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by Seven Peaks on Dec 13, 2023 5:42:46 PM
Alex is the founder of the financial UX design agency, UXDA. A member of the Forbes Business Council, he is a recognized expert in the UX strategy and human-centered design of digital financial products, having covered the topic in over 100 articles in Forbes, FinancialBrand, Finextra, and UXPlanet. Alex is the author of Financial UX Design methodology, with over 10 years of experience in 200+ digital products design for customers in 36 countries.
Most financial brands struggle to overcome the ordinary to make their digital service so stunning that the entire team will be passionate about it and customers will love to use it. UXDA uses a special UX methodology to add soul to financial products that empower business creating digital advantage and driving breakthroughs. My story in digital design started with the banking crisis in 2008. I lost all my savings and investments and quit my job in real estate. I was so impressed with the success of digital startups I decided to make my own and it failed. But as a result, I joined a small web development studio.
This way, 12 years ago, I began to actively integrate UX design and design thinking into digital design. We helped 30 startups and completed 70 digital projects for third-party clients. Several of them were related to finance. In one of them, UX approach increased the company’s revenue by 30% per year. It became a tipping point and in 2015, with my co-founder Linda Zaikovska-Daukste, we founded the world’s first UX design agency 100% focused on the financial industry - UXDA.
Remembering the painful experience of the economic crisis back in 2008, we made it our mission to humanize the financial industry and help user-centered financial brands to create digital products that would serve people instead of ruining their lives.
“Today, the UXDA team is the well-known financial UX design agency that makes over 100 products of Tier 1 banks, vendors and FinTechs from 36 countries loved by their customers through the power of Financial UX design.”
These experiences create positive emotions that turn finance companies into loved brands, rewarded with long-term customer loyalty and trust. We have delivered UX/UI solutions to TOP Forrester banking vendors like Intellect Design Arena, Finastra, CR2, Backbase, as well as to banks like HSBC, Emirates NBD, Garanti BBVA Securities, Bank of Jordan, United Arab Bank, BKT and FinTechs like GCash, SurePrep by Thomson Reuters, Magma, Private Wealth Systems, and Bolero. UXDA has been awarded in multiple globally-famous design and finance “Oscar-awards” like the Red Dot Design Award, iF Design Award, A' Design Award, UX Design Awards, Banking Technology Award, International Design Award (IDA), and the London Design Award.
The UXDA team is based in Latvia, Europe, but serves financial services companies around the world. Currently, UXDA has designed more than 100 digital financial products in 36 countries. We are open to collaboration with financial companies in Thailand and will be happy to help humanize digital finance in this country.
FinTech plays a key role in the financial industry and the broader business landscape today. Thanks to the technological leap that humanity has made over the last century, we find ourselves in a fundamentally new reality – digital.
In November 2022, humanity surpassed 8 billion, and the digital age changed the rules, personal relations, businesses, communication and how everyone uses their time. Businesses try to adopt new rules through digital transformation, but it’s difficult. Data from BCG research shows that only 35% of companies achieve their digital transformation objectives.
This created new requirements for finance, and accordingly led to the emergence of FinTech. And with the integration of advanced solutions in the field of AI, Metaverse and cloud technologies, FinTech will become a key link for the integration of finance in the digital world.
“Unlike traditional financial institutions, FinTech is an advanced technological laboratory where models and tools are developed and tested that will become ubiquitous tomorrow and form a new customer experience.”
More and more traditional financial companies are starting to understand this and are partnering with FinTech companies, integrating FinTech solutions, and in some cases even transforming themselves into FinTech. And in a global sense, in 10-20 years all players in the financial industry will become FinTech or leave the market. Because digitalization will completely change work methods and standards.
After all, already now, the bulk of the activities of incumbent banks depends on technology suppliers. But at the level of digital customer service, they lag behind FinTech. According to a PWC study, 61% of consumers interact weekly on digital banking, and 20-25% of consumers would prefer to open a new banking account digitally but are unable to do so. The global digitization and FinTech development has significantly impacted how banks operate and serve their customers. Digital technologies have allowed banks to automate many of their processes, reducing the need for manual labor and increasing efficiency. This has led to faster transaction processing times, lower operating costs, and improved customer satisfaction.
Digital technologies have also made it easier for banks to implement advanced security measures to prevent fraud and protect customer data. This has helped reduce the risks associated with online banking and other digital financial services. The global digitization of the banking industry has reduced investment requirements to banking service providers resulting in more players entering the market and offering digital financial services. This has pressured traditional banks to improve their digital offerings to remain competitive. Digital technologies have also enabled the development of new business models in the banking industry, such as mobile payments and digital lending, which has allowed banks to diversify their revenue sources and reach new customer segments.
“The quest for frictionless, secure financial transactions has never been more pressing in the dynamic digital services landscape.”
Biometric authentication leverages unique physiological traits such as fingerprints, facial recognition, and even retinal scans enabling users to access their accounts, authorize transactions, and perform a host of financial operations without the need for digital devices or cards. These and many other digital-world transformations put the emotional experience, human-centricity and ethical consumerism into front of social trends. At the same time, in response to information overload, more and more people demand easy to use and customer-centered digital solutions, especially in finance. This brings us to the first and foremost banking disruption we want to address:
“To place people over profit, a business should become purpose-driven, which requires exceptional human-centricity. And, in the digital age, this is the most profitable long-term strategy.”
According to Havas research, 77% of consumers buy meaningful brands that match their values, and, by making the world a better place, those brands outperform the stock market by 134%. Sixty-six percent of consumers are even ready to switch from a known brand to an unknown, purpose-driven brand, according to a Cone/Porter Novelli study. So, from the societal point of view, a FinTech mission is to adapt the financial industry to the digital disruption and transform it into a human-centered business.
At UXDA, we use more than just the tools and techniques of Design Thinking and UX Design to create the next generation of digital financial products. We use a several frameworks system that is aimed at integrating the company's business strategy and customer needs at five levels:
1. Purpose
Purpose-level encompasses a company's “why?” through vision, mission, values, goals and its commitment to providing value to customers and society. This level sets the foundation for all business decisions, including design, ensuring they align with the overarching goals. A clear sense of purpose extends beyond short-term goals and instant challenges, giving direction through a bigger picture of a business and social landscape. It's fueled by passion and dreams, driving us to make tangible efforts for meaningful results in our businesses and lives.
2. Market
The next level is the Market-level, involving understanding the target audience, customers’ profiles, expectations, needs, usage contexts and pain points. Тhe financial companies need to have a clear understanding of who their customers are and what they want in order to develop a purpose-driven digital strategy that resonates with them. Deep insights into the customer base are crucial for tailoring design to meet specific customer requirements.
3. Brand
The third level is the Brand, which involves defining the company's brand identity and determining how it can be authentically communicated to customers based on Purpose and Market insights. This includes brand guidelines and visual language, as well as the channels and methods through which the brand will be communicated. We need to ensure that the brand authenticity reflects the purpose and values, and resonates with its target audience. Product design in this stage plays a crucial role in consistently conveying the brand's essence, ensuring consistency and differentiating it from its competitors.
4. Service
The fourth level relies on the aspect of Service. This stage involves making crucial determinations regarding the range of services a company will offer in order to fulfill its Purpose within the target Market in line with the Brand identity. In the banking context, these encompass essential services, such as fund transfers, deposit accounts, credit accounts, insurance products, investment opportunities and various other financial instruments, including services that facilitate financial management and budgeting.
5. Ecosystem
The final level of the pyramid is the Ecosystem, which includes all the digital products and elements needed to interact with customers. It is the main infrastructure and support that enables the company to function and serve its customers. This includes things like mobile and online banking, as well as the internal systems and processes that support these services.
We help financial companies to ensure that their digital ecosystems provide a consistent and frictionless experience to its customers and employees across all touchpoints. A cohesive and user-centric digital ecosystem is crucial for retaining customers and creating a competitive advantage in the modern world.
While the design sprints in FinTech can be effective for quickly addressing specific UX design challenges, there are several potential drawbacks when considering long-term digital financial product success:
Narrow Focus
Design sprints are often centered around solving a single, immediate problem. This approach might lead to a myopic view that neglects the broader user experience and long-term goals of the digital financial product.
Lack of Holistic Strategy
Long-term success requires a comprehensive strategy that aligns with business goals, user needs, and market trends. Design sprints may not allow for the in-depth analysis needed to develop a holistic and adaptable strategy.
Neglecting User Research
Design sprints prioritize speed, which can result in limited user research. Neglecting thorough research may lead to solutions that do not accurately address user pain points or provide lasting value.
Limited Iteration
In a sprint, the emphasis is on quick solutions, which can hinder the iterative process crucial for refining and optimizing a digital financial product over time.
Short-Term Fixes
Design sprints might lead to short-term fixes that do not address underlying issues. This could result in a series of band-aid solutions rather than a cohesive, long-term product strategy.
Incompatibility with Complexity
Financial products are often complex and interconnected. Design sprints might struggle to tackle multifaceted challenges that require a more nuanced and integrated approach.
Inadequate Testing
Design sprints involve rapid prototyping and testing, but this might not adequately simulate real-world usage scenarios. Complex financial products may require more extensive testing to ensure functionality, security, and regulatory compliance.
Lack of Alignment
Successful financial products require alignment with regulations, compliance standards, and industry best practices. Design sprints might not give enough time to ensure these aspects are thoroughly considered.
Risk of Short-Term Wins
While design sprints can generate quick wins, they may not necessarily contribute to the sustained success of the product. Long-term success requires a strategic and cohesive roadmap.
Limited User Involvement
While sprints often involve user input, they might not offer enough opportunities for continuous engagement and feedback, which are crucial for financial products.
Change Management
Financial products often require changes in user behavior or processes. A sprint may not provide adequate time to address change management aspects required for long-term adoption.
Aligning a digital product design in FinTech with a digital strategy can be a complex endeavor, as it involves bridging the creative and strategic aspects of a company. Following are key challenges that can arise during this alignment process:
Differing Timelines
A digital strategy often requires long-term planning, while a digital product design may operate on shorter development cycles. Balancing these differing timelines can be challenging, as design iterations may be needed even after the digital strategy is set.
Budget Constraints
Allocating resources for design can be a struggle when business leaders prioritize other areas, such as marketing or infrastructure. Convincing stakeholders to invest and grow design maturity can be a challenge, especially if they don't immediately see its impact on the bottom line.
Changing Business Priorities
Business goals and priorities can shift rapidly due to market dynamics, competitive pressures or external factors like economic conditions. This can lead to conflicts when design efforts are well underway, causing design teams to pivot quickly.
Lack of Alignment Among Teams
Ensuring that design teams, product teams and business units share a common understanding of the overarching strategy is crucial. Misalignment among these groups can lead to inconsistent execution and wasted efforts.
Limited User Centricity
Sometimes, business strategies may focus too heavily on financial goals and not enough on user needs and preferences. Balancing these priorities is essential for creating products that resonate with customers.
Resistance to Change
A company’s existing culture, processes and workflows may not be conducive to incorporating design thinking into every phase of product development. Overcoming resistance to change and promoting a design-centric culture can be challenging.
Communication Gaps
Effective communication among design teams and business strategists is crucial. Misunderstandings or a lack of clarity about objectives and constraints can lead to design decisions that don't align with the intended strategy.
Resource Allocation
Deciding how much time, effort and talent should be devoted to design within the broader resource allocation can be tricky. It often involves trade-offs with other critical functions like engineering, marketing and customer support.
Scalability
As businesses grow, maintaining design consistency and quality across multiple products, platforms or regions becomes challenging. Scaling design processes while preserving the original strategic intent can be demanding.
Competing Stakeholder Interests
Different stakeholders, from executives to customers and investors, may involve conflicting interests and expectations. Balancing these interests while adhering to the core business strategy can be a juggling act.
“Overcoming these challenges requires a collaborative approach in which design teams work closely with business leaders, engage in ongoing communication, adapt to changing circumstances and advocate for the value of design in achieving strategic goals. It's a dynamic process that requires continuous effort and a commitment to aligning design and business strategy effectively.”
The Global Payments Report 2023 by FIS highlights a paradigm shift in how transactions occur, with a decline in physical cash usage and a surge in digital payments. The report found that digital wallets were the globally leading payment method in e-commerce in 2022, with a 32% share in POS payments. Credit cards had a 26% share in global POS payments, and debit cards had a 23% share. Cash is used in only 16% of POS transactions globally, and this number could decline to 10% in 2026.
In this landscape, over 100 countries are exploring retail Central Bank Digital Currency (CBDC) issuance. This could create a future in which transactions are instantaneous, secure and accessible, regardless of physical borders. CBDCs could also represent an evolutionary leap in the way we engage with money and financial systems. As CBDCs challenge traditional banking notions, they could also empower consumers to interact directly with central banks. CBDCs have the potential to directly impact financial customers’ behavior, as they could enable individuals to hold digital currency with central banks, thereby shifting deposits away from traditional banks. To overcome potential disruption by CBDCs, FinTech will ride the wave of groundbreaking innovations that are sweeping in:
Generative AI
Generative AI, epitomized by the release of ChatGPT, could provide hyper-personalized customer experiences like never before. By analyzing vast amounts of data and understanding individual preferences, AI in FinTech can craft tailored financial solutions, recommend investment opportunities and offer real-time assistance that resonates with each customer's unique needs.
The Metaverse
The emergence of The Metaverse will be facilitated by new products like Apple's Vision Pro headset and could enable a new dimension to financial experiences that allows customers to engage with financial services in virtual spaces, attend virtual financial seminars and visualize their financial data like never before.
Embedded Finance
Embedded finance, another transformative trend, enables FinTech to embed financial services within non-financial platforms like e-commerce websites and mobile apps. This integration creates new touchpoints for customer engagement without leaving the customer's preferred digital environment.
Biometric Authentication
Biometric authentication could help transform the user experience from cumbersome to seamless. By leveraging fingerprints, facial recognition and even retinal scans, biometrics could enable users to access their accounts, authorize transactions and perform various financial operations without digital devices or cards.
Cloud
In a world where agility, scalability and personalized experiences reign supreme, I've seen cloud migration emerge as a catalyst for the evolution of the financial industry. Cloud computing enables FinTech to unshackle themselves from traditional infrastructure constraints and tap into the virtually limitless resources of the cloud.
Decentralized Finance
At the moment, decentralized finance (DeFi) uses cryptocurrency and blockchain technology to manage financial transactions. DeFi aims to democratize finance by replacing outdated centralized institutions with peer-to-peer (P2P) relationships that can provide a full range of financial services, from everyday banking, loans and mortgages to complex contractual relationships and trading of a variety of assets, including non-digital ones. In the future, DeFi will make everything around us liquid through the appropriation of tokens, so people who do not currently have liquid assets will be able to turn everything they have into it and participate in global economic exchange without intermediaries. In effect, this is a total democratization of the financial and investment market.
Open Banking
Imagine open banking as a highway network that connects different financial institutions and service providers. Before open banking, each bank was like a separate town with its own roads and infrastructure. To manage their finances, customers had to navigate a complex system of different platforms, interfaces, and security protocols. With open banking, the roads between banks are open, and customers can travel freely between them, using different vehicles and FinTech services along the way easily.
“Don’t be under the illusion that FinTech is about technology and finance. FinTech is about people. Therefore, only how well you understand their expectations, needs and behaviors will determine your success in the digital world of the future.”
Alex Kreger
Founder and CEO of UXDA
Alex is a UX Strategist and Scientist who creates and develops financial UX design methodology. Based in Latvia, Europe, UXDA serves financial services companies around the world. Currently, UXDA has designed more than 100 digital financial products in 36 countries and have received numerous awards around the world for their excellence.