The Convergence of Fintech and Banking: The Gap Between UX and Functionality Is Closing

In the past decade, the financial landscape witnessed a dramatic transformation driven by two distinct forces: fintech startups and traditional banks. Initially, fintechs emerged as UX-rich but often monofunctional challengers, while banks remained service-rich but struggled with digital customer experience. Today, however, these lines are blurring — fintechs are expanding into full-scale banks, and traditional banks are reinventing their digital experiences, closing the gap between them and fintechs.

Fintechs: From Focused UX to Full-Scale Banking

Fintech companies entered the market with a clear advantage: exceptional user experience. Their sleek, intuitive apps and seamless onboarding flows redefined how users interact with financial services. Fintechs prioritized simplicity, speed, and emotional engagement, often solving a single or limited set of problems — such as payments, lending, or personal finance management — exceptionally well.

According to the 2024 EY Global FinTech Adoption Index, over 64% of consumers globally now use multiple fintech services, signaling a demand for more comprehensive financial solutions beyond single-function apps. This push toward expanded functionality has driven fintechs like Chime and Revolut to add features traditionally offered by banks — savings accounts, investment options, and insurance — transforming into full-service digital banks.

Case study:

Revolut started as a payments and currency exchange app but now offers banking, investments, crypto trading, and insurance — a full banking ecosystem within a single app. Their focus on UX remained a constant, helping them acquire over 25 million customers globally by 2024.

Traditional Banks: From Service Richness to Delightful Digital Experiences

Conversely, traditional banks historically offered a wide range of financial services — from mortgages to wealth management — but were often hampered by clunky, outdated digital interfaces and fragmented user experiences. Their digital channels were functional but lacked emotional connection, delight, or the intuitive ease fintechs championed.

However, according to the McKinsey Digital Banking Report 2023, more than 70% of banks have increased their investment in customer experience technology since 2020. Banks such as JPMorgan Chase and BBVA have revamped their apps with modern design systems, AI-driven personalization, and contextual user journeys, resulting in improved customer satisfaction scores and reduced churn.

Case study:

BBVA invested heavily in digital transformation, creating a fully integrated digital banking platform that emphasizes simplicity and emotional engagement. This has increased their digital customer base by over 50% in just two years.

The Closing Gap: A New Financial Ecosystem

A Forrester Research 2024 study found that digital experience leaders among banks now score only marginally below fintechs in customer experience rankings, reflecting the success of bank-led digital innovation. The Capgemini World FinTech Report 2024 notes that over 60% of customers expect banks and fintechs to offer seamless, integrated financial ecosystems — pushing both types of institutions to blur their previous distinctions.

The convergence of fintech and traditional banking models is reshaping the industry:

• Fintechs become full-service banks: Expanding product suites beyond niche offerings while preserving superior UX design.

• Banks become UX leaders: Delivering delightful, brand-connected experiences that engage customers emotionally.

• Customers benefit: Access to comprehensive financial services wrapped in easy, enjoyable digital experiences, regardless of provider type.

This convergence benefits the entire financial ecosystem. Fintechs’ expansion drives innovation and competitive pressure on banks, pushing them to evolve. Banks’ digital transformation raises the bar for customer experience, inspiring fintechs to enhance their offerings further.

Conclusion

The once clear divide — fintechs as UX-focused specialists and banks as service-heavy institutions — is fading. Instead, the future belongs to financial players who master both dimensions: rich, multi-functional product portfolios paired with compelling, emotionally resonant digital experiences. As the gap closes, the competition will center not on fintech versus banks, but on who delivers the most integrated, user-centered and rich financial journey.