The banking industry in India doesn’t usually consider the human factor while developing products and services. But several financial institutions are now starting to understand how important it is. They are using proven business strategies to foster creativity and innovation. This is called Design Thinking.
People mistakenly believe that design thinking is all about aesthetics a philosophy only limited to creative types of people, who specialize in design. But that’s not at all the case. It does not mean that you can ignore aesthetics, but a good-looking design that does nothing for consumer needs or does not solve any consumer problems has zero chance at success.
Design thinking is about applying the design principles to the way people interact with the world, rather than focusing solely on aesthetics. An iterative process in which you try to understand the user, challenge your assumptions and redefine problems in an attempt to identify different solutions that might not be easily apparent using conventional methods. Design thinking revolves around developing a deep interest in understanding users of products and services. This helps you develop empathy with the target user.
This is the complete opposite of how the banking industry in India and the credit institutions traditionally design products and services. Financial institutions tend to develop products based on their internal processes and operational efficiencies, instead of focusing on the consumers. Finishing up the product with a pretty wrapper and calling it a day.
Financial institutions then wonder why consumers get frustrated with their products and services. For example, a customer abandoning the online account, opening half-way through the process. The process doesn’t meet the user’s need or address their problem; to open an account without having to go to a branch. Design thinking, in theory, can help solve that problem.
Design thinking is growing in popularity, but not a new phenomenon
It is not a new concept. It’s been around in some form or the other since the 1960s. Today, it will be difficult to find a Fortune 100 company that does not incorporate Design Thinking or at least some aspects of design thinking in how they get products and services to market.
The banking industry in India and Financial services organizations are laggards in adopting laggards, but there are some exceptions. For Example, BBVA launched a program “Design Thinking for Leaders”, to help the bank innovate and design for its customers.
Rob Brown, Head of Marketing, Design and Responsible Business at BBVA, believes that “All employees, regardless of their role, should begin to see themselves as a designer that contributes to improving the customer experience” giving the bank an edge over its competitors.
Design thinking is big with technology companies that focus on the consumer experience first. Making it likely that more financial institutions will turn to design thinking since they increasingly find themselves competing against both mega-tech and fin-tech firms.
Empathize digital banking users
At the Empathize stage, we collect a large amount of data about business goals, customer needs and pain points, and product features, thus researching the wire context around the product. Our aim is to feel and emphasize with the problem we are trying to solve. To achieve this, we need to step into the shoes of the customer and business owner.
Define core user problems and value
At the Define stage, we analyze and synthesize collected data to define the core problems and prioritize key data. The main purpose is to understand what value we could bring to customers and why they would prefer it over other solutions. To achieve this, we need to approach data analysis from these different angles: business, psychology, user behavior, competitors, marketing, technology, etc.
Ideate digital banking solution
At the Ideate stage, we start to generate multiple hypotheses about what our solution could be. Our main goal is to uncover the best way to solve the previously defined problems. To achieve this, we need to step out of the box and create dozens of potential solutions.
Prototype digital banking product
At the Prototype stage, we take dozens of previously generated ideas about how our end solution could look and work, moving toward designing the final version. We check all the solutions based on previously generated user scenarios, business goals, etc. at the Synthesis stage. In this way, we narrow down multiple solutions into one or more that are delivered as visual prototypes and could be tested by users and business owners.
Test banking prototype
The final Test stage is needed to ensure that our visual prototype provides the needed solution according to the previously defined problem. If it is not, we then return to the first stage and repeat the process.
Design Thinking in finance determines success in digital age
Design and Design Thinking have never before played a more influential role in determining the success of any business in any industry. This fact is well supported by the Design Value Index (DVI), a summary of the market performance of 15 design-driven companies including Apple, IBM, Nike, and SAP. Those companies share a high level of design strategy implementation across their organizations. Their executives practice design in everyday work, and they have design positions at the management levels. In the period from 2005 to 2015, design-driven companies outperformed the S&P 500 by 211%.
Bank is using design thinking to address big, knotty internal issues, like centralizing multiple back-offices into one, to serve customers better. The big question is what impact have they seen on customers?
Bank was able to see first-hand how design thinking can address such a question through its work with its customers in the education space. Banks are governed and Bank is no exception by Basel 3 rules, a regulatory framework intended to strengthen bank capital requirements by increasing bank liquidity. Schools are liquidity-rich, yet they don’t need cash on site, so helping them to reduce their cash on site and improve their overall liquidity, while getting more funding onto the bank’s balance sheet, enables a bank to lend more. Sounds like a win-win proposition. Wrong.
Using design thinking to uncover the real need, bank included teachers and educators their customers in the process, in pursuit of radical collaboration. By doing this, they quickly discovered that holding cash on school premises (parents pay a lot of cash into schools for trips and other school services) is a risk, as it attracts thieves. But the real pain point for teachers is the administrative overhead of collecting all the money for school trips, remembering who has paid, who is going, and which parents still need to be chased. School outings enrich pupils’ lives, but the administrative burden on teachers reduces time invested in lesson planning their core job of teaching.
Once it understood the real pain point, bank collaborated with an tech partner to create a school app, similar to Uber. This is how it works. The parents associated with a class will receive a notice via the app and can sign up directly no more need for signing attendance sheets. Parents’ bank accounts or credit cards are linked to the app just like paying for an Uber cab so the financial transaction takes place without cash. The app is also linked to Outlook, providing diary management for everyone.
The more perspectives that are included in the initial design thinking stages, the easier it is to commercialize the outcome, because you are uncovering real demand.
The greater good
Anything that reduces risk on school premises and increases the time teachers spend on teaching rather than on administration has to be a good thing. But there’s more. Bank is already contemplating the wider ecosystem of the desperate need for free education in South Africa.
“Design thinking helps us to solve problems at a higher level of thinking it makes you think wider and bigger,” says du Plessis. “This is a thin wedge strategy. It opens our minds to how an app like this might be used to offer free education in the future, especially to children in remote areas.”
Giving back and nation building are the next steps on the agenda.
Design thinking is a powerful tool. Used properly, it opens the gateway to innovation that really works for customers. But it also seems to be a recipe for cultural change changing the way a business thinks about and manages itself.