The finance industry is in a state of upheaval. Shifting global regulations, increasing competition from fintechs, and tech giants like Apple and Google Pay entering the finance space is forcing traditional financial firms to rethink their business model or risk losing traction in the marketplace. Since the great financial crisis, the financial services sector has been living on borrowed time.
For some firms, their business models are being upended by fintech start-ups. For others, their increasing irrelevance to the under-banked or non-banked, means that they are struggling to capture the attention of large portions of society.
This has put incredible pressure on industry players to embrace digital transformation efforts and to create more agile environments through innovation labs and digital projects that will help them adapt to a more digitally savvy customer base. Last year, global banks invested $9.7 billion to enhance their digital banking capabilities, with many shifting dramatically away from brick and mortar offices to focus on digital experiences. Wells Fargo, for example, cut $2 billion in the last few years by closing branches and expanding its digital services; Bank of America now receives more deposits from mobile channels than in physical branches; and European banking giant DNB, has closed 70 percent of its branch offices, while investing significant sums in digital projects, including its Vipps mobile banking app, which is now used by more than three million Norwegians (roughly 60 percent of the country
How to Make it Work
Though making this transition requires more than shifting resources from branch offices to digital projects. These institutions need to adopt new ways of doing business and engaging with employees and customers, which is something that doesn’t come easily to this staid and risk averse industry. A recent survey from Deloitte found that financial services organizations have been slow to adapt their digital experiences to create an emotional connection with customers. The authors argued that if they want to appeal to consumers, they have to restructure their operations by focusing on the different stages of the customer interaction.
They can achieve this transformation by embracing a design thinking ethos that helps them put customer needs at the heart of every project, and creates space and platforms where project teams and end users naturally interact.
Everyone is Talking
Finance industry experts are increasingly touting the benefits of design thinking as a tool to address the many challenges the industry faces. In 2018 alone, Financial Brand magazine called design thinking “the hottest new trend in banking”; global consulting firm Oliver Wyman, called said it was “The New DNA of the Financial Sector;” and digital banking firm Nelito argued that design thinking is “shifting bank operations away from ‘managing’ and more toward innovating”. We also saw executives across the industry refer to design thinking directly articles and speeches, and overtly when they repeatedly referred to the need for more customer-centered decision making, and taking a user-centered approach to their design strategies.
It’s clear that industry leaders recognize the link between design thinking and the ability to adapt to changing customer demands. And the banks that haven’t gotten on-board need to get started. Unless there is a fundamental re-thinking of what finances, financial services, banking, and capitalism mean to the broader public, existing finance industry stalwarts will have their world upended.
The case for human-centric approaches has never been stronger, especially as the finance sector seeks solace in robo-solutions and the opportunity to foster self-help at the expense of human understanding. Otherwise, technology misapplied to human needs will continue to fail.
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