Design thinking in the financial sector: process, benefits, challenges, and examples

Usually, it's rare to build a product that works perfectly on the first try. You'll need to try different designs before settling for the one that works. To beat the competition and launch to the market faster, some brands slip into building digital financial products that are not scalable and intuitive.

However, with design thinking, you can gradually build and test a digital financial product until it meets the brand and customers' tastes. Also, it enables you to launch the product faster without compromising your budget or quality using iterative prototyping procedures.

Design thinking shifts the focus from what only the brand assumes to what the customer actually wants, paying close attention to customer psychology, buyer personas, and fintech trends. At the end of the day, you won't only build an intuitive digital financial product for your customers but also stand out from the competition. Per Adobe report, 46% of brands implementing design thinking claim to have a competitive advantage in their niche. Now you see where this is going?

Implementing design thinking in the financial sector clarifies your core user needs and helps ensure you have a defined approach to solving these problems. So that you do not follow the crowd to build just any fintech product; you create products that align with your brand and customers' demands.

We can't talk about the advantages of design thinking in finance without discussing waste. Do you know that correcting a problem during development costs ten times the money you would spend fixing it while designing a product? Worse, if the product has been released, fixing it may cost even 100 times more.

Meanwhile, implementing design thinking in the financial sector can prevent you from spending extra money fixing your design issues. You can build your product bit by bit until you achieve the desired results.

Another one of the many benefits of design thinking in banking is solving your customers' problems. The banking industry is already bugged with so many complexities that all your customers want is a simpler way to understand the system and perform transactions successfully.

With design thinking, you follow a systematic research-driven methodology that helps you to properly define your customers' limitations and then formulate a solution in the form of a digital financial product.

The number one priority of design thinking is enhanced user experience. In this study, you could see why almost half of companies that didn't implement design thinking in their UX strategy reported a weaker customer experience than their competitors. Design thinking focuses on the users and how your product blends into their daily lives, prioritizing how it can be a solution rather than just an app or product.

As mentioned, every fintech brand aims to build a digital financial product with an intuitive UI, including ease of use and accessibility. If your fintech product falls short of this, every other aspect, including profitability and usability, goes begging.

Design thinking in banking ensures you cover user touchpoints and provide better engagement opportunities so your intended customers can access and interact with your digital financial product at any time.

Every marketer knows that acquiring a new customer is much more costly than retaining one, especially considering the competition in the banking industry. Nonetheless, design thinking is like an A/B testing system that allows you to optimize your digital financial product and focus on what matters to your customer and product market, thus cutting off all unnecessary investment during customer acquisition.

Empathizing with your customers is the first stage of design thinking in fintech. Empathy means getting a personal touch or understanding of your customers in their natural environments. To achieve this, you must interview your target customers to replace any assumptions and doubts about your product market with facts and first-hand knowledge of your users' needs.

After empathizing and collecting enough feedback or data, you can confidently state your customers' problems. The "define" stage of design thinking in banking means narrowing your customers' needs to something simple to understand so you can ideate or brainstorm potential solutions when building your digital financial product.

The ideation stage of design thinking in finance opens the door for curiosity and problem-solving. After defining your users' concerns or needs, the next step is for you and your design thinkers to start generating and documenting ideas. There is no limit to the number of ideas to generate at this stage. However, after generating these ideas, design thinkers must narrow them down to the most practical and innovative ones.

Prototyping in product design is the experimental transformation of ideas into digital or tangible products that can be improved occasionally. This comes after condensing your ideas in the previous stage. You get to visualize these ideas by creating a simple product called a prototype, which gives tangibility to the solution of the problem you seek to solve.

Testing is one of the steps of design thinking in fintech, where your ideas meet real-world use cases. After experimenting with your ideas through prototyping, you must test them with real users, whose feedback would be critical for determining whether your digital financial product meets your and your customers' expectations.

Design thinking requires practical steps dependent on finances, human resources, technical skills, and tools, among other things. These resources are necessary for you to implement design thinking processes successfully.

Legacy systems are a hard nut to crack when design thinking is concerned. This is because many traditional finance systems are unwilling to embrace or adjust to the latest digital finance trends. But even finance systems willing to adapt may still be caught in the fishnet of bureaucracies and solid traditional systems.

Not just banks but customers could be a huge pain to deal with, hindering the design thinking process. Some customers may still want to follow the traditional finance system and voluntarily avoid adapting to or embracing the new digital finance order. Educating this set of people will take time. In the worst-case scenario, they will be reluctant to participate in the empathetic stages of the design thinking process.

As the saying goes, "A little knowledge is dangerous." Imagine having limited or no knowledge or skills to implement design thinking in fintech and banking. In that case, any effort you make with your in-house team toward implementing it will only result in more complications. It's advisable to train your team first on the fundamentals of the concept before trying to build any product around it.

Capital One is a successful international financial company with over 800 branches worldwide and over $30 billion in revenue. The company adopted design thinking to streamline the onboarding process for its clients and create an equal platform for creativity among its employees, regardless of their levels in the hierarchy.

Capital One achieved this goal using a multi-tenant content management SaaS solution, OneView. The result of this experiment also increased productivity and an ambient and fun workplace atmosphere for its employees. One of the company's employees affirmed that design thinking reduced traditional paperwork by 70%.

PayPal has become a household name in the fintech industry. However, its success did not start today. The company underwent many iterations before reaching its level, and one of the cornerstones of this success was design thinking implementation.

One of the areas where PayPal prioritized design thinking was in its onboarding process. The reason was to solve the problem of PayPal becoming more complex as it continued adding more products to its list of financial services. This made it a bit overwhelming for users who were pretty new to PayPal and digital banking to sign up, complete tasks, or even process transactions.

So, PayPal's design team implemented a customer-driven approach to its fintech redesign and mobile customer experience (CX). The new design ticked the core principles of design thinking boxes, iterating gradually until reaching its level today.

As a new player in the US finance sector at the time, Bank of America, a multinational investment bank and financial services holding company, found it hard to onboard people to use its savings account service. So, it initiated a campaign called "Keep the Change," which was an empathetic approach to help them understand their target customers better and how they made financial decisions. Then, it collaborated with other stakeholders in the fintech industry to streamline the onboarding process for newly acquired customers. After those two initiatives, Bank of America saw a staggering gain of over 10 million new customers, who have saved over $1.8 billion with them.

Design thinking principles can be effective in transforming financial services in the following ways:

• Defining and understanding customer fintech challenges and needs, including user touchpoints and engagement patterns.

• Then, address these challenges through iterative prototypes, which you can continually test until the product reaches its apex.

Design thinking in the financial sector determines success through improved customer experience, faster time to market through prototyping and minimum viable products, cost savings, and better engagement opportunities and touchpoints for fintech product users.

The fundamental principles of design thinking in the banking sector include empathy, defining user problems and needs, and generating ideas based on these needs through ideation. Then, you should experiment with generated ideas through prototyping, test the viability of these ideas with real people, and finally, iterate these prototypes as you get more feedback.