Why Design Matters More than Ever in Digital Banking

Banks are feeling pressure from consumers to improve their mobile apps and they are turning to the likes of Amazon and Apple for inspiration.

Amazon, for example, recently introduced a Mayday button that lets tablet device users video chat with agents — a feature bankers have said they would like to emulate. (mBank in Poland and USAA already offer video chat on their websites.)

Banks are also closely monitoring Amazon's recommendations engine, borrowing this predictive modeling approach to generate cash-flow projections for consumers. KeyBank's latest money management app, myControl banking, can help customers predict what their daily bank balances will look like until their next paycheck. 

Apple, meanwhile, has inspired banks like Deutsche Bank to launch app stores for commercial clients and, more recently, has driven financial institutions to let customers book appointments online before they come into the branch, the way Apple customers have long been able to remotely set up Genius Bar appointments at Apple stores. 

"We feel the pressure not just from other banks but from other industries," says Jim Simpson, senior vice president and chief technology officer at City Bank in Lubbock, Texas.

Pressure is also coming from digital startups. The $2.2 billion-asset City Bank is in the midst of an online banking upgrade that Simpson says is in part influenced by the consumer response to features offered by Moven and Simple. Other firms, like Mint, Check and Venmo, offer consumers alternative interfaces to their transaction data that are easier to digest than what's offered by most banks.

In response to all this innovation, financial institutions across the country are modernizing their websites, ATMs and mobile apps in hopes of creating better digital banking experiences and, ultimately, attracting and retaining more customers.

They are purging dense text, simplifying navigation and removing banker jargon across from their mobile and online banking interfaces to avoid missing out on potential business just because the process required too many clicks to, say, get a credit card.

"Design 2.0 is not just branding and colors but the way a modern customer experiences a financial institution," says Ben Rogers, a research director at Filene Research Institute, a think tank for credit unions that is hosting an event on financial services design in March. "It's not just the skin anymore. It's the experience. …Yes, it's hard. Yes, there are thorny tech issues and big data issues, but this is where the world is going."

One way banks are streamlining the customer experience is by creating quick balance features that let consumers view their balances without logging into an app. Bank of the West, Citigroup (in pilot) and USAA are a few of the banks that offer such pre-login activity. 

"Customers don't want giant spreadsheets of what they have done," says Drew Miller, a creative director with frog design in Austin, Texas. "They want somebody to translate the data into something very valuable to them."

Certainly, Simple's acquisition by BBVA is the latest signal of the increasing importance of design in digital banking. 

Simple, which provides online and mobile banking in cooperation with The Bancorp Bank, has been held up as one of the few firms whose app sports consumer-friendly design. True, some of the Portland company's features existed in other banking apps before Simple offered them (such as the ability to power off the debit card via a mobile app). But the "neobank" is an ace at breathing fresh life into online and mobile tools that banks — and their vendors — have struggled to make intuitive. The Simple software, for example, lets users search specific transactions, which is rare in banking apps, and projects the amount of money a person can spend based on the data it has.

"Good design gives people reasons to come back," says Bradley Leimer, who leads digital banking at Mechanics Bank in Richmond, Calif. and who often speaks and blogs on design within financial services. "But a mobile banking app that's cumbersome to begin with and built five years ago, why use it again? Why not think about moving to another bank?" 

Bankers are finding design muses from outside the industry.

Even weather apps, for example, are becoming more pleasurable to use, Leimer says. The Yahoo app, for example, pulls in weather imagery from the photo-sharing site Flickr to provide an experience more in line with what people want: what the weather actually looks like.

"Why not bring sizzle into the way we look at linear and structured data," says Leimer. "All design should come back to reaching out and understanding what people are doing in other places that are engaging to them."

Leimer's bullish on banks weaving imagery into their apps the way Yahoo has done to draw in new and more frequent users.

Customers, who are already used to taking photos with their smartphones, could add imagery, including receipts, at the point of sale to help them recall what they bought, says Leimer. Simple already offers this ability and reports that customers are happy with the tool, while JPMorgan Chase lets business customers upload receipts to an app in a bid to improve expense reporting.

Banks could also make digital data more interactive by including a map and photos of what a customer bought as visuals to help the person recall where his digital dollars went. "People are taking selfies of themselves dipping fries in ketchup at McDonald's," says Simpson. "It's an engagement point …What if we [banks] can engage at transactions? It's what people are doing in the real world on multibillion-dollar apps."

The idea, which would have to be proven out, would give consumers reasons to use the app beyond finding out whether a check cleared and monitoring fraud alerts, adds Simpson.

One hurdle for banks in these efforts is getting design projects prioritized in the long line of more pressing needs, such as complying with new regulations.

Another is that the fintech vendors have yet to make their application programming interfaces available to developers and aren't known for playing nice with one another. 

Even so, banks are expected to demand that their apps be different from their competitors' — eventually.

"The tides are changing," says Simpson. "Instead of a big fintech provider saying, 'Look at what we are doing for you,' mobile bankers are coming on board, saying, 'Look, large provider, I want this. This is what Apple is doing.' "