining long-term profitability in a rapidly evolving market.

Digital Advantage: Design is the New Currency in Banking

Financial apps today are focusing narrowly on functionality, with banks and Fintech companies assuming that offering features like transfers, bill payments and budgeting tools will ensure customer satisfaction. However, this approach narrows a crucial component: the user’s emotional experience. According to a PwC survey, 59% of consumers feel that companies have lost touch with the human element of customer experience.

Emotional design goes beyond mere aesthetics; it’s about creating a connection with users. A McKinsey study found that banks offering emotionally engaging customer experiences experienced a 15% increase in cross-selling success and a 20% reduction in churn rates. By focusing on emotional design, banks can transform routine tasks into delightful experiences, fostering loyalty and satisfaction.

Investing in user-centered design and emotional engagement yields significant returns. According to a report by the Design Management Institute, companies that embraced design thinking outperformed the S&P 500 by 211% over a ten-year period. This approach not only enhances user experience but also drives business growth through innovation and differentiation.

Contrary to the prevailing wisdom, the most successful financial apps aren’t merely feature-rich-they’re emotionally engaging. Emotional design isn’t fluff; it’s a necessity. A study by Forrester reveals that 80% of respondents would spend more with a brand when they experience positive emotions. It’s time for financial apps to transform from mere utilities into experiences that resonate emotionally with users.

Banks are criticized for their lack of empathy, with many users finding their interactions with banks to be cold, frustrating and impersonal. A Forrester study reveals that 53% of customers consider banking to be more transactional than relational. This is a significant problem because, at its core, banking is about trust and relationships.

To address this empathy deficit, financial brands must adopt a user-centered product design approach. This starts with thoroughly understanding the needs, desires and pain points of users through comprehensive research. Observing and engaging with users in their natural environments reveals insights that structured surveys and focus groups can’t, offering a deeper understanding of customer satisfaction with a product. For instance, why might a user prefer a mobile banking app over a traditional branch visit? What challenges do they encounter when trying to complete a transaction online?

Once these insights are gathered, they must be converted into actionable design principles. The Define stage of the design thinking process emphasizes framing the right problem to identify the most effective solution. By focusing on the user’s perspective, banks can redefine their challenges, leading to more innovative solutions.

A perfect example of emotional design is the Monzo Bank mobile app, which employs friendly language, engaging visuals and intuitive interfaces to make banking feel less like a chore and more like a personalized service. Monzo’s approach has not only attracted a massive user base but also fostered a community of loyal customers who act as brand advocates.

Here are the top 10 strategic product design principles that can transform financial apps into user-centric digital powerhouses:

1. Embrace Emotional Design: Beyond Functionality

Imagine your financial app as a trusted companion rather than just a tool. Users should feel understood, valued and cared for. Emotional design involves employing colors, typography and micro-interactions to create a warm and engaging environment. For instance, Monzo uses playful animations and personalized greetings to make users feel welcomed and appreciated every time they open the app.

2. Simplify Complexity: The Zen of Finance

Financial matters are inherently complex, but your app shouldn’t be. Strive for simplicity in both design and functionality. For example, Robinhood has simplified the complexities of stock trading into an intuitive and easy-to-use interface that even beginners can navigate effortlessly. Simplicity is not just about aesthetics; it’s about ensuring clarity and ease of use.

3. Personalize the Experience: Tailored to Perfection

One-size-fits-all approaches are outdated. Personalization is a key for relevance. Utilize AI and machine learning to tailor content, notifications and advice to individual users. For instance, the personal finance app Clarity Money offers personalized insights and recommendations based on the user’s spending habits, creating a uniquely tailored experience for each user.

4. Create Trust: Transparency is Gold

Trust is fundamental in financial services. To foster it, design for transparency by providing clear, concise information and straightforward navigation. Highlight security features prominently and provide explanations for complex processes. A study by Accenture found that 18% of customers switched providers due to a lack of trust. Effective trust-building can be achieved through clean, uncluttered interfaces and straightforward language.

5. Foster Engagement: Keep the Conversation Going

Engagement is an ongoing conversation, not just a one-time event. To keep users actively involved, incorporate gamification and interactive features. For example, the app Qapital uses goal-setting and reward systems to make saving money a fun and interactive experience. This continual engagement helps build habits that are crucial for fostering long-term loyalty.

6. Design for Accessibility: Inclusion by Design

Accessibility isn’t an option; it’s a requirement. Design your app to be usable by everyone, including those with disabilities. This includes using clear and readable fonts, providing text-to-speech options and ensuring color contrasts meet accessibility standards. For example, Apple’s financial app, Apple Card, integrates these principles effectively, delivering an inclusive experience for all users.

7. Iterate Based on Feedback: The Agile Approach

Your users are your best critics. Implement a feedback loop in which user input directly shapes design improvements. Regularly update your app based on this feedback to meet evolving user needs. For instance, Spotify continuously refines its app using real-time user feedback, setting a standard for responsive design.

8. Prioritize Security: Peace of Mind

Security should be woven into the fabric of your app’s UX. Ensure that security measures are visible and understandable. Use biometric authentication and provide users with control over their security settings. For instance, Revolut offers real-time transaction alerts and easy-to-access security features, giving users peace of mind.

9. Facilitate Learning: Educate and Empower

Financial literacy is low; your app can change that. Integrate educational resources and tools to empower users to make informed decisions and improve their financial well-being. Acorns does this exceptionally well by providing educational content that helps users understand investing basics, making the app both a tool and a learning platform.

10. Design for Delight: Surprise and Enjoyment

Delight is the secret sauce of exceptional UX. Small, unexpected moments of joy can transform the user experience. Think of incorporating delightful animations, playful interactions and rewarding feedback. The budgeting app YNAB (You Need A Budget) delights users with its fun, quirky interface and rewarding progress tracking, turning budgeting into an enjoyable experience.

Best Practices: Revolutionary Product Design Examples in Finance

The good news is that financial companies are already adopting these UX design principles, elevating financial experience to new heights. Here are some standout examples and best practices in the financial industry where institutions have leveraged unique UX design principles to create hype, transform user experiences, and generate millions in revenue:

Revolut: Real-Time Notifications and Control

Revolut’s revenues surpass $2.2bn, with record profits of $545m in 2023. Revolut app has revolutionized the banking experience with its real-time transaction notifications and extensive security features. Users receive instant alerts for every transaction, enjoying peace of mind and control over their finances. Additionally, the app allows users to freeze and unfreeze their cards instantly, set spending limits and enable location-based security, making it a powerful tool for managing and protecting their finances.

Monzo: In-App Community and Transparency

The fintech startup reported a pre-tax profit of £15.4 million ($19.6 million) with revenues of £880 million for the full 2023 year. Monzo has created a unique community environment within its app by integrating a forum in which users can discuss features, share feedback and even vote on upcoming features. This level of transparency and user involvement in product development strengthens loyalty and fosters a sense of community. Additionally, Monzo provides detailed transaction breakdowns and instant notifications, enabling users to easily track their spending in real-time.

Starling Bank: Seamless Integration and Versatility

Starling Bank reported a profit of £301.1m, revenue of £682.2m, and total deposits of £11bn. Starling Bank has focused on creating a versatile and integrative platform. Its marketplace enables users to link their accounts with various financial services and tools, from investment platforms to insurance providers. This seamless integration offers users a holistic view of their finances and enhances the app’s utility beyond traditional banking.

BBVA: Gamification and Financial Health Tools

BBVA has incorporated gamification elements into its app to boost user engagement and promote better financial habits. The app offers a financial health tool, “Bconomy,” that provides users with scores and insights into their financial behavior, along with personalized advice for improvement. These elements make financial management more interactive and empowering, helping users make informed decisions.

ENBD X: Premium Digital Banking Experience

ENBD X by Emirates NBD sets a new standard for digital banking in the MENAT region, reflecting the luxury and innovation of Dubai. The app combines everyday banking with wealth management in a sleek, user-friendly platform. With 200+ banking features including personalized financial insights, a self-service hub and proactive communication, ENBD X enhances the user experience, making it a preferred choice for managing finances and investments.

Liv by Emirates NBD: Millennial-Focused Banking

Liv Digital Bank, another product from Emirates NBD, is tailored specifically for millennials. It features a vibrant, social media-like interface that makes banking feel less formal and more engaging. Liv X app allows users to open accounts in minutes, track their spending visually and even split bills with friends effortlessly. The app’s social and interactive design has made it a favorite among younger users.

USAA: Voice and Biometric Authentication

USAA has been a pioneer in implementing advanced authentication methods, such as voice and biometric recognition. These features enhance security while also providing a seamless and convenient user experience. The app’s design integrates these security measures without compromising usability, making it both safe and user-friendly.

Capital One: Eno Virtual Assistant

Capital One has introduced Eno, a virtual assistant powered by AI that helps users manage their finances. Eno provides real-time updates, alerts and personalized insights and even helps users track their spending and manage their accounts via text message. This level of interaction and support makes financial management more accessible and intuitive.

Chime: Automated Savings and Early Paydays

Chime has gained attention with features like automated savings and early access to paychecks. The app automatically rounds up transactions to the nearest dollar and transfers the difference to a savings account, making saving effortless. Additionally, Chime offers early direct deposit, giving users access to their paychecks up to two days early.

Qapital: Goal-Oriented Saving and Expense Tracking

Qapital has built its brand around goal-oriented saving and comprehensive expense tracking. Users can set financial goals and automatically allocate funds toward them in 15+ different ways. This focus on goals and tracking makes financial management more proactive and personalized.

Tangerine: Personalized Financial Insights and Recommendations

Tangerine offers a feature that provides users with personalized financial insights and recommendations based on their spending habits. This feature helps users make better financial decisions and manage their money more effectively, significantly enhancing the overall user experience.

Gcash: Inclusive Digitalisation of Finance in Philippines

Gcash has transformed from a simple e-wallet into a comprehensive financial super app in Southeast Asia. It combines payments, savings, investments, insurance and lending in one platform. The super app’s user-friendly design and accessibility have empowered 90 million Filipinos to participate in the digital economy, especially in regions with limited access to traditional banking services.

bineo: Making Digital Banking Safe

bineo, launched by Banorte, is Mexico’s first licensed fully digital bank, designed with a deep understanding of local cultural and financial practices. The app features intuitive navigation and personalized financial tools, such as its “Pockets” savings feature, which aligns with the traditional Mexican habit of saving money physically. By focusing on customer-centric design, bineo ensures that users can easily manage their finances, set savings goals and track their progress in licensed banking services provided by Mexico’s largest banking group.

myt.money: Lifestyle Support and Financial Innovation

myt.money has evolved into a comprehensive financial and lifestyle super app designed to modernize banking in Mauritius. The app integrates a wide range of services, including payments, savings, investments, insurance and more, alongside everyday lifestyle needs like bill payments and ticket bookings. Its intuitive design and personalized financial insights empower users to seamlessly manage both their finances and daily activities, making it an essential tool for the modern Mauritian user.

Conclusion: Product Design Pays Dividends

Taking into account the shift from physical branches to digital platforms and the changing dynamics of the banking industry, product design and user experience (UX) are poised to become the main factors driving bank profitability in the future for several interconnected reasons.

First and foremost, as banks continue to operate primarily through digital channels, the user experience will be the most direct and impactful touchpoint between the bank and its customers. Unlike in the past, where a bank’s physical presence, customer service at branches and personal relationships with bank staff played a central role in building trust and loyalty, these elements are now largely replaced by the digital interface. This makes UX the key factor in customer satisfaction, loyalty and, ultimately, retention. A well-designed, user-friendly digital product encourages customers to engage more frequently and deeply with the bank’s services, increasing the lifetime value of each customer.

Moreover, in a landscape where financial services are increasingly commoditized, and where numerous Fintech startups and digital-only banks are offering similar financial products, the differentiation factor will be the quality of the user experience. Banks that invest in superior product design and UX will stand out in a crowded market. They will attract not only tech-savvy customers who demand seamless digital interactions but also those who may otherwise be drawn to Fintech competitors. This differentiation will be crucial in driving customer acquisition and retention, both of which are critical for profitability.

Additionally, a superior UX directly influences operational efficiency and cost reduction. A well-designed digital product minimizes the need for extensive customer support, reduces the occurrence of errors and streamlines processes such as onboarding, account management and transaction handling. This operational efficiency translates into lower costs for the bank, which, combined with higher customer satisfaction and retention, leads to improved profitability.

The personalization capabilities offered by advanced product design and UX also play a significant role in enhancing profitability. By leveraging data analytics and AI, banks can tailor their offerings to meet individual customer needs, creating more personalized and relevant financial experiences. This not only increases the likelihood of cross-selling and up-selling but also enhances customer loyalty, as customers feel that their bank understands and anticipates their needs. Personalized services delivered through a well-designed UX create additional revenue streams and strengthen the relationship between the bank and its customers.

Furthermore, as banking becomes more embedded in everyday digital ecosystems-integrating with e-commerce platforms, social media and other online services-the user experience will be crucial in determining how seamlessly a bank can fit into these ecosystems. Banks that can offer a frictionless experience across various digital touchpoints will be better positioned to capture value in these integrated environments, thereby increasing their profitability.

Finally, in a future where technology continues to evolve rapidly, banks that prioritize product design and UX will be better equipped to adapt to new technologies and customer expectations. The ability to quickly iterate and improve digital products based on user feedback and technological advancements will be a key competitive advantage. This agility will allow banks to continuously enhance their services, maintain customer engagement and stay ahead of competitors, all of which are essential for long-term profitability.

As the banking industry becomes increasingly digital, product design and UX are not just important-they are central to a bank’s ability to generate profit. These factors determine how effectively a bank can attract, engage and retain customers, manage operational costs, differentiate itself in a competitive market and adapt to future technological changes. Banks that excel in product design and UX will be the ones that thrive in the digital age, turning these elements into the main drivers of their profitability and digital ROI.

Originally published at https://theuxda.com.