Traditionally, customers look to their financial partners for investment guidance, peace of mind, and value. Advancing technology has allowed fintech to carve a niche that is fast replacing conventional banking platforms. Thanks to its emphasis on innovation, design thinking have become key to helping the financial technology industry pull ahead of its more established financial competitors.
Design Value Index, which tracks the value of certain high-profile, publicly-funded companies, found that design-driven companies outperformed the S&P 500 by 211%. Fintech has evolved from a back-end system to support and digitize finance businesses to an industry of pocket mentors. This includes on-the-go financiers and everything in between.
From businesses like Apple Pay, Venmo, Kickstarter, and Mint along with others in cryptocurrency, stock trading, and budget, design thinking is what drives them all.
Design Value Index summarizes the market performance of 15 design-driven companies including Apple, IBM, Nike, and SAP. DVI found that design-driven companies outperformed the S&P 500 by 211%. Turns out design thinking is profitable too.
Now, fintech is outpacing those businesses by filling the gaps banks have laid bare. In many ways, the industry has produced alternatives that boost the consumer’s experience directly. Through things like Venmo, Kickstarter, SoFI, and Mint along with other companies specializing in cryptocurrency, stock trading, and budget, fintech has become an industry of pocket mentors, on-the-go financiers and everything in between.
Two things are driving this change: consumer behavior and design thinking.
Design Thinking Disrupts
“What people may not understand is the subtler way that design thinking gets around the human biases that time and again block the exercise of imagination.”
– Jeanne Liedtka, Harvard Business Review
To truly understand how fintech turned the tide on established systems, we need to fully understand the impact of design thinking. In the fintech industry, design thinking has challenged widely-used norms by focusing on what people secretly want, not what they are predicted to do. For Instance, Uber identified a segment of people who had a dislike of hailing a cab from the curb, without any guarantee of actually getting one. So they created an app to make transportation easier for them. With Uber, people can identify drivers available nearby, schedule a pick-up and pay with their credit card.
By reframing the problem with a focus on the customer’s experience, fintech is finding ways to rethink the status quo. There are three basic factors that drive design thinking:
- Know your audience.
- Reframe their problems.
- Use diverse teams to ideate and experiment with new solutions.
Design thinking helps brands reshape processes. For stakeholders, it’s a way to turn a better profit. For consumers, it makes the journey from wanting to acquisition smooth and easy.
In the fintech industry, design thinking has challenged widely-used norms by focusing on what people actually do, not what they are predicted to do. This leads to reframing problems in ways that boost experimentation and rethink the status quo. For instance, Uber identified people’s need for transportation and dislike of hailing a cab. So they created an app to make it easier. With just your smartphone, you can identify drivers nearby, schedule a pick-up and pay with your credit card.
Elements of Design Thinking
How did a tool to support business become a business in its own right? As fintech modernized technology platforms for banks, it recognized a disconnect in how banks viewed their modern users. Fintech is all about building the tools people needed.
According to Jeanne Liedtka, strategist and professor of business administration at the Darden School of the University of Virginia, the way to create meaningful customer experiences is to follow these seven principles:
- Immersion – sharing the customer’s journey.
- Sense making – finding patterns and making sense of data.
- Alignment – focusing on the possibilities during collaborative discussions.
- Idea Generation – identifying solutions.
- Emergence – brainstorming and building on ideas.
- Articulation – challenging assumptions.
- Testing – fine-tuning products/services (with the assumption that they can be thrown out).
Design thinking pursues a fresh perspective. It leads companies to uncover the unarticulated needs of their consumers and enact new ideas to solve them. We see this in some of the brands we partner with. UPLI, a tech-driven financial health platform, imagined what it would be like if employers offered state of the art tools for employees. The brand wanted employees to frequently engage with tools, budgeting, and individual finances. So our agency collaborated with UPLI to design an innovative mobile-friendly platform. The mobile app offers a range of modern financial tools that help individuals make better money decisions. Sunbit wondered what it would be like if people didn’t have to worry about money. So they created a point-of-sale tool that helps users get more out of their money while still at check-out. These two businesses re-imagine the way people do everyday things.
People Drive Change
Consumer behavior and design thinking make fintech a compelling force to be reckoned with. Through design thinking, transparency and trust-building, fintech can provide a new generation of savvy tech users with the services and insights they need.
Accenture performed a global financial consumer study showing the patterns people exhibit when they interact with their financial institutions. They organized those patterns to create four consumer personas: pioneers, pragmatists, skeptics, and traditionalists. Above all, these personas show that;
- Established financial institutions leave opportunity for fintech.
- Consumers who lack the trust and tech know-how need companies to do more for them.
- Emotion plays a big role in consumers’ financial decisions.
- Older consumers appreciate a blend of physical/digital modalities—90% of pragmatists want face-to-face help with some of their financial decisions.
Fintech In Flux
Fintech is not without its own challenges. Consumers trust banks to look after their financial well-being almost 30% more than fintech companies (Accenture). A critical part of that mistrust lies in how they utilize a network of third-party providers they can’t necessarily control.
Ultimately there is plenty of opportunities for financial institutions to learn from fintech. A JD Power retail banking study found only 28% of people actually got the financial advice or guidance they sought from their bank. When people just aren’t getting what they need from banks, opportunities are suddenly created. With design thinking and a strategic approach to transparency and trust-building, fintech companies can provide a new generation of savvy tech users with the services and insights they need.