Design Thinking - Princeton Mortgages

Recently, I heard someone say: “You must fail quickly and cheaply in order to learn and succeed”. These words were uttered by an expert in design thinking when talking about the need to experiment with possible solutions to problems. Design thinking is an iterative process to finding solutions and requires a deep empathy for the end-user.

Design thinking has been defined as “matching people’s needs with what is technologically feasible”. Put simply, it melds product design with human behaviour. Steve Jobs was a proponent of design thinking and this enabled him to come up with game-changing innovations like the Apple iPod. Jobs believed that design simplicity should be used to make products easy to use.

Cirque du Soleil also used design thinking to produce a breakthrough innovation. The Canadian entertainment company redesigned and repackaged the traditional circus. It created a better audience experience that is more like a sophisticated and comfortable night out at the theatre – a far cry from sitting in a cramped and smelly circus tent of old.

Businesses are increasingly using design thinking to deliver profitable, customer-focused experiences. But finding desirable solutions for customers using design thinking is challenging. It requires a business to look at what it does from the outside in by starting with the experience coveted by the end-user – and most businesses find that paradigm shift confronting.

But deeply understanding the person or people for whom you are designing a solution can deliver transformational change. Customers must be at the heart of every business process and decision. Design thinking reframes problems through the eyes of the customer.

Financial services institutions are now embracing design thinking and this is producing some novel solutions. An example is Bank of America’s Keep the Change Program. This was designed after the bank sent researchers into the field to observe how a customer segment behaved when spending money.

The researchers tagged along as mothers shopped and discovered that their target audience – baby-boomer women with children – rounded up their transactions for speed and convenience. The team also found that many mums had difficulty saving.

The bank presented the findings to a cross-functional team which ultimately came up with a new product. The bank launched a special Visa debit card that rounds up purchases to the nearest dollar and transfers the difference to the cardholder’s savings account.

The convenience and ease of rounding helps BOA customers to save money over the long run. This automatic and invisible way to save is a win-win for the bank and its customers. The bank is reported to have attracted millions of new customers and billions in savings for them.

Another example of the successful application of design thinking in banking is Wells Fargo. Some years ago now, this US bank redesigned its ATMs to create a superior user experience. The system learns what you normally do at an ATM and provides shortcuts to make routine transactions happen with a minimum of fuss.

Using predictive analytics, Wells Fargo’s ATMs provide customers with an array of touchscreen buttons, based on their previous transactions and preferences. The screen layout is faster and easier with the new interface offering customers a customised experience.

There’s no doubt that design thinking is an effective protocol for solving problems and discovering new opportunities. Financial institutions need to remember that customers are humans, not numbers. Finance, money and banking are part of our daily lives and those institutions that make the human connection easier will be the winners.

All business of course could learn from these experiences

Now there’s some food for thought!

Sincerely
John (JT)Thomas

This opinion piece is provided by John (JT) Thomas, a 48- year veteran of the financial services industry and since 1987 a specialist in commercial mortgage funds. Considered by many to be the father of the modern commercial mortgage fund sector, JT helped establish and then managed – for 17 years – what became the largest and most successful commercial mortgage fund in Australia – The Howard Mortgage Trust – with assets exceeding $3 billion. Under JT’s stewardship, investors never lost one cent of their investments and indeed, investors always received competitive monthly returns. JT was also Chair of the $40 billion mortgage trust industry sector working group.

JT has been proudly involved with Princeton for nine years and sits on both the Princeton Credit Committee and the Princeton Compliance Committee as well as being an advisor to the Princeton Board.

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