India's fintech industry has transformed significantly as several fintech products are now well accepted by vast swatches of customers. Today, mobile banking and digital payments have made digital finance services accessible to the majority of the population with all.
This prompted Union Minister Ashwini Vaishnaw to claim at the World Economic Forum (WEF) 2023 that in December 2022, India's digital payment transactions amounted to $1.5 trillion annualised basis and "if we compare it with US, UK, Germany, France, it's more than their combined economies".
The road ahead is full of possibilities and innovation as technologies like big data and blockchain applications continuously evolve to offer better financial services to customers and business benefits to companies. While the future looks promising, it is imperative for organisations to identify upcoming opportunities to gain an edge over the competition, strengthen their presence, increase market share and achieve higher customer loyalty.
So, how do they mark their presence? Design thinking can help them lay the foundation for their brand and chart the path to outperform their competition.
What Is Design Thinking In Fintech?
Design thinking is essentially about clearly understanding a target audience's needs and applying that knowledge to develop a new set of products or reiterate existing ones. It aims at block-building financial solutions that are desirable, technically feasible and economically viable.
Design thinking in fintech consists of five essential elements. It starts with Empathizing with the audience for the product or service and is followed by defining what the company is trying to accomplish. This includes generating many ideas and picking the best one.
Next comes ideating to refine the concept further, trailed by prototyping to build a test product for feedback. The last step is implementing the ideas.
The Power of Empathy
According to Harvard Business Review, companies prioritising empathy in their customer experience outperform their competitors by 85 per cent in sales growth. Empathy is the foundation of design thinking and involves understanding customers' needs, goals, behaviours, and pain points. It helps a company understand the specific nuances that can ensure higher customer delight in the short-term and customer stickiness for the product in the long term.
For instance, by empathising with a customer who wants to buy a home, a fintech company can develop an affordable mortgage solution that meets their financial situation and goals. Similarly, by empathising with a customer who wants to save for retirement, the company can develop an automated investment solution that grows their wealth over time in a low-cost and tax-efficient manner.
Defining the Problem
Characterising the problem is essential to developing solutions that meet customers' needs. Only when a company can clearly outline the customer challenges can it create products and services that address them.
For example, they can address the problem of saving for major life goals through an automated savings solution. Likewise, the challenge of paying down high-interest debt can be tackled through a low-interest debt consolidation solution.
According to Nielsen Norman Group, companies that spend time on problem definition can reduce development time by 75 per cent and create solutions that customers really want.
Ideating for Innovation
Idea generation is key to innovating solutions that address customers' challenges. As per research done by Accenture, companies that prioritise innovation achieve 30 per cent higher revenue growth than their peers.
Brainstorming a wide range of solutions around a key customer challenge can lead to innovative ideas that meet customers' needs efficiently and conveniently. For example, the challenge of accessing funds in an emergency can be addressed through a digital line of credit solutions that provides customers with quick access to funds at a low cost.
Prototyping for Perfection
Prototyping and testing are essential to refining solutions and ensuring that they meet customers' needs. According to Nielsen Norman Group, prototyping can reduce development time by 75 per cent. Fintech companies can prototype solutions with key features and test them with customers to gather feedback for refinement.
For example, an automated investment solution can be prototyped with core functions like goal-based saving and automatic rebalancing. They can incorporate customer feedback to refine the user experience and enhance key features. Similarly, a digital line of credit solution can be prototyped and tested with customers to refine the application process and loan terms.
Bringing Your Solutions to Market
Implementation is crucial in bringing solutions to the market and achieving customer adoption. By investing in marketing, customer support, and partnership development, fintech companies can launch solutions successfully and gain traction in the marketplace.
For instance, fintech companies can raise awareness of their solutions through social media marketing and affiliate marketing partnerships. They can also provide best-in-class customer service to address customer issues and build loyalty.
Partnerships with financial institutions and other companies can further boost adoption by integrating solutions into existing customer experiences. By understanding customers' needs and employing the key components of design thinking, fintech companies can achieve significant returns on investment and capture market share.
Design thinking can completely transform a business by fostering innovation, enabling the discovery of fresh ideas from unexpected sources, and creating new goods. Every associated person, along with the business, can build a better future with the aid of design thinking.
Additionally, it can assist in spotting fresh fintech opportunities that you might otherwise miss. It enables you to understand your clients' requirements and think of creative solutions to meet those demands.
Design thinking is not linear. It's subjective and flows like an art form. One must allow intuition and creativity to guide one through the five-step process. It's an approach away from the 'one-size-fits-all' pathway and gives leeway to breakthrough ideas and better outcomes from work.
- Ankur Jain, Chief Product Officer, BharatPe