The psychology of UX design and online banking

Banks and credit unions are losing ground to tech companies and app-based startups armed with a secret weapon: brilliant user experience (UX) design.

Convenience sure has a way of making us picky. Just ten years ago, moving money from savings to checking meant getting in your car, waiting in line, filling out forms, and leaving the bank hoping the task had been accomplished properly. But now that a majority of adults do their banking online, our tolerance for inconvenience in banking has all but disappeared.¹ As virtual banking services continue to evolve, consumer loyalty is shrinking. According to a recent survey, millennials are two to three times more likely than previous generations to switch banks, with over 80 percent reporting that they would be willing to switch.²

Why banks and credit unions can’t ignore UX

As anyone who works in banking will tell you, numbers don’t lie. And when it comes to consumer perception and preference, the numbers for America’s financial institutions aren’t looking so good. Seventy percent of people who bank online use only two to four of the primary products offered by their bank or credit union.³ Instead, users are opting for apps and startups like Venmo and Prism – even though the same services are offered by mainstream banking apps.

Based on data from the Apple app store, the average bank app scores 50 percent lower on average than leading finance apps created by startups (expense managers, investment apps, etc.). Even worse, the level of consumer trust given to banking companies is 30 percent lower on average than that given to tech companies like Apple and Amazon. These two stats are more related than they may seem, and it all comes back to user experience.

UX design and human psychology

It’s no secret that banks have had their share of PR blunders over the years, but so have companies like Apple, Amazon, and Uber. So what gives? Why do consumers seem to forgive and stick with tech companies and punish legacy institutions like banks and credit unions? It all comes back to the intersection of perception and experience.

Where banks and credit unions have traditionally relied on conventional marketing methods to spread their message, mobile app and site-driven tech companies have used intuitive, delightful experiences to show consumers their value rather than tell them, building loyalty and boosting perception through thoughtful UX design. More and more, consumers are choosing these alternatives over their bank’s equivalent product because of the perceived simplicity.

It all comes back to some basic psychology and the triune brain theory, where 80 percent of our brain activity comes from the “lizard brain” (fight-or-flight, feeding) and the “mammal brain” (emotions, habits, motivational systems), with the remaining 20 percent coming from the neocortex (knowledge, abstract reasoning, math, analysis, etc.). Digital experiences that cater to our mammal brain are perceived as more intuitive and enjoyable, where experiences catering to the neocortex are perceived as frustrating, even anxiety-inducing. Even though finances are technical and clinical, it can pay to keep things simple and human-friendly.

UX design principles for online banking: web vs. mobile

Whether on a smartphone screen or a full-size monitor, the ideal digital banking experience can be described in three words: quick, seamless, and personalized. With that in mind, the context and mindset behind app and website use can be very different. Let’s break it down.

Common reasons for visiting a bank’s website include:

Applying for loans
Updating user information
Researching rates and products
Opening new accounts

Common reasons for visiting a bank’s app include:

Depositing checks
Checking account balances
Transferring money
Locating branches or ATMs

Generally, websites tend to favor research and more complex tasks, while apps are used for more immediate needs. Treating your app like your website and your website like your app is a mistake: emphasizing too many different points of functionality on your mobile app can create a cluttered experience, while emphasizing minimalism on your website can bury some highly specific needs your users may have.

Essential UX design principles for online banking

While different banks and credit unions have different online needs based on their size and customer base, some core UX design principles should always be kept in mind.

Mobile apps

Keep the target action close at hand: Because users choose mobile apps to perform actions quickly, always ensure that buttons are clear and present. Don’t make your user scroll or question themselves just to execute a simple task.
Make contacting a branch simple on every screen: Mistakes and confusion are inevitable. Whether it’s user error or an app malfunction, users need to be able to call or chat with a real person easily.
Keep user authentication simple and secure: Logging in to your mobile app should be simple and secure without one taking precedence over the other. Making people answer too many questions or jump through too many hoops will likely drive them away from using your app—or worse, drive them toward a competitor.

Websites

Make the most of the homepage: Just because websites cater to more complex actions doesn’t mean the user experience should be complicated. Audit the features and pages your users interact with most and ensure they are clearly accessible from the home page.
Categorize carefully: Your high-level navigation items should always start broad. Stick to essentials like “manage my account,” “savings and checking plans,” and “investing and planning,” and let your users choose how deep they want to dive.
Easy-to-use navigation and search: Sometimes people take wrong turns and need to start over. Don’t make them click back 30 times. Keep the homepage and main category pages accessible and easy to reach on every internal page to retain visitors and help them find what they need.

Building a better online banking experience starts with the right partner

If the last time you thought about your bank or credit union’s digital experience was when you first launched your app, it’s probably time for a reevaluation. A strong user experience is dynamic and can be the difference between fragmenting your customer base and increasing your revenue. It all starts by auditing what you have and exploring current trends and options before you build something better.