By Kenan Maciel, Director of Strategy at Lab49
In 2025, delivering an excellent customer experience is no longer a nice-to-have but a must. As a result, financial services firms are investing in sleek mobile apps, seamless online platforms, and personalised user interfaces. However, front-end modernisation alone is not enough. Firms must ensure that UX transformation is delivered in parallel with back-end modernisation.
The financial services industry’s current focus on UX improvement is well-placed, with customers demanding fast and intuitive digital experiences from banks and financial apps. A 2023 PwC survey found that 73% of customers consider experience an important factor in their purchasing decisions, behind only price and product quality. The message is clear: user experience is not a luxury but directly impacts customer acquisition and retention.
However, focus on UX improvement can sometimes mean that back-end improvements are overlooked and deprioritised. Core back-end upgrades are vital. You simply cannot deliver a high-performing user experience without a modern infrastructure to back it up. As back-end upgrades are less immediately apparent to the user, and as a result are often neglected, back-end data and infrastructure are the building blocks of an application and crucial to its functionality.
If overlooked, back-end failures surface directly in the front end and lead to numerous issues for the user, such as slow loading times, errors in transactions and unexpected downtime. A slick front end is of little use if every push of a button leads to error messages and long loading times. Similarly, deficient capability in the back-end will restrict the user experience in the front-end. For example, a front-end that can handle customer orders for various product types will be limited if the back-end cannot distinguish between the product types or cannot handle the attributes of more complex product types.
Firms focusing only on continuous front-end improvements while neglecting core system upgrades will find they cannot seamlessly or quickly benefit from new technologies. Legacy back-ends often struggle to integrate with modern APIs, cloud services, and new technologies, making it hard to roll out new offerings and stay competitive.
A study by McKinsey found that companies with old core systems wrapped in a multitude of modern applications often need to significantly redesign their architecture. In practice, this means that companies that focus solely on modernising their front-end whilst neglecting important foundational updates often will need to rebuild the majority of their software from scratch – a timely and costly nightmare that will divert resources away from innovation and growth efforts.
The need for modern back-end infrastructure is even more apparent against the backdrop of AI implementation. Many firms are deploying AI chatbots for customer service, using AI to offer personalised financial insights, and streamlining onboarding processes. But these features will not improve customer experience unless they are supported by robust back-end infrastructure providing the necessary data and processing power.
Financial services firms undergoing digital transformation must view back-end and front-end improvements as parallel, interdependent efforts. By this, I mean that while both back-end and front-end transformation is progressed at the same time, back-end issues must not block innovation on the front-end and vice versa.
An abstraction layer can be used to ensure that UX transformation is delivered in a parallel but decoupled workstream with back-end upgrades. An abstraction layer decouples the front-end from the back-end by simplifying the output from the front-end into something manageable by the back-end. This translates to greater flexibility, agility, and room for UX innovation. When the back-end is updated, there doesn’t have to be wholesale transformation of the front-end and vice-versa.
However, the ability to develop the front-end more quickly through the use of an abstraction layer should not diminish the need to work on back-end updates in parallel. The abstraction layer is not a substitute but a strategy to manage timing and reduce dependencies in the short term.
For financial services companies, modernising their user experience is crucial in order to stay competitive in the short term. However, if a firm continuously neglects back-end development, it will miss out on opportunities to benefit from new technology in the long run. To manage front-end and back-end modernisation efforts most effectively, they must be treated as parallel but decoupled workstreams. Striking the right balance between the two and managing the process effectively is absolutely crucial for digital modernisation.