The UX Tax: How Poor User Experience Fuels Abandonment in Financial Applications
Dec 10, 2025
Every financial institution talks about funnels and conversions, but very few address the quiet force that destroys both. The experience itself. Applicants do not usually abandon because they change their minds. They abandon because the process becomes confusing, tedious, or untrustworthy.
And the numbers prove it.
A study from Signicat found that financial application abandonment is now at 63 percent globally. In other words, nearly two out of three applicants leave before finishing. Not because the product was wrong for them, but because the process pushed them away.
This is not a demand problem. It is a design problem.
The Real Cost of a Bad Experience
When an applicant leaves, the loss extends far beyond the missed opportunity. It affects acquisition cost, forecasting accuracy, and the overall stability of an institution’s pipeline.
Here are the hidden losses:
Acquisition spend
Every abandoned application raises the cost of each completed one. You paid to bring that applicant in, but the UX pushed them out.
Operational strain
Teams spend hours chasing documents, re-explaining steps, and managing incomplete files. Most of that labor is preventable.
Reputation erosion
Applicants associate friction with competence. A confusing, outdated process signals risk, not trust.
Lost lifetime value
The biggest cost is not losing the first application. It is losing the long term relationship with someone who could have stayed for years.
Why Applicants Drop Off
Across industries and behavioral research, the root causes of abandonment remain consistent:
Too many steps
Too many uploads
Repeated information
Redirects between portals
Slow verification
Unclear instructions
Waiting with no feedback
Lack of visible security and privacy signals
67% of financial institutions say they’ve lost applicants due to slow or inefficient KYC processes.
Source: Fenergo 2024 Global KYC Survey
People need reassurance. When the process feels unsafe or unprofessional, trust collapses instantly.
And here is the part most institutions overlook. Design is not cosmetic. It is cognitive.
Applicants perceive friction as risk. A Stanford Web Credibility research study found that 75 percent of users judge a company’s credibility by its design. In financial services, credibility determines whether the applicant continues.
The Power of Cognitive Ease
68% of applicants abandon online credit applications due to friction and complexity.
Source: ResolvePay, Credit Application Abandonment Report
The fewer mental steps you force someone to take, the more likely they are to finish.
Leading institutions are embracing this principle by:
Using permissioned data instead of documents
Running checks simultaneously instead of one at a time
Removing redundant questions
Eliminating portal switching
Providing a clear progress path
Using one continuous experience from start to finish
Creating visual trust cues that show security and legitimacy
The Future: Experience as Risk Reduction
A well designed onboarding experience does more than improve UX. It improves revenue, reduces drop offs, and increases trust. It also mitigates fraud. A modern flow with real time checks gives fraudsters fewer opportunities to manipulate the process.
Completion is not achieved by pushing applicants harder. It is achieved by removing the barriers that never needed to exist.
Abandonment is not an applicant problem. It is a design problem. And institutions that fix it unlock a competitive advantage that compounds over time.