3 Reasons UX is Critical in Open Banking Development

Three reasons UX is critical for any Financial organisation or FinTech implementing Open Banking / Open Finance APIs.
Critical need for UX in open banking development

Recently, I was having a chat with a colleague of mine. We were sharing experiences about our previous roles. He was surprised when I mentioned that I formerly held a Director of UX role for an Open Banking API company. He was curious about what role UX played in an API company, particularly one relating to finance and banking, as he couldn’t grasp what kind of projects the UX team would be involved in.

It made me realise that with all this misleading “UX/UI” terminology being thrown around, people now almost exclusively to associate UX with visual interfaces, when it encompasses so much more.

In this article, I want to share why UX is critical for any Financial organisation or FinTech developing and implementing Open Banking / Open Finance APIs.

Before we dive further into the topic, perhaps a brief introduction to the world of Open Banking / Open Finance / Open Data is necessary.

Understanding Open Banking

Prior to the era of Open Banking, financial institutions retained control over customer financial data and managed all incoming and outgoing transactions. It was not possible for businesses to access customer accounts to facilitate financial use cases, unless the bank decided to invest in building out a feature to allow their customers to perform an action via their web app or mobile app.

The advent of Open Banking has enabled banks to grant access to their customers’ financial information to third parties and provide control over transactions through standardised open APIs, all with the customer’s consent, of course!

This technology enables businesses to build various use cases by utilising Account Information Services (AIS) or Payment Initiation Services (PIS).

For example, a lender no longer requires you to submit paper statements of your bank account. They can simply send you a digital request to authorise connection to your account. Once your data is received, it is fed through their risk assessment module, which assesses your risk level.

All of this can be done in a matter of minutes, compared to the week or more it took when using paper statements to perform the same task.

Open Banking & Beyond

Open Banking: Banks provide access via standardised Open APIs to businesses. Open Banking Platform Providers aggregate the APIs from all the banks in a particular country and enable businesses to access them via a single API endpoint.

Open Finance is the next step after Open Banking, and it goes beyond just banking institutions and opens this ecosystem up to other financial institutions enabling access to pensions, investments, mortgages, insurance and more, enabling use cases with a more holistic financial picture.

 Open Data is the future end state, where this standardised API based access system expands beyond the financial sector and includes data from various other sectors such as telecommunications, government data and health records.

Before and after open banking

3 Reasons UX is Critical to the Open Banking Development Process

Now that we have briefly covered what Open Banking, Open Finance and Open Data are, let’s talk about why UX is needed at companies working in this space.

There are a number of reasons why these companies need to engage with UX teams. Let’s go over some of them.

Reason 1: Communicating Benefits Based on Financial Literacy

Open Banking is still a relatively new concept for consumers and businesses alike in this region. Different markets vary in the state of their technological infrastructure and banking systems. As a result, end customers also have varying levels of knowledge about modern financial services.

It is essential to understand via user research what the existing comprehension of businesses and customers is, so that you can create appropriate communications capable of explaining the benefits of open banking to them. And this is why UX is so important.

Reason 2: Building Trust in the Authentication Process

For Open Banking to be successful it requires trust, confidence and a sense of security. Open Banking requires end customers to authenticate using their banking credentials, so creating an experience that users can trust, feel confident in and be sure is safe requires discovery followed by design experimentation. This process will help identify what resonates with users and results in successful transactions.

If the UX of authentication isn’t solved, businesses will fail to see high conversion rates after implementation, making this a critical step of the process to get right.

Reason 3: Better Onboarding Through Discovery, Design & Analytics

Open Banking requires the rapid onboarding of businesses. Open Banking businesses tend to rely on successful live transactions to bill their customers. These businesses tend to have various stakeholders who need to go through multiple steps before they are ready to go live and transact on the open banking APIs, so it can take quite a while after sign-up (maybe upwards of 3-6 months) before you see any live transactions.

Leveraging discovery, design and analytics data to understand the various stakeholders of your business will allow for the best-practice creation of  informational assets, optimised sign up flows and onboarding procedures that will enable each stakeholder to sign off rapidly, pushing the business to go live faster.

A smooth onboarding experience eliminates friction points that might otherwise deter users from fully utilising the platform. Therefore, it is essential that companies utilise UX teams to create optimal onboarding, which will subsequently result in faster and greater profitability.

In Summary

The success of Open Banking relies on three crucial aspects of user experience (UX):

1. Open Banking Literacy: Communicating the benefits to businesses and consumers will enable them to understand it and be more comfortable adopting Open Banking solutions

2. Trust in Authentication: A secure and intuitive authentication process is vital for user confidence and transaction success.

3. Efficient Onboarding: Leveraging data-driven insights enables rapid onboarding of stakeholders, reducing time-to-market and driving profitability.

In essence, intuitive user experience not only enhances user satisfaction but also serves as a catalyst for the widespread adoption and success of open banking API development by creating a seamless, user-friendly experience that encourages engagement and retention.


Are you thinking about implementing open banking or open banking related workflows?

Let’s have a conversation about your goals, so that you can navigate your way to a successful and profitable product without running into common hurdles that see other businesses fail. We’ve recently partnered with leading Open Banking provider Brankas, putting us in the perfect position to help your business.

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