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I have a lot to say on this topic. I’ve been doing design work in financial services for over 20 years.
And, I’ve seen the shit show play out dozens of times. As many try - and fail.
A few years ago, I helped (lead product design, UX/ UI) a venture firm launch a new digital bank (mobile first) here in Vietnam. They’ve now acquired over 100,000 customers.
Thus, as I said, I have many opinions on the topic of design and fintech. Blah, blah, blah - lol
Design is not a silver bullet
One thing that is critical to understand when designing in this environment - design is not a silver bullet.
It must be approached holistically, it requires a process for stakeholder buy-in and consensus, and a design thinking approach must be at the core of the organizational DNA from the top to the operations, to the product, security and compliance teams to the customer service team, and so on.
And, there cannot be an ivory tower approach to design - where the lead designer and design team goes away for weeks and presents the brass with their findings.
Design has to be in the executive suite.
And, basically, every single inflection point of the customer experience across multiple core personas must be considered.
Core banking design patterns: information, action & intelligence
In the banking project I mentioned above, I captured this holistic approach by distilling banking down to its essence, and breaking that essence into three key components that defined our design process:
I wrote about this in more detail on Virgin: https://www.virgin.com/entrepreneur/what-will-future-innovation-banking-sector-look
We then ran product decisions through this framework - and formed a core set of interaction principles that realized these components (information, action and intelligence) - and further, prioritized these interactions based on actual use cases.
I then created a design system, which had these components of how it works as their foundation, and we tested and validated our assumptions with multiple types of user testing.
The unbundling of finance
Going back to my point of design is not a silver bullet -
I’ve seen countless companies crash and fail who try and use design as a silver bullet.
In my time, I can’t tell you how many startups I saw who tried to make a prettier Craig’s List.
Once upon a time, Ebay snagged a board seat on Craig’s List, owned 25% and made a run at the classifieds market with Kijiji - they eventually got sued and shot down.
Yet, my point - even with inside information - Ebay money, and a “prettier design” - they failed to put a sizable dent into Craig’s List business.
The business approach was leveraging a stale, dying paradigm.
Further, there is an interesting bit of business analysis out there on Craig’s List - and one that comes to mind is something called - The Unbundling of Craig’s List.
You can go to Craig’s List and point to a billion dollar unicorn like Uber, Airbnb, etc., who versus attacking Craig’s List head on - the genesis of their business concept originated there and they hit the market sideways - creating a new market.
I believe finance will be unbundled in a similar fashion and you’re already seeing it.
You can go to Chase’s shitty, portal homepage - and point to a billion dollar unicorn.
I can see Kabbage and I can see Acorns lingering in the links of their homepage. Listening to the Robinhood co-founder on TWIS it's clear they're making a run at retail banking.
Fintech startups get the majority share of venture capital investments
Last year, fintech startups received the lion’s share of venture capital investments totaling $16 billion usd.
Further, banks are some of the most hated institutions in the world and have earned little customer loyalty.
The Millenial Disruption Index confirms this fact: http://www.millennialdisruptionindex.com/
And, you can see banks like Chase punching back and winning Millenials over with the Chase Sapphire card:https://www.bloomberg.com/news/features/2016-09-22/how-chase-made-the-perfect-high-for-credit-card-junkies
Thus, it's an arms race between the incumbents, tech giants like Facebook and Apple, and well-funded startups.
Finally, in designing for finance - you literally have to consider the design of the business itself.
God tier post.
I think a lot of your points relate not just to financial sector, but literally any large organisation who are centred around basically a few core products.
Just a note on this point, "Further, banks are some of the most hated institutions in the world and have earned little customer loyalty".
Its weird, I did quite a few interviews with people my age about their banking choices, I was wondering if a better digital experience would convince people to swap. And I found despite there being many options, with better digital experiences for people to swap to, nobody every swaps. People literally choose what banks their parents use, and don't ever consider a switch until they're going to go for a home loan.
But despite this, everybody had so much shit to talk about their banks. The app, the customer support, the confusing websites - and just generally, "fuck banks right". But it's sooo hard to get a user to switch!
You’re absolutely right. Many of these principles can be applied to other institutions and verticals, and I have done just that - in areas of cyber security, bio-tech, etc., etc., yet, I try to distill the essence and approach each situation agnostically and try to get as close to the truth; customer, market environment and problem space as closely as possible.
Yep, agreed - many just don’t switch.
I suspect a lot of that does indeed have to do with parents helping (relationship at the bank with a banker) - also, many banks aggressively recruit college students and lock them in.
I also suspect (in the US) - this will change with age and different financial goals.
Many young people just aren’t that concerned yet with banking. Switching is a hassle. However, that time will come.
Another vector to this picture is the role of those that are unbanked (no bank account at all) - and the underbanked.
Those are especially high numbers still at this point where fintech could be play a key role in providing low income people affordable, dignified financial services.
But yeah - "fuck banks" lol
Amazing post. I think in the near future we will see more incumbents buying well-funded startups, like the Simple acquisition by BBVA: https://www.simple.com
Speaking of the design of the business by itself, the rise of cryptocurrencies have the potential to disrupt completely the financial industry especially in the medium/long term
Yes, excellent point. We will indeed see more of these types of acquisitions. Though, at least in the US market, the playing field is still thin. Maybe if N26 breaks into the US market - -
Simple Bank now - personally, I was asphyxiated by their most recent, incoherent redesign. I went on one hell of a rant about it here:
I wonder how things are going there.
Additionally to that point of acquisitions - the banks themselves are partnering with fintech organizations and forming their own venture backed cooperations.
The Financial Solutions Lab is a $35 million dollar collaboration between Chase and CFSI to incubate and invest in fintech startups.
One other point related to that is the M&A activity around banks buying up design firms.
Capital One bought design firm Adaptive Path back in 2014. And in 2015 they bought Oakland based Monsoon design.
I've spoken to a few insiders there - and it sounds like there may be the culture clash one would expect from putting oil and water together.
With regards to the results - - I suspect most major US banks (Chase, Capital One, etc.,) - have simply given up on their websites. It shows.
That said, to their credit - I find many have focused on native mobile apps and some are decent. I find the Chase mobile app to be above average. Though I find the color story, controls and icongraphy to be reminiscent of Fisher-Price Toys. It feels a bit honky tonk, bossy out of scale, unsophisticated and impersonal for a place dats' holdin mah monay.
I agree that cryptos have a shot at disrupting financial industries. I've been involved with a few bitcoin related startups. I suspect the myriad ways many speculate crypto will disrupt financial services may not come to fruition. And, whatever disruptions that take place may be extremely sharp, unseen and not what most expect.
The Black Swans are circling.
Crypto is still in its Make Out Club, Friendster, Live Journal phase and transitioning to the MySpace phase. We’ll see more and more radical decentralization, more attempts at centralization - and perhaps power laws may kick in - or not.
Anyhow, the incumbents are not necessarily in total denial and asleep either.
Major financial institutions have formed something called, The BlockChain Alliance - with the purpose of resolving institutional transactions via Blockchain.
Though, Goldman has already dropped out of this - thus, expect power struggles, and start and stop sputtering.
The area of most promise for crypto may be in developing markets where most are unbanked. There is obvious, existing precedent for the symbiosis of mobile, mobile payments and mobile banking in massive markets (China, WeChat) and emerging markets.
In emerging markets one of the biggest inhibitors to banking is trust.
As broader understanding of these technologies and their implications take hold, perhaps we will see crypto (related Blockchain technologies) become the defacto trust agents in these markets.
Further, adoption of these technologies by governments in emerging markets may address their major pain point - revenue collection.
I can envision a city that’s overlaid with a mesh of transactional inflection that powers day to day life. Use the road, ding - it hits your wallet. Use the park, ding. Throw something in the trash, ding. Basically, pay for services as you go.
Shoot - I could GO ON and ON about this stuff. Sorry for rambling. I love this topic. I was thinking about starting a newsletter to leverage the sources I have and to track it.
I’m just a little spent for time working on a new startup, building a team, etc., (unfortunatley, not in fintech) - guess, I shouldn’t be writing so much on DN. :) - but, I did just write this on my phone in a taxi.
Thanks for your reply. I would love to sign up to a newsletter of that kind.
I believe in the cryptocurrency potential but this new ICO craze is bringing a lot of speculation and expectations to the market.
There are really interesting projects like Civic, Golem, Iconomi, but most of them are raising too much money in this initial phase.
Cool, thanks for the encouragement.
Yeah, there will be a lot of tulips exchanged in the ICO hysteria.
Some of it has legs.
Swarm.City is one that caught my attention.
Nice tip. I didn't knew about Swarm.City. Looks promising
So glad to see I am not the only one writing lengthy responses. This is fantastic and inspiring! Thank you for putting the time together to write this!
You're welcome! My pleasure.
I do suppose many assume the lengthy response writers are a bit bat shit crazy. :)
In truth, I have a process for it that uses dead time.
It's rainy season here in Vietnam and I'm cabbing everywhere. I simply find discussions I care about and write my thoughts in Letterspace in transit.
Copy, paste, done.
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