How Can Design Thinking Help the Finance Sector Keep Up with Modern Times?

Author
Joël Sonderegger
March 1, 2022

The finance sector has gone through considerable change in recent years. What was once a privilege of the wealthy is now accessible to everyone. Financial services are available anywhere and anytime thanks to technology and mobile phones. But what does this mean for the industry, and how will financial services keep up?

Design thinking is a methodology that allows individuals and teams to work together in solving problems and creating solutions. Design thinking can be applied to almost any aspect of business, including finance sector processes. The finance sector needs design thinking now more than ever as it faces a future of disruption, changing customer desires, and pressure to innovate.

What exactly is design thinking, and how can it be applied to finance sector problems?

Design thinking is a problem-solving methodology that starts with the customer. Design thinking considers the user’s needs and wants, as well as the company’s business goals. It is a human-centered approach that allows for creativity and collaboration. Scholars and experts in the field of design thinking have identified five stages that are essential to the process:

1. Empathize with the user
Here, the user is put at the center of all decisions and problems. Design thinking begins with empathy for the user, whether it is a retail customer or a corporate client.

2. Define the problem
This step is about understanding and articulating the problem. Design thinkers will ask lots of questions to get a clear understanding of the problem.

3. Ideate potential solutions
Design thinkers are encouraged to brainstorm as many solutions as possible. This is the time for imagination and creativity.

4. Prototype your solutions
You can use frugal methods such as pen and paper sketches or digital methods to create prototypes. Prototyping allows you to see your solutions come to life and get feedback from others.

5. Test your prototypes
This is where you put your solutions to the test. You can test them with users or with a smaller group of people within the company. Design thinkers constantly iterate and test their solutions until they find one that works best for the customer and the business.

The finance industry is not known for being the most innovative industry. Banks are known for being slow to adapt and change. But the world is changing fast, and the finance sector needs to keep up. Design thinking can help the finance sector face the future with confidence and adapt to the needs of customers. Here are three potential ways design thinking can help this industry:

1. Banking and financial services

Design thinking can help banks and other financial institutions design better products and services that meet customers‘ needs. It can also help with customer service and support, helping to resolve complaints and improve satisfaction levels.

The industry is already under pressure to change and adapt to new technologies and customer needs. With financial technology (fintech) startups disrupting the industry, finance sector incumbents are under pressure to innovate. Design thinking can help companies adapt to changing customer needs and embrace new technologies. Design thinking can also help employees in the finance sector formulate innovative solutions to old problems.

For example, think about how mobile banking has changed the way people bank. It has made banking more convenient and accessible to people worldwide. But customers‘ needs and wants are constantly evolving, so banks need to continue to innovate to stay ahead of the curve. Design thinking can help them do this. With the metaverse becoming more popular, for instance, is it likely that customers will want more virtual experiences from their banks? Metaverse is a term for a digital world composed of multiple virtual universes. In this digital world, people can create their own online persona or avatar and interact with others in various ways. Financial institutions could use design thinking to develop products and services that cater to the needs of metaverse users. Design thinking is about anticipating needs and wants, not just meeting them.

JP Morgan’s Onyx Lounge In Decantraland. Image: Decentraland

2. Design thinking for financial advisors and brokers

Design thinking can help financial advisors, and brokers better understand their clients‘ needs. The finance sector is full of jargon that many people do not understand. Design thinking can help simplify the language used to explain investments, taxes, insurance policies, and other products or services offered by these professionals.

An example of how an independent financial advisor (IFA) can use design thinking is to help clients make better financial decisions. For example, imagine that a client wants to invest in a mutual fund but doesn’t know which one to choose. An advisor using design thinking would ask questions like, „What are your goals for this investment? How long do you want to invest?“ Design thinking can help advisors understand their clients‘ needs and find a way to meet them. It can transform an IFA from a salesperson into a trusted advisor.

3. Blockchain Applications

Design thinking can help blockchain startups better understand their customers and come up with innovative solutions to problems. Blockchain is a new technology that can revolutionize the finance sector. It is a digital ledger of transactions that can be used to record anything of value, from money to property deeds.

When it comes to blockchain, design thinking is all about collaboration. Designers and developers need to work together to develop creative solutions that meet the needs of customers. For instance, imagine using blockchain to record property deeds. Designers might work with developers to design an app that would allow people to transfer their property ownership without going through the hassle of dealing with a lawyer or real estate agent.

In a recent Forbes article titled, “The Future Of Real Estate Transactions On The Blockchain,“ Adam Redolfi describes how blockchain can disrupt the real estate industry in unprecedented ways.

“If the internet has revolutionized the commercial sector in recent years through the development of marketplaces, the blockchain stands to change the real estate sector in terms of fluidity and distribution of information and transactions” he wrote. “As the blockchain could shake up entire sectors of our global economy, all real estate professions are now concerned with the blockchain, from recording and funding to transactions, from real estate investment to appraisals to asset management.”

The finance sector as we know it is facing an uncertain future. In his book, „Bank 4.0: Banking Everywhere, Never at a Bank,“ Brett King argues that banks will be obsolete if they don’t embrace new technologies such as mobile banking, artificial intelligence (AI), and blockchain.

„The emergence of Bank 4.0 means that either your bank is embedded in the world of your customers, or it isn’t. It means that your bank adapts to this connected world, removing friction and enabling utility, or it becomes a victim of that change,“ he writes.

„The bankers of tomorrow are not bankers at all—the bankers of tomorrow are technologists who enable banking experiences your customers will use across the digital landscape. The bankers of today, the bank artifacts of today, the bank products of today, are all on borrowed time,“ he adds.

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