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User experience: What is it and why all the hype?

“Experience schmicksperience.” There is no doubt in my mind that this phrase has been uttered, or at least thought, by many a banking executive in response to a member of their staff expressing the need for an improved online account holder experience. Yours truly has witnessed a few such reactions first-hand. As one who believes strongly in the value of a quality user experience for online banking users, I’m hopeful that a fairly recent event will convince the skeptics who disregard user experience. But first, what exactly is user experience?


According to the Nielsen Norman Group—pioneers in the field of evidence-based user experience research, training, and consulting—user experience (UX), “…encompasses all aspects of the end-user’s interaction with the company, its services, and its products.” Carrie Cousins of Design Shack—an online locale that covers all things web-design related, defines user experience as “…how a person feels when interacting with a digital product.” Cousins adds that UX encompasses many other factors, including but not limited to: “…usability, accessibility, performance, design/aesthetics, utility, ergonomics, overall human interaction and marketing.”


While some folks find it necessary to distinguish between usability—how things work— and user experience—how things feel, most lump the two terms together when discussing the totality of an end user’s digital experience. Plainly put: user experience concerns how things look, feel, and operate. This concept tends to be abstract and difficult to quantify, which is why it doesn’t fit neatly into the CFO’s spreadsheet. It’s hard as heck to quantify it; hard as heck to truly appreciate; and hard as heck to sell to bankers who are already paying a bunch for their digital channel efforts every month. So how did it become such a big deal, and why all the hype? Believe it or not, there’s science behind it.


One of the earliest and most interesting studies around UX was conducted by the UK Design School between Dec. 1993 and Dec. 1994. Researchers tracked the share prices of publicly traded companies who had won awards for their focus on design and UX, and then compared them to various indices such as the FTSE 100 and the FTSE All Share index. They found that the design-focused companies out performed all others by more than 200 percent. And that was over the course of a five-year bear market, a three-year bull market, and the beginning of the recovery in 2003; the superior performance of the design-led companies persisted throughout.


Intrigued by the findings of the UK study, in 2006 researchers in Canada created a UX fund of their own, comprised exclusively of companies well-known for their UX prowess, such as Google, Apple, and Netflix, and promptly invested $50,000. Their original plan was to sell after one year, but when they realized a nearly 40 percent return in year one, they simply couldn’t sell; four and a half years later, the fund had matured 101.8 percent! These two studies kicked off a wave of UX studies around the globe, as more and more business leaders began to grow curious. U.S.-based Watermark Consulting conducted a study from 2007-2012 that found that the top ten leaders in customer experience—based on Forrester Research’s Annual Customer Experience Index— outperformed the S&P with close to triple the returns, at a cumulative total of +43 percent. In spite of a growing mountain of evidence in support of UX investment, skeptics remain.


Which brings us back to that “fairly recent” event I referenced earlier. On Oct. 2, 2014, Capital One– yes, that Capital One– acquired San Francisco-based Adaptive Path. Why was this so significant, you ask? Because, Adaptive Path and the folks they employ are considered by many as the gurus of UX. The huge-font verbiage that adorns the Adaptive Path corporate home page makes it very clear what they do and what they believe: Great businesses are built on great experiences. We make those experiences happen. If you explore their website further, you’ll encounter such statements as, “When Adaptive Path was founded (2001), UX (user experience) firms didn’t exist…” Not only are they the gurus of UX, you could also say they invented the space. And Capital One just acquired them – lock, stock, and barrel. If you’re someone who provides financial services to consumers and you haven’t been taking all this UX stuff seriously, it’s officially time to begin doing so–others are taking it very seriously. It can mean the difference between winning and losing.

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