Optimising the banking experience: It’s time for banks to deploy service design to build a competitive advantage

June 2025, by Sholto Lindsay-Smith

CX is the new battleground, but are banks missing out on an opportunity to create a winning customer experience by not employing rigorous service design methodologies when it comes to new model bank branch design?

Capitalising on the shift to digital retail banks are taking the initiative to redesign and rationalise their branch portfolio. Some have gone space age, many have adopted the style of an internet café and others have gone Apple-esque.

The cost of implementation is high, yet many of these new format and highly stylised branches are not delivering on their intent. Here we explore why and how banks could employ design thinking approaches to optimise the bank branch experience.

Let’s start with the intent.

Branch re-design is typically being driven by several factors:

  • Repurposing the branch as a sales and consultation space, whilst using lower cost digital channels to manage transactions
  • Using the branch to educate, assist and encourage customers to facilitate and speed up the adoption of digital channels
  • Acting as a public showcase to enhance the bank’s position as an innovator
  • Enabling self-service to drive cost efficiency and reduction in full time employee count

These are all good and strong reasons to modernise the branch design. However, these are all motivations that serve the bank’s purpose. What’s in it for the customer?

If the customer experience is not kept front and central to any redesign you can expect a disconnect between the intent and the result.

Customers are often reluctant to go on the journey because they value human interaction, feel unconfident about using digital channels or are simply resistant to change. So, it is not uncommon for a branch redesign to be met with customer frustration, resistance to adopting new channels and a drop off in NPS. Customers react negatively, because what is familiar and routine has been taken away and the benefit to them is not clear.

Another common issue we witness is the introduction of excellent new technologies that are not integrated into the omni-channel process, leading to a disjointed customer journey.

This is where service design can play a role, bringing a clear human focus to the design not just of the branch but the whole end-to-end omni channel experience. The process starts with the customer need and works back from there. It marries together the need of the customer, the need of the bank and the needs of the bank staff.

The double diamond process is a robust methodology to follow as it encourages a robust exploration of ideas and can help bring together different areas of the bank in shared problem-solving approach:

Discover:
This phase is about gathering insights through user interviews, surveys, and observation (the latter is one of the most powerful but underutilised research methods when it comes to service design). The goal is to gain a deep understanding of all of the stakeholder’s needs and challenges. What does the business want to achieve? What does the customer want and what will make their life easier or the experience more satisfying? What gets in the way of staff delivering great service?

Define:
The define phase is about using the insights to reframe the problem. For example, the original starting point might have been, ‘how can we use digital channels to drive efficiency?’ But taking a customer centric approach, this might be reframed as, ‘how do we help a customer connect with the bank most easily at their exact time and point of need?’ You can see how this problem statement will spark more innovation and joined up thinking.

Develop:
With the problem defined, the focus then turns to generating creative solutions, mapping out service concepts, prototyping, and user testing to explore different approaches.

Deliver:
Once the optimum approach has been identified, the programme shifts to implementation and deploying the designed service. Ongoing testing and making improvements based on the actual user experience is vital to the process and is a good reason to ensure the roll-out is phased to allow time for course correction.

Key service design principles:

  • User-centricity: Prioritising user needs and experiences.
  • Joined-up: Considering the interaction between different touchpoints, operational workflows and processes within the service.
  • Multiple perspectives: Involving all stakeholders in the design process to ensure feasibility and operational success.
  • Iterative: Continuously refining the service based on feedback and testing.

The theory is easy – it’s more common sense than rocket science. But making it happen is hard. It requires C-suite endorsement to ensure cross-department collaboration and adoption of a customer first ethos.

Companies such as Intuit are great exemplars of how service design has been embraced by leadership and used to build a better product. One of the reasons the new generation digital banks are outperforming traditional banks on customer experience is that they employed service design and UX principles from the get-go. In the UK, an independent survey conducted amongst 1,000 customers of each of the 17 largest personal current account providers, the top three performers for overall service quality were Chase, Monzo and Starling Bank – all digital only banks designed around the customer.

Done right, the service design approach can help overcome operational silos in banking and lead to a tangible lift in customer satisfaction which in turn can drive long term competitive advantage.