The financial industry has a problem. It needs to be more innovative in order to compete with fintechs, digital banks, and other forms of technology-driven financing. Fully 81% of bank CEOs say they are concerned about the speed of technological change — more than any other industry sector. These executives know they need to adapt but they don’t know how to go about it.
Many industry analysts believe design thinking could be the answer.
Financial services firms have never been known for being customer-centric. Their “design goals” tend to revolve around driving bottom line results, meeting regulatory requirements, and delivering operational efficiencies. That was fine when there was little competition in the marketplace, but now they have to do better.
What Analysts Say
In response to this creativity crisis, finance industry experts, executives, management consultants and journalists have been raving about the benefits of design thinking to help shake up the bottom-line driven culture in these firms.
Here are a few examples of what they have to say:
Michael Sims (former) research analyst for the American Productivity & Quality Center (APQC), called design thinking “a proven innovation tool that puts the customer’s needs first,” in his piece: How Design Thinking Can Help Finance Professionals Achieve their 2018 Goals. He believes these practices will help the finance function address its top two priorities:
Implementing new technologies and capabilities
Identify and implement best practices
He added that of all the elements of design thinking, developing empathy with customers is where financial firms have the most potential to benefit.
The Financial Brand called design thinking the hottest new trend in banking. “When you don’t use design thinking, you risk creating a product that — by all measures — may look great and might be technologically advanced… but ultimately fails,” wrote Lisa Joyce in this finance industry publication. She noted that design thinking is “big with technology firms who tend to focus first on the consumer experience,” and that financial firms need to follow suit if they want to compete.
In the article, she shares several examples of financial institutions that are already implementing design thinking strategies and innovation labs to overcome their inability to put customers first.
A March 2018 piece, authored by financial tech firm Nelito Systems, argues that when finance industry professionals talk about creating a better consumer experience, and thinking like a startup, what they are really talking about is design thinking. The author noted that design thinking is helping bank leaders shift their operations from “managing to innovating,” and that the current course of disruption hitting the banking industry marks the beginning of a new era: “a mix of advances in business models, agile execution, and Design Thinking.”
Even back in 2016, the Association for Financial Professionals (AFP) was encouraging its members to embrace design thinking strategies as a way to be more competitive. “CFOs and the people who report to them need to start thinking and acting like visionaries—the way many artists, entrepreneurs and inventors do,” wrote Jim Kaitz, president and CEO of AFP, in his article Finance Leaders Need to Embrace Creativity. And Fast!
In the piece, he urged finance professionals to be open to big ideas and using innovative techniques and technology to solve customer problems. “Whether it’s leading-edge analytics or design thinking, inculcate a culture of creativity and experimentation by dabbling with new techniques and methodologies,” he said.
The message is clear: to stay competitive, financial services firms need to evolve and that includes using design thinking to drive innovation. These methods can help the industry adopt a more creative approach to idea generation that will ensure every new product they design delights customers and as a result will drive better financial returns.
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