How Design Thinking is changing the Banking Industry

Banks and credit institutes don’t usually take ‘the human factor’ into consideration while developing products and services. But several financial institutions are now starting to understand how important it is. They are using proven business strategies called ‘Design Thinking’ to foster creativity and innovation. 

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.

1. What is Design Thinking?
2. Design thinking is growing in Popularity, But Not a New Phenomenon
3. Implementation of Design Thinking in the banking industry
4. How Design Thinking Works for banking industry
5. Empathy Is a Critical Factor in Design Thinking for banking industry
6. Let everyone contribute Ideas
7. Conclusion

So what is Design Thinking for real?

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 know the user, challenge your own assumptions and re-define 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 banks and credit institutions traditionally design products and services. Financial institutions tend to develop products based on their own 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 service For example – A customer abandoning the online account opening halfway 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

Design thinking is not a new concept. It’s been around in some form or the other since the 1960s. In fact, 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.

Implementation of Design Thinking in the banking industry

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 it’s 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.

Also Read: Improve your Sales with Design Thinking

How Design Thinking Works for banking industry

Design thinking has four or five phases, dispensing upon how you perceive a problem.

1. Empathize:

 Conduct research in order to develop knowledge about user behaviour. Hypothesize that your goal is to improve the onboarding experience for new users. In the first phase, you talk to varied actual users, you observe what they do, how they think, and what they want. 

Understand user motivations, discouragements, if they experience frustration at any stage of the process. The goal of the empathize phase is to gather observations, so you can truly start to empathize with your users and their perspectives.

2. Define:

Combine your research from the empathize stage and observe where problems exist from a user standpoint. When stating your users’ needs, highlight opportunities for innovation. Use data gathered in the above phase to draw insights. Lay down all your observations and draw parallels across users’ current experiences. This will help you identify a common pain point or an unmet need.

3. Ideate

Brainstorm and collate a range of crazy, creative ideas that address the user’s pain points or unmet needs. There should be total freedom while ideating, quantity trumps quality. Bring all your team members together and share ideas with one another and build on each others’ ideas.

4. Prototype 

The goal of this stage is to understand what parts of your ideas work, and which do not as you start to weigh the impact versus feasibility of your ideas through feedback on your prototypes. Your ideas should be as real and tactile as possible (not always easy in a service industry like banking). Change your concept based on feedback, prototyping again and again quickly.

5. Test

Return to your users for feedback. With questions like  ‘Does the solution meet users’ needs?’ and ‘Is there an improvement in how they feel, think, or do their tasks?’  Put your prototype in the hands of real people and see if it achieves everyone’s goals. Even after you start executing your vision, you should continue to test.

Empathy Is a Critical Factor in Design Thinking for banking industry

One of the key concepts in design thinking is empathy. Without it, design thinking might look like any other creative process.

Empathy means putting aside your own ideas to understand why consumers think and behave the way they do. For example, in banking, you go to the branch and talk to consumers, watch them interact with the tellers. Invite them to focus groups and let them play around with the new unreleased mobile banking app. Take feedback, but also observe their body language and facial expressions. Try as much as possible to feel what the customer feels.

Design thinking is all about uncovering thoughts, feelings, pain points and motivations – Why are consumers visiting the branch so much? Why didn’t the users use the mobile app?

The Bank of Ireland’s team of design thinkers met with customers who had recently experienced a bereavement. Based on what they gathered, the bank designed a personalized concierge service to handle the administrative tasks and paperwork that the grieving customers may not be able to deal with.

Without design thinking, you risk having a product that may look great and be technologically advanced but ultimately fails due to not meeting a user’s need. For example, Google Glass – a wearable product released in 2013, was received with much fanfare. It was touted as the coolest thing at that time but failed to gain traction with consumers. Why? Because the product was not developed to solve any consumer need rather it was something that the engineers thought people needed.

Also Read: How to use Design Thinking in HR

Let everyone contribute Ideas

Another key aspect of success in the design thinking process is that ideas can come from anywhere in the organisation. Some traditional financial institutions still only allow innovation ideas to originate from top executives, notes Jim Van Dyke of Futurion. Those projects not only took longer to come to market but also employee confidence and employee morale in these projects were also lower.

If you want to find out if your organization supports an ideas-can-come-from-anywhere approach, here’s a test. Identify ten innovations in your organisation, and poll employees to understand where the ideas came from. If only a handful of these ideas came from employees who work with consumers, products, or technology, then you have a disconnect and a problem.

Employees generating ideas don’t have to be subject matter experts. Diverse employees should come up with ideas since they’ll bring different approaches to the problem.

To solve the design thinking and innovation puzzle, some banking and finance companies have started to set up “Innovation Labs”. These labs are often siloed and hence struggle to make design thinking part of their everyday culture and processes.

Catherine Bessant, Chief Operations and Technology Officer at Bank of America, does not believe that an innovation lab is critical to implementing design thinking.

“It’s much more powerful to capture innovation from 10,000 people than to put 10 people in a lab,” Bessant told the Wall Street Journal.

Conclusion

Design thinking is disrupting all industries and it is high time traditional industries like banking and finance also move towards Design thinking.

If the design thinking approach excites you but you do not know where to start, look no further and start with this Design Thinking course.