Traditional banks are ramping up technology investment to modernise their operations to remain competitive in an increasingly digital-first financial landscape. NatWest, for example, spent £1.2 billion on technology last year, with a significant focus on artificial intelligence.
The pressure is on to adopt technology to match the seamless, intuitive digital experiences delivered by newer players like Monzo and Revolut. Free from the constraints of legacy infrastructure, they have built their platforms from the ground up with user experience at the core, redefining customer expectations and making banking easy, clear and enjoyable.
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That’s the benchmark legacy banks need to live up to, if they want to ensure that their investments don’t just enhance technological capability, but actually translate it into value for customers and long-term loyalty.
Legacy challenges
For traditional banks, digital transformation can be a long road, with many struggling with structural challenges in how services are delivered. Features are often spread across multiple screens, platforms, or even companion apps, leaving customers to navigate between complexity to complete simple tasks. This lack of cohesion is in sharp contrast with the holistic, streamlined experience that users increasingly expect not just from banks, but from any digital service they use.
This situation is emblematic of the broader struggle facing legacy banks. Years of layered systems, regulatory requirements, and incremental updates have created complex infrastructures that are difficult to overhaul. While these banks benefit from deep customer bases and strong reputations, their digital experiences lag behind.
The Monzo experience
At the other end of the spectrum are digital-native banks like Monzo and Revolut, which have built their offerings around usability. Opening an account, sending money, tracking spending, or setting budgets can be done in just a few taps, with clear interfaces and real-time feedback.
Monzo, for instance, has become known for its clean design, instant notifications, and features like spending categorisation and savings pots, which help users manage their finances intuitively. Saving is gamified, giving users a reason to log in and engage.
Revolut, meanwhile, has expanded rapidly by layering additional services such as international payments, crypto trading, and budgeting tools on its platform for a holistic experience. Having recently had its full banking licence approved, it can also proceed to grow its offering to retail and business customers, ready to compete not just as a fintech, but as a fully-fledged global bank.
Because these newcomers are not constrained by legacy systems, they can continuously evolve their products in ways that complement existing features rather than complicate them. For them, digital isn’t a transformation programme – it’s the whole business model.
And that’s what legacy banks need to learn from.
Guided by consumers
The difference between legacy operators and the likes of Monzo and Revolut is that the challengers behave like a digital product you actually want in your life. They don’t base their experience on what a banking app should look like, but what any app users want to engage with looks like.
That’s a vital learning.
Our research shows that there is often a clear disconnect between what business leaders prioritise and what customers actually want. Look at AI, for example. While many banks are investing heavily in AI across all operations, many customers remain cautious about its role. This is particularly evident in customer service.
In contrast, customers’ priorities are relatively straightforward. Our data shows the top areas where they expect brands to invest include instant customer service (whether AI-driven or human), seamless experiences across all channels, and higher levels of personalisation.
Digital leaders, however, tend to emphasise slightly different areas, ranking proactive notifications and AI that understands customer needs over time before seamless experiences.
This suggests that organisations may be overestimating the appeal of certain innovations while underdelivering on the basics that customers value most. For legacy banks, this should be a wake-up call, as many challengers are already ahead of the game in the core areas consumers prioritise.
Making investment count
It’s encouraging to see traditional banks recognise the need to up their tech game to deliver better services for customers. The challenge going forward is execution.
Digital challengers have set a new standard for what banking can feel like: simple, transparent, and enjoyable. For legacy banks, matching that experience doesn’t mean abandoning their strengths, but it does call for a shift in perspective. Technology can’t be the end goal, it’s an enabler for better, more human-centred experiences.
Seamless experiences are no longer a differentiator – they are the expectation. And for legacy institutions, meeting that expectation may be the difference between retaining customers and losing them to more agile competitors.
Rebecca Crook, CEO of MSQ DX UK
