Unpacking Dark UX Patterns in Fintechs

A neo-bank's aggressive payment reminders, escalating to third-party collectors, reveal potential dark UX patterns. Ethical concerns rise from customer support to fear-based tactics. Fintech PMs should prioritize ethical practices, transparency, and user-centric incentives.

Unpacking Dark UX Patterns in Fintechs

Recently, a neo-bank that issued me a credit card sent multiple WhatsApp reminders to pay my balance—10 days before the due date. By 7 days out, I started getting calls from a third-party collection agency 📞. Annoying, but tolerable. Then, just days before the due date, I received a message informing me that a collection agent has been assigned to visit my residence. What started as helpful engagement turned into harassment.

This experience, while frustrating, highlights a critical issue within the fintech industry: the potential for dark UX patterns. These are design choices that manipulate users into taking actions that benefit the business, often at the user's expense. Let's unpack the business motivations behind this—from ethical to questionable—and explore potential dark UX patterns at play:

The Spectrum of Motivations:

  • ✅ Customer Support (Ethical): Reminders to help customers avoid missing payments. This is a benevolent and solid behavioral UX design. It's about providing genuine assistance and preventing negative outcomes for the user.
  • 👍 Customer Retention (Ethical): Helpful nudges for core tasks build long-term loyalty. Good UX again. By making the payment process seamless and providing timely reminders, fintechs can foster a positive relationship with their customers.
  • 🤖 Operational Efficiency (Ethical): Fintechs with thin margins automate SMS, WhatsApp, and emails to cut costs. This is a practical approach to managing communication, and it's essential for maintaining profitability. However, it's crucial to ensure these automations are well-calibrated to avoid over-communication. Perhaps, in my case, there was an automation glitch?
  • ⚖️ Business & Partnership Pressure (Grey): Fintechs often rely on borrowed banking licenses and face pressure to optimize performance. This can lead to decisions that prioritize business metrics over user experience, placing them in a grey area.
  • 🔔 Customer Behavior Shaping (Greyer): Encouraging prepayment 7-10 days early boosts cash flow, float, and profits. This is a form of Pavlovian conditioning, where users are subtly nudged towards a behavior that benefits the company. While not overtly harmful, it edges into darker territory.
  • 🚨 Fear-Based Retention or Profiteering (Dark): Third-party collectors and “visit” threats? This is intimidation and coercion—classic dark pool patterns. These tactics create a sense of fear and urgency, manipulating users into making payments they might not otherwise make.

The Business Impact: A ₹90 Crore Monthly Float

Let's look at the numbers. Assume a fintech has 20 lakh customers, each spending ₹2,000 per month. If they can encourage prepayment by one week, they generate a float of ₹90.33 crore per month. This translates to an estimated ₹7 to ₹10 crores in annual profit. For a fintech operating on razor-thin margins, this is a significant financial gain.

What Can Fintech PMs Do?

The key is to maintain a balance between business goals and ethical practices. Here are some recommendations:

  • Stay Compliant and Ethical: Adhere to all relevant regulations and prioritize user well-being.
  • Be Transparent: Clearly communicate payment policies and avoid misleading language.
  • Incentivize Prepayments: Instead of resorting to fear tactics, incentivize prepayments by sharing profits with users, such as through discounts or rewards. This creates a win-win scenario.
  • Refine Automation: Assure that automation tools are properly configured, and that they do not over communicate with the client.
  • User Feedback: Implement a system to collect user feedback, and use that feedback to improve the user experience.

The fintech industry has a responsibility to build trust with its users. By prioritizing ethical practices and transparent communication, fintechs can create a more positive and sustainable ecosystem.


About the Author:
Hari Subramanian is a visionary tech leader and Co-Founder of Niti AI, where he has been pioneering AI-driven tools for product managers and growth teams since August 2022. Based in Bengaluru, India, Hari brings over two decades of experience from top-tier tech giants like Uber, Amazon, and VMware. At Uber, he led a 100+ member engineering team focused on customer obsession, transforming defective experiences into delightful digital solutions. Previously, he spearheaded data infrastructure and migration initiatives at Amazon Web Services and VMware, contributing to scalable cloud and AI innovations. A University of Kansas graduate with an MS in Computer Science, Hari is an inventor with over 14 patents and a thought leader in big data, AI, and fintech. He is actively involved in reimagining dev-infra for an AI-first world, and actively supports privacy-preserving tech as an iSPIRT volunteer.