Fail Early And Often With Design Thinking For Retail Banking

using design thinking for banksWe all know that many banks struggled during the last financial crisis and some major players are no longer in the game. The banks that survived the dramatic downturn now have to answer questions about how they’ll differentiate themselves to gain a competitive advantage.

Banks that survived the crash were adept at optimisation, but although optimisation may have helped banks avoid insolvency, it’s not a differentiator. To differentiate and keep shareholders happy, banks need to be able to innovate.

So how can banks shift from an optimisation-centric approach to one that balances optimisation and innovation?  From experience we’ve found the Design Thinking model is an ideal way to promote innovation.

Design Thinking is a methodology for creative problem solving. It brings people with different backgrounds together to think about issues and explore solutions in a coordinated way.  Design Thinking enables us to understand both human and business needs from the very beginning of a project, investigates options exhaustively and ultimately creates the best possible solution.

Deutsche Bank for example has already built its own design thinking division to solve complex business problems. You don’t have to go that far.  Design Thinking can be applied as an end-to-end process, or in part for specific element of a project. For example, we can work with banks to apply Design Thinking in a business process redesign project, where prototyping will help us to evaluate process alternatives and get direct feedback from different stakeholders to improve the process prototypes in an iterative approach.

From my experiences as a Design Thinking facilitator and a banking consultant, I’ve found that Design Thinking is not a silver bullet, but used in the correct way and in the correct context, it has the potential to help banks to successfully evolve and become innovative.  The projects that use Design Thinking most successfully all have three core things in common:

  • Specific and well-defined design challenges
  • Diverse team setups
  • Fast prototyping

Although Design Thinking offers a good way to encourage banks to be more creative and innovative, there’s a more fundamental question that we need to consider. Do banks have the ability and willingness to innovate and evolve? Or does a combination of regulation and corporate culture mean that banks see innovation as a fad and will soon retrench into the old habits of slash and burn optimisation?

Ismail Serin is working as a Banking Consultant in the Business Transformation division of SAP focusing on analytical banking and big data solutions.