Risk has become a topic for constant discussion and assessment in investment banking. In an environment where instant messaging, process automation software and recording voice instructions increasingly via direct instruction from investors are just some of the methods by which orders are placed, good user experience design presents an opportunity to reduce risk for fund managers, traders, institutions, intermediaries and the end investor.

Creating an intuitive, usable and pleasing product using cognitive science and design thinking reduces the risk of errors made by end users, high training costs, user frustration and potential project failure, not even taking into consideration the business risk associated with the changing systems.

Why is UX Design relevant to a bank’s internal software?

It is no longer enough to have a digital solution that merely functions.

"...banking has become an ‘arms race’ - it’s increasingly clear that for banks, delivering engaging, connected experiences... is no longer a ‘nice-to-have’, but a competitive necessity ”

says Will Jones, Monitise Managing Director, EMEA & AP.

The changes seen by banking since 2006, when the second generation of SDPs began to emerge in buy-side front offices, have included remote working, increased automation of completion processes and a break away from established platforms like Bloomberg Terminal. In addition, development in the web generally has led users to expect a highly functional, multi-portal experience that does not compromise usability for multi-platform functionality. Whilst familiarity and reliability have their place, expectation drawn from other forums is starting to supersede the institutions reluctance to invest in updated systems. Changes to regulation and accountability have finally forced the hand of many institutions.

The complexity of a bank’s internal systems, working with legacy processes, legislation and technology as well as attitudes, can make being early adoption of new technology seem a hurdle too far. However, the increasing popularity of dedicated fintech initiatives in the last couple of years demonstrates that attitudes are shifting and the knowledge that a bad user experience can not only drive customers away directly, but by association means that innovation is more welcome than ever before. Bad press, reputation damage and regulation changes also increase the pressure on large, complex institutions to update and modernise their processes, which often requires system overhaul. The effort required to achieve this dictates that doing it right is more valuable than doing it quickly.

What is UX Design for the financial services sector?

UX design is rooted in understanding patterns in human behaviour and ergonomics. The term ‘user experience design’ was created in the mid-1990s to describe a complete experience with a system, beyond human interface and usability, including industrial design, graphics, interface, physical interaction and the user manual. Today, the term is frequently used without an understanding of its origin, meaning and intention.

UX design treats complexity as a design problem. This requires lateral thinking, creative problem solving and the ability to abstract and reframe the problem. These skills are especially valuable in capital markets, where complex financial products and systems operate within equally complex business and organisational contexts.

But UX is not about usability alone. Usability is an attribute of a well-designed product or service. It is a hygiene factor. Every system should adhere to usability principles or run the risk of low user adoption through confusion, frustration or worse. Claiming a UX design victory because a product is usable is like claiming a culinary triumph because a meal is edible.

The user interface (UI) is arguably the most important component of UX, but it is nonetheless only a component. Very simply, the UI is what you see; UX is what you feel. Dain Miller, a UX industry leader says:

“UI is the saddle, the stirrups, and the reigns. UX is the feeling you get being able to ride the horse and rope your cattle.”

How Does UX Design Reduce Risk?

“Despite having a greater awareness of risk, companies are still struggling with the practicalities of mitigating ‘catastrophic’ threats.” Will Jones

Risk comes in many forms – related to the nature of the business; credit risk, market risk, operational risk strategic risk and conduct risk, and simple risk factors: human error, failure of software and third party risk (like internet connectivity or hardware failure). Each requires checks and balances that do not preclude the potential for innovation and use of new and emerging technology, whilst being quantifiable and accountable.

Projects to change systems and processes go through rigorous due diligence processes to ensure risk from the point of view of the business is minimised – reliable and established suppliers are chosen, conflict of interest is avoided, personnel are put through security checks and commercial interests protected. Checks to ensure the project does not fail are not so universally recognised or undertaken.

Changing IT systems and processes often is unfavourable as it slows operation down and increases the chance of user error. This conservative attitude to early adoption of new technology has created a deep dissatisfaction from customers at the gap between financial services and most other sectors. In order to try to remedy this, Barclays, Mastercard and Wells Fargo have invested in their own fintech startup funding whilst others such as Lloyd’s, have backed Startupbootcamp. After several years of 'doing nothing', there are now daily updates in the use of alternative technologies to the monolithic, established financial services technologies. The sector is moving very fast. Risk can no longer be a barrier to adopting new options.

Of course, the requirement to minimise risk is still a major concern. In reality, what can be done to manage and reduce risk associated with trialling new systems and processes in large and complex organisations?

Why ignoring the 'human factor' is a risk

Changing systems and services to meet regulatory or business changes can often mean reducing or abandoning user inputs, research and testing in favour of speed to market and demonstration of compliance. There is a huge disadvantage to changing business systems without consulting with those whose daily tasks rely upon systems that may not work very well, but have been in use for many years, or across many business roles. Rejection by users can be a huge risk in banking as governance and accountability are lost if systems are misused, ignored or worked around.

Happy users are advocates of the system, will teach each other and seek to spread the good experience. The human experience of the product is critical to its success, and thus the success of the business. Derisking the interface between user and system by designing with the user at the centre of the interaction is the first benefit of UX Design.

Secondly, where making a significant difference to business operation is the goal, rather than re-versioning an existing system to incorporate new modules, ignoring the users is pure folly. Frustrated workers are risky both to the operation of the business and to its performance.

No longer can new systems or incremental improvements be considered worthy of major investment if the risk reduction is not evincible.

What are the (six) things you need to consider when designing your banking product?

Figure 2 shows the components of UX design, and provides a conceptual framework for the planning and design of successful products and services. Each element in Figure 2 is considered to ensure that a full solution is developed as efficiently and quickly as possible.

Strategy – Before the design process starts, the most important factor is not setting off to design an elegant solution to the wrong problem. Questions to be asked include: What do users need to be able to accomplish in order for the business / product / service to be successful? Conduct primary research. Uncover latent (“unstated”) requirements. How do users make decisions? How do they behave? What motivates them? How does this map to the goals of the business? And to the technology requirements / constraints? These insights, gained from user interview and observed behaviours are turned into an actionable design brief, and a roadmap for change over time.

Concept – Before we engage with a new product or service, we make a quick cognitive assessment and decide if the interaction is likely to be successful, or if we may struggle with it or even abandon it altogether. The right concept gives a positive first impression, and communicates the underlying concept clearly in terms of learnability, effort required to engage, likely chance of success, etc.

Structure – The experience must be structured intuitively to support priority user journeys. Great experiences anticipate users’ needs, and provide smart support to help them accomplish tasks in the environment / context of use. Poorly-structured experiences lead to confusion, frustration, inefficiency, and potential pain-points.

Information – Good information design means accessible, findable, well-organised content. This includes meaningful taxonomies, clear labelling, logical grouping, and the right level of detail.

Interaction – Good interaction design provides a user with the right balance of control vs. effort, intuitive calls-to-action, clear communication of status, state transitions, task flow progress and feedback. Interaction should be delightful and intuitive to support faster task completion, reducing effort and increasing satisfaction. Poor interaction design is likely to increase confusion, frustration, inefficiency and human error.

Sensory – Today, most UX in banking focuses on the graphical treatment of key screen elements including their shape, colours, typography, use of screen estate and layouts. Beyond usability improvements, visual design impacts credibility and desirability. But as interactive technologies become more advanced, UX should address other senses other modalities such as speech, sound, gestures and haptic feedback.

Conclusion

Risk reduction can be effectively achieved in fintech projects by employing good UX design. There is no single correct set of actions to conduct UX design, it is formed from a series of processes and refinements operated with the consistent goal of seeking to empathise with the user. Good design is a process that yields a set of suggestions to be implemented; a composite of ethnographic research, quantitative analysis and creative problem solving, coupled with lateral thinking, innovative; it is the result of these components being employed together.

Well-designed banking systems become invaluable – and indispensable – to the people using them; anticipating their needs, improving their performance and transforming the business in which they work. Replacing existing systems is costly, time-consuming and high risk, but proper use of the principles of UX design from the start of the process can de-risk the project significantly.