click to get service View profile
Learn how to apply Design Thinking in FinTech to enhance user experience, boost innovation, and create customer-centric financial solutions. The FinTech market is growing rapidly, but not all companies succeed. Often, businesses prioritize their goals over end users – the very people their products are meant to serve. As a result, users struggle with bureaucratic labyrinths and seek simpler alternatives.
Design thinking offers a human-centered approach instead that puts people first.
This article explores how Design thinking in FinTech can harmonize business goals with customer needs through empathy, iteration, and simplicity.
What Is Design Thinking in FinTech?
Design thinking is a creative problem-solving process centered on understanding user requirements. It involves observing users and uncovering their unmet needs.
Design thinking in FinTech (as well as any in other industry) relies on rapid prototypes – a quickly produced, often simplified product versions, created for testing and validating a future solutions. Rapid prototypes are produced in iterations and get more refined over time based on user feedback.
The iterative nature of prototyping allows you to put new concepts in front of users in days rather than months. But this is just one of many other benefits of Design thinking in FinTech.
The Main Benefits of Design Thinking in Fintech and Banking
“In today’s highly competitive banking sector, developing products from scratch without any prior knowledge or hypotheses about your users can be an exceptional challenge.” That’s where design thinking kicks in.
It shifts the focus from merely ticking off business goals to crafting experiences that solve human problems. This shift brings the following advantages.
1. Avoiding Wasted Investment
Testing early makes failure inexpensive. With Design Thinking in FinTech, potential product or feature failures are identified early through rapid prototyping and user testing. This approach allows teams to pivot or abandon ineffective ideas before investing significant time and resources, ultimately preventing costly mistakes and ensuring innovative, user-centric financial solutions.
2. Discovering the Right Problems to Solve
Observing real customers reveals their friction points. Design thinking in FinTech highlights issues that may not be obvious from a business perspective. For example, users might want the flexibility to generate a bank statement for a single transaction, not a statement containing all transactions made within a given day.
3. Aligning Earning Opportunities with Customer Value
Charging for ATM access or sending SMS for a fee may provide a short-term income boost but can come across as unnecessary to users.
Instead of relying on fees for basic services, Design Thinking in FinTech uncovers smarter revenue opportunities by addressing real user needs. For example, rather than hidden charges, customers may willingly pay for value-added services like access to licensed financial advisors or personalized reports on their financial habits and trends, enhancing both user satisfaction and business growth.
4. Lowering Customer Acquisition Costs
Acquiring new customers is more expensive than retaining existing ones, especially in banking: changing financial service providers involves earning trust and overcoming inertia.
Design thinking can lower customer acquisition costs. Products effectively addressing user pain points generate word-of-mouth referrals and loyalty.
5. Attracting Partners and Investors
McKinsey reports that banks have struggled to attract investors in recent years, becoming the lowest-valued sector globally in 2021. The reason is that most traditional banks have been slow to embrace cross-industry partnerships compared to other industries. It clearly shows that institutions clinging to closed, legacy ways of work will continue to be undervalued.
Fortunately, Design Thinking in FinTech offers a clear roadmap for innovation, helping financial institutions align their goals with investor expectations while staying customer-centric. By embracing this approach, banks can enhance adaptability, improve user experiences, and position themselves for long-term success in an evolving financial landscape.
If you’re ready to reap the benefits of the human-centered approach, let’s figure out how to proceed.
The Process of Design Thinking in FinTech
Design thinking in finance requires a creative yet structured process for FinTech innovation. It must keep the end-user front and center through each of the five phases of the Stanford design thinking process:
The Stanford Design Thinking Process.
Phase 1: Empathize
The first stage focuses on gaining empathy for users. Rather than making assumptions, design thinkers should directly engage with customers through interviews, surveys, and observations.
The advise combining interviews with user testing sessions. This way, you can speak with your users’ about their frustrations and desires and simultaneously observe points of confusion in practice as they use the platform.
Experts recommend segmenting users based on their familiarity with the industry. Design Thinking in FinTech emphasizes understanding both newcomers and experienced users to create more tailored solutions. For example, an investment app can conduct in-depth interviews with novice investors and seasoned traders to develop features that cater to their unique needs, ensuring a seamless and user-friendly experience.
Phase 2: Define
Next, design thinkers make sense of what they’ve learned by framing the core problems. For the investing app, key issues may be simplifying trading for newbies and providing personalized recommendations for experienced investors.
Phase 3: Ideate
During the ideation phase, Design Thinking in FinTech encourages generating a wide range of creative solutions, without limiting innovation. At this stage, no idea is too unconventional. For an investment app, this could include an interactive chatbot that educates users on investing basics or advanced projections of long-term returns linked to key life events, such as retirement, ensuring a more personalized and insightful financial experience.
Phase 4: Prototype
The next step in Design Thinking in FinTech is transforming the most promising ideas into prototypes. At this stage, designers create simplified MVP versions to test core concepts—focusing only on essential features without unnecessary complexity. For an investment app, this could mean developing a basic chatbot for financial education or an investment planning tool to assess usability and effectiveness before full-scale development.
Phase 5: Test
Design thinkers introduce the prototypes to real users to see what resonates and what needs work. Testing may show the chatbot is user-friendly, but the retirement projections fail to account for personal risk tolerance. The company can then use the input and further iterate on the planning tool.
In the fast-paced world of FinTech innovation, Design Thinking in FinTech is often seen as a game-changer. However, implementing a human-centered approach comes with challenges, such as analysis paralysis or overcomplicating solutions. To overcome these obstacles, financial institutions should follow clear principles that ensure a balanced, efficient, and user-focused design process, driving real impact in the industry.
Fundamental Principles of Design Thinking in FinTech
Adopting key design thinking guidelines allows you to create impactful products that win over customers. Here are four principles to implement.
1. Create Experiences, Not Just Products
Traditional business thinking focuses on maximizing features and functionality. However, this approach often misses the mark for FinTech products. FinTech is complex, with many specificities across different sub-industries.
Design Thinking in FinTech goes beyond just functionality—it prioritizes what truly matters to users. Instead of overwhelming them with countless features, this approach focuses on deep user understanding to deliver meaningful solutions. Insights gathered from interviews and research play a crucial role in identifying the features that add real value, ensuring a seamless and user-centric financial experience.
2. Make Incremental Progress, Not Instant Perfection
Don’t strive for perfection from the outset. It can cause ‘analysis paralysis,’ where teams keep evaluating potential solutions but never move forward to validate market fit.
In contrast, Design thinking in FinTech relies on iterative prototyping and user testing cycles. You must acknowledge that the first product may not be perfect, but the final will. This incremental development keeps teams grounded in reality rather than detached in a bubble when they generate ideas that may not even be needed.
3. Stay Empathetic Yet Rational
Business decisions are often made based on rational factors like costs and efficiency.
Within design thinking in banking, empathy for the user perspective is equally crucial. By balancing qualitative understanding of emotions with quantitative evaluation, FinTech companies can create products that make logical—and emotional—sense.
4. Seek Simplicity While Addressing Complexity
FinTech solutions often grapple with challenges like security, compliance, and data integration. Traditionally, complexity is met with even more complexity. However, Design Thinking in FinTech embraces simplicity—breaking down intricate systems into intuitive user experiences. This approach ensures a seamless balance between security and functionality, making financial products more accessible and user-friendly.
Now that you know the key design thinking principles, check out the examples below to see them work in practice.
How Is Design Thinking Used in the Financial Sector?
By integrating empathy, iteration, and simplicity into their design processes, these FinTech disruptors have produced products that truly resonate with consumer financial needs.
- Bank of America has embraced AI to gain an in-depth understanding of customer needs and expectations. This innovation drives their most popular solutions: Erica, an AI assistant; Zelle, a digital payment app; and Merrill Guided Investing, an online advisory program.
- Affirm, a FinTech company that provides point-of-sale financing and online payment solutions, is committed to improving lives over profits. Their CEO says they will always take the more difficult path if it means benefiting people. Affirm offers an intuitive app and website so customers can easily manage payments. Their browser extension helps shoppers estimate costs to improve their shopping journey.
- Petal, a financial service company, aims to expand credit access through using alternative data like cash flow. By collaborating across the industry, Petal seeks to evolve credit systems to help consumers “build credit, not debt.”
Ultimately, these cases illustrate that design principles combined with technology can create products that seamlessly blend utility and meaning.
Conclusion
The FinTech revolution has brought countless new products to enhance how people manage their financial lives. However, creating digital solutions that truly resonate with consumers requires more than just technical competency. It demands deep empathy for user perspectives and creating experiences, not just functional products. This is where Design thinking in FinTech comes in.
The path forward is collaborating with professionals adept at design thinking and its agile, collaborative process. Instead of getting frustrated when iterations falter, the right mindset is to enjoy the process of exploring real consumer needs. Qubstudio has a proven track record and deep expertise in leveraging design thinking in banking to develop digital financial products that can excite your customers.