Xero, the New Zealand-based online accounting application for small business, was recently named one of the 10 Best Application UIs for 2008 by the acclaimed usability guru Jakob Nielsen.

In my mind, Xero is the king of financial application UIs. Its innovative use of technology and fearless execution of new interaction design techniques makes it the clear leader in this space. It has a lot in common with Mint.com, except that its target user base, small business customers, are notoriously behind the curve in terms of adopting new technology. This makes their task that much harder given the complexity and critical nature of business accounting. It proves that complex business applications need not have a complicated interface. As any product manager eventually finds out, the hard part is finding ways to keep it simple while putting a focus on usability.

But Xero is more than just a pretty UI, they offer some of the most advanced and effective functionality anywhere, from automatic bank feeds and online invoicing to bank reconciliation and reporting. They also know the value of keeping up with other technologies, such as the ability to export Xero documents to Google Docs and creating a version for the iPhone.

If you want to understand the genius of ING Direct, forget the typical formula that defines a bank and focus instead on what makes main street so popular to most Americans. That in a nutshell is the message Arkadi Kuhlman, the Chairman of ING Direct, dispenses with in this terrific podcast (his speech starts at around minute 10).

Here are some other highlights on the secret of their success since their founding 7 years ago:

• All employees, even the chairman, sits in the call center
• Do not hire bankers, product managers, consultants, or advisers
• Do hire florists, retail employees and jazz musicians
• Easier to sell a product with one rate
• Don’t confuse or mislead customers with introductory offers and fine print
• Do not outsource IT or marketing
• Work hard at building the brand
• Be relentless with cost cutting
• Do good
• Be authentic and real with your customers

A new payment service has just launched to allow UK banks the ability to process ‘low value’ payments in hours compared to days.

So far, 13 banks are participating, including Barclays, HSBC, Halifax Bank of Scotland, Lloyds TSB and Royal Bank of Scotland Group.

The technology, dubbed the “Faster Payments Service,” enables electronic payments to be made by phone and online. Rather than simply a service, Faster Payments is a new infrastructure where banks can provide payments as seamlessly as they offer intra-bank transfers today for their customers.

As the roll out of the service begins, initially only non-scheduled payments will be supported, with future dated payments slated to begin June 6.

Below is some information on how the system works:

More details on their site.

No one likes talking to people who sound more like a well-rehearsed parrot than a real person. And try as they might, banks can’t seem to stop talking in bank speak. Check out this curious letter by Citibank’s new CEO to his slew of customers around the world:

I want you to be among the first to know about the bold steps we are taking at Citi to be the premier, global, fully integrated financial services firm.

Our objective is to create for our customers an experience in which services are seamless, payments and transfers effortless, and distances meaningless. My commitment - and the commitment of everyone at Citi - is to work tirelessly around the world and around the clock to deliver outstanding value and service as we continue to earn your trust.

Come again? Do people really talk like that, especially a business to its customers? The letter sounds more like a shareholder letter. In reality, what people really care about is lower fees, better savings rate, and ways to ease the credit crunch. The price of this bank speak, of speaking to everyone and no one, is a bank that feels more out of touch than ever.

It seems everyone is atwitter about Twitter. From Wesabe recently twittering that their site was down or (4 minutes later) that it was back up to Mint.com twittering about a recent press release, micro-blogging is here to stay.

For those who need to know what others are doing NOW, twittering is almost like a drug, best taken in small doses but not overdoing it. But as a way to communicate with your customers about what’s happening with your company and product, it seems that early Twitter adopters are still experimenting.

Here’s a good overview of Twitter.

From the BBC:

Banks must do more to help customers in financial difficulties, under the new Banking Code which has come into force.

The new voluntary code states that banks must contact customers they think may be heading toward debt problems.

The onus had been on people to contact their bank. The code, which applies to building societies too, also contains a pledge to responsible lending.

The recent comScore report is a reminder that banks need to find new and creative ways to increase their online banking usage.

After years of accelerating growth rates, the growth in the number of online banking customers at the top 10 online banks has begun to slow.

The report surveys customers on several new technologies such as blogs and personal finance management tools, finding interest ranging from 14% to 30% respectively.  But what does fewer, yet happier customers tell us about the state of online banking? It could mean that banks are doing what customers expect, no more and no less. Which leads to the next question: what can banks do online to truly exceed their customer’s expectations? The answer in most cases — aside from higher interest rates — is a more robust set of self-service tools and personalized service. This goes beyond blogs and widgets toward tools that enable customers to conduct basic banking transactions on their own, wherever and whenever they want. The other way to exceed expectation is through a more personalized experience. Building technology for its own sake does not meet this objective. But creating technology solutions that enable customers to do more, while offering them targeted products, services and advice in a meaningful way is the path by which banks can attract more customers online.

It is one reason why several banks are creating personal finance management applications for their customers, giving them the tools to examine and manage their finances online. But it’s not at all clear whether this increases customer satisfaction, and whether customers will continue to seek out banks for this type of service. It’s perhaps more likely that a true technology play, whose focus is on application development, will continue to surpass banks and provide solutions that quickly respond to their needs.

So, where does that leave banks and technology? The comScore report leaves us with more questions than answers.

Xero is not your typical small business accounting application. But it should be.

Xero is a publicly traded New Zealand company that’s been making news for launching innovative, user-centered online tools for small business.

We’ve been following this little company with big ambitions for some time now. The company seems to thrive on introducing new and big ideas that are scaled down for small business. Their new initiative is the Xero Network that allows partners with complementary applications to integrate their offerings with Xero. Their blog post states that:

The Xero Network is an “ecosystem” concept where we expect Xero to work in with other online providers, creating an integrated community that makes running a small business easier for business owners.

The goal of an integrated ecosystem, where your accounting application can work seamlessly with your payroll application, which then in turn integrates with your time tracking software, is the ultimate in running a productive business regardless of size. Imagine having one system to do everything, where your data and your vendor’s data is handled together. Imagine sending and receiving invoices from others on the network as easily as managing your bank accounts online. Well, that’s their vision and it offers a compelling alternative to the disparate solutions, both offline and online, offered today. It also meshes nicely with the idea that most business functions, especially data-driven ones, can be done online faster and more efficiently than handled separately.

This idea of an integrated and collaborative online experience is driving a lot of the innovation we’re seeing today. With the likes of Google Apps, WebEx Connect, and Salesforce vying to deliver on this promise, Xero’s focus on small business centered on an account system is a strategy with a lot of legs. In fact, those legs recently ran off and launched in the UK.

Going to your safety deposit box is generally not something you do every day, and when done, usually tinged with a sense of secrecy and privacy, approached with an almost James Bond-like precision. Well, Wells Fargo thinks it’s time these safety boxes move into the 21st century.

As reported in the San Francisco Chronicle, Wells Fargo will start offering a new service called Wells Fargo vSafe that lets customers securely store and access online their bank statements and any other personal and confidential document.

Although online storage services have been around for a while, non before Wells Fargo have been built and offered by a financial institution.

The move by Wells Fargo to invest in this service is a bet that secure, online storage is the virtual equivalent of safety boxes, where customers can digitally store practically any sensitive document, from tax returns to wills. But unlike regular safety boxes, this can be accessed from anywhere. And yet like your behind the teller counter safety box, Wells Fargo vSafe offers two-factor authentication as an add-on security feature through the use of tokens that generate a one-time password. The service will also automatically store 2 years worth of bank statements.

If there’s one guiding principle of highly effective user-centered design it would have to be persistence. Sure, luck mixed in with good designers and engineers have a lot to do with it, but persistence is often the key ingredient when it comes to rolling out an online application that’s easy to use versus easy to refuse.

Stories abound of Websites rushing to market with scaled back features, interfacing with poorly conceived designs. While the ever present time-to-market is usually the culprit, more often than not it’s the symptom of a broken process, driven more by having something that’s simply good enough.

Compare this with the process employed by Google and Apple, who generally believe that it takes months, sometimes years, of iterating the same design to arrive at a finished product. Take for example the design evolution of Gmail, which went through months of iteration — and is in fact still in Beta — before seeing the light of day. Here’s a firsthand account of the process that shaped it.

What most people don’t know about Gmail, is that Google worked on it for a very long time before releasing it to the world. In fact, we created at least seven distinct versions of the Gmail user interface before the product was ever released. During that time, we experimented with a lot of different interfaces and features, including much of what you see on Gmail today (and some things that never made it into the final product). However, the product never felt “ready” — the features were there, but they were a little awkward and didn’t fit together quite right. Finally, in the later part of 2003, someone new joined the team, a user experience designer named Kevin Fox. Over the course of the next several months, Kevin and the team developed a new Gmail interface (code named “fin”), and finally the features all fit together! That was the interface that we launched with, and to a large extent that is the same interface that Gmail has today (though there have been many improvements).

Note how little deadlines and requirements gathering played a part in the process. Unlike the traditional waterfall project management method, the ideal approach for effective design is usually a variation of the agile method, where iteration, collaboration and further iteration shapes the final product. In another example, an Apple insider explains the design process behind their success:

Apple designers come up with 10 entirely different mock ups of any new feature. Not, Lopp said, “seven in order to make three look good”, which seems to be a fairly standard practice elsewhere. They’ll take ten, and give themselves room to design without restriction. Later they whittle that number to three, spend more months on those three and then finally end up with one strong decision.

The pattern usually repeats itself wherever good design can be had: several designers with diverse backgrounds creating a range of designs that are paired down over time to arrive at a final design direction. But it also explains why it’s so hard to achieve it, and harder still to maintain it as both your customer base and features expand and diversify. For this reason, it takes a lot of persistence and a willingness to pair down ’stuff’ on the screen to expose that thing we all seek: the product’s true essence. Through all that clutter and time, if you’re lucky and willing not to settle, a gem might appear where once there was just noise. In many ways, a good website, like a home, is never done, always changing until a form pleasing to both the occupant and the visitor is achieved.