Something weird is happening in the world of banking. I mean, banking is full of weird stuff – paper money is not made out of paper, 90% of money doesn’t really exist in the physical world, banks lend out funds they don’t have (hello, global financial crisis).
But something particularly weird is about extremes that somehow co-exist in the banking field.
- The old-school end of a banking spectrum is occupied by brick-and-mortar financial institutions that have hardly changed since the 16th century.
- On the opposite end of the spectrum sit futuristic super apps that, in addition to money management, will shop for you and send you coffee (literally).
- Somewhere between those extremes, we have traditional banks that test the digital waters,
- And fancy virtual neobanks that jumped into digital, skipping branch creation completely.
Traditional brick-and-mortar bank and user experience sabotage
Getting service from a physical bank is challenging. Consider a story that happened with my good friend Artem.
Artem tried to buy a present for his girlfriend. His Italian bank tracked this attempt as a suspicious activity and blocked his card. Since the bank doesn’t have its banking application, Artem didn’t get any notifications about the blockage.
He went on a business trip to Switzerland and realized that he can't pay for food and hotel. To understand what's happening, Artem called his bank to figure out that yes, the card is indeed blocked, and no, the issue can’t be fixed until the card owner visits an Italian branch where he got his card.
Then it happened again.
How are banks that violate basic UI/UX design principles still alive, you ask?
- First, a physical location and face-to-face interaction with a bank officer add to trust. Not everyone is ready to place their money in a solely virtual organization.
- Second, people who got an account in a brick-and-mortar bank many years ago remain loyal just out of habit.
- Finally, not everywhere in the world, better alternatives are available.
But despite everything, the number of people using traditional banks melts like snow under the spring sunshine. In the picture below, you can see how people of all age groups left branches for digital banking in the years 2015 — 2020.
That was a trend before COVID-19 that only accelerated since. Now digital experience is the primary driver of churn and a major factor for people who choose their bank. To retain users like Artem, traditional banks are willing to evolve and renew their model.
Basic features for digital bank application design
A digital bank is a web doppelganger of its non-digital brick-and-mortar ancestor. Banks’ ambitions for their mobile apps are usually to replicate in-person interactions, making all user journeys available online. Thus, physical and virtual banks can exist in parallel.
A digital bank needs to have some basic features to be valuable for users:
- Quick and seamless onboarding that takes up to 10 minutes, scans user documents and accepts face IDs or fingerprints for identification.
- Real-time transaction notifications so that users can keep track of their spending.
- Integrated management tools backed by clear visualizations and dashboards, that give people a full view of their finances.
- Flexible goal-based features — to allow users to deal with their money as they wish.
- Basic budget insights based on spend analytics.
- Advanced access and security to help prevent fraud and personal data leaks.
Tons of banking app challenges arise just from these six points. But some financial institutions go even further, beyond the basic features. They maximize the value they offer by providing deeper solutions to users’ pains.
Neobanks and mobile banking app design that is capable of more
The first wave of fintech, which began after the 2008 financial crash, brought us the idea of neobanks — banking apps that operate exclusively online, without a network of branches.
Neobanks don’t have to make users pay for branch maintenance so they can offer more favorable terms. But the main value proposition of such innovative banking apps isn’t the core service, but the follow-on service that accompanies it. Because people are concerned about so much more than just banking.
- They struggle for help in setting and achieving their financial goals.
- They want insights on how they can change their spending patterns to save more.
- They want their bank to nudge them in the right direction, giving notifications they didn’t even know they needed.
- People expect banking services to adjust to their needs.
In its recent digital banking report, Deloitte mapped out eight segment-specific needs that traditional banking ignores, and 40+ features of neobanks that respond to those needs. You can check them all out in the table below.
Let us see how it works with a few examples.
How Revolut rewards you with cashback magic every time you pay
Revolut concludes third-party partnerships with merchants to encourage users with cashback and discounts. Every time you spend, you feel relieved and overjoyed because you earn up to 30% back.
How Monzo helps users to adopt better financial habits
In Britain, around 0.8% of people identify themselves as problem gamblers, which means that more than 5,000 Monzo customers are affected by gambling disorders. Monzo believes that it’s a banks’ responsibility to support peoples’ self-exclusion from gambling.
In their app, Monzo developed a feature that blocks transactions to gambling sites.
To remove the block, users will need to chat with customer support first. After that, it will take 48 hours before the app turns the block off. In design, it is called “positive friction” — user experience is made deliberately complex to prevent people from impulsive decisions.
How Habstash allows you to set collaborative goals
Habstash is one of Eleken’s clients, a budget app that helps people to save money for their dream home. Generally, budget apps have an option for planning savings personally (hence, they are called personal finances apps).
However, UX research, wireframing and prototyping stages of the design process have shown that for such significant purchases like buying real estate people often save together with their partners or family members. That’s why we added a “Save with your partner” feature.
How Up bank makes its users feel ‘Up Yeah!’ moments
Up is an Australian neobank that rarely gets inspiration in the banking or fintech space. Instead, Up designers follow social media and SaaS best practices in user interface. And that’s what helps the company to go beyond basic banking features.
One of such basic features for digital banks is to get users into the app in under x time. The Up team observed that although they nailed sign-up speed — you can literally open your Up bank account in under 3 minutes — their banking app UI design felt cynical and unimpressive. Mailchimp, for instance, makes such moments more emotional.
So Up designed a special post-signup moment that made you go “Up yeah” in celebration. And that was the first of many “Up Yeah!” moments.
How Qonto simplifies your everyday life as a startupper or freelancer
People want their products and services to be personalized. Actually, they are ready to pay 20% more for products that properly fit their lifestyle. Qonto knows that — it tailors its services to the needs of small & medium enterprises, startups, and freelancers.
Qonto customers don’t have to purchase expensive standalone software to manage their finances. A Qonto account allows them to review balance and transaction history, assign budgets to projects or teams, manage their bill payment directly from the account, and many other features called to make things easier for small businesses.
How neobanks turn into super apps
Being a neobank, you solve people’s financial problems beyond what traditional banks offer. But sooner or later, either problems or your solving capacities run out. What would you do next? The logical move would be to pull in related services that would become a logical supplement for the current application.
Salesforce has done it many years ago, expanding a basic CRM app into a huge B2B ecosystem. Now banking app design trends make neobanks expand into such ecosystems and call themselves a financial super app.
Lots of fintech companies have recently started to call themselves “super apps”, yet nobody has developed anything similar to Salesforce, WeChat, or Alipay. So we don’t know what user experience turns a financial app into a super app. For now, it's still wait-and-see.
How to create a bank app that will keep up with neobanks?
The success of neobanks is based on features that lie beyond basic banking functionality. They cover users’ needs users themselves don’t even know they had.
What makes such forward-thinking possible? If you ask UI/UX designers, the answer would be “UX research.” The methodology of UX research allows you to find hidden problem spots and relevant solutions. If you'd like to learn how it works, we recommend checking out our articles on what is UX research and how the UX research process works to find answers to questions you have.