Design Thinking Solutions For The Issues Encounter By Financial Institution
Assessment guidelines and marking:
You will conduct the early phases of data analysis and ideation in a team with others. This team is called a 'Flexible Collaboration Team' (FCT). As opposed to a CLN group, FCTs may be fluid in their composition: their purpose being to facilitate the sensemaking process dialogically, while honing development of collaboration skills.
You may develop one design thinking solution (only) from the list developed in your ideation session(s) with your FCT. You can take as much or as little as you like from the original idea, and change/iterate it, as long as you clearly show the original idea and the development pathway that you've undertaken. Please see your instructor if you require further clarification around concept development.
Part 1: Introduction and context-setting (approx. 1 page)
• review key issues/opportunities
• articulate a problem statement to solve for
• articulate your chosen HMW question
• introduce/list the members of your FCT group
Part 2: Ideation process (approx. 2–3 pages)
• provide evidence of your ideation process (i.e. photos, notes)
• offer brief commentary on the process (collaborating with FCT group on synthesis/ideation, how you found the process)
Part 3: Concept prioritisation and selection (approx. 1 page)
• provide evidence of your prioritisation and selection process
• explain rationale regarding concept selection from a lens of Human-centred Design (HCD) - improving the user experience and/or meaning derived.
Part 4: Concept/solution pitch
• concept poster
• accompanying discussion and relevant supporting materials to illustrate theconcept/solution/idea • be creative – you have many options available to you in this stage (if unsure, please speak to the instructorin order to clarify what types of supporting presentation material strengthens your case) Part 5: Conclusion
• rough costing/budget
• write a brief desirability, viability, feasibility (DVF) analysis
• review your idea persuasively, as if you were vying for your concept/solution to be chosen from a number of different design teams (Why is this important Why will it work)
• outline potential next steps (if this idea were to be chosen)
Part 1: Introduction and context-setting
This report is going to address the issue and the challenges that a financial institution usually faces. The report will draw on the concept of design thinking to develop a framework, product, or service to resolve those issues and bring financial stability. The report uses a comprehensive set of information from previous assignments to develop the necessary ground to articulate a suitable solution. The purpose of design thinking for a business problem is to follow a set and effective pattern and mechanism to identify the problem, understand its impact, and ideate a solution for it. The solution that will be proposed in this report will be theoretically evaluated and propagated through various literary and academic sources. Since the problem associates academic purview with the technological utilization of big data and artificial intelligence, the solution will be developed as an alignment of both the domains. Many banking institutions have already employed AI- based solutions to determine the credit score and identify potential defunct customers. But the objective of this report is to expand the purview of solutions to include all banking operations and complete virtualization. The requirement for virtualization was identified when people were unable to visit banks for various purposes due to COVID-19.
Key Issues and Opportunities
The necessity of thinking about financial reforms came into consideration when the financial crisis of 2008 took place, when human intervention allowed the flaw in a system to inject huge amounts of money into real estate. Further, the US government provided money to the distressed banks to bail them out. Later, they were regarded as ‘too big to fail’. So, taking lessons from the past and nurturing the concept of nurturing financial stability drives the concept of design thinking to formalize a solution to inculcate some frameworks or mechanisms that can inculcate a sense of authenticity and prevent any discrepancy in the system. The virtualization will empower the banking institutions, and the automated system will levy more effective control on the financial machinery.
"How might future experiences of personal banking be understood and reimagined for customers in the digital age"
The problem stated above relates to the rising number of people choosing to have a bank account. Also, many people nowadays are looking to have multiple bank accounts for different purposes. One can also see the rising number of credit cards, where each of them relates to a particular purpose of usage. This shows the expansion is pushing the banking infrastructure to be more accountable and careful about all its operations. It is necessary to revitalize the financial institution to sustain such a level of expansion.
Analysis of Problem
The necessity of virtualizing financial institutions is to expand the reach of banking institutions to the people and, at the same time, to address the development of robust structures that could prevent financial crises. Human intervention cannot be administered completely, as it has been seen many times in the past. When everything is digitized, then there will be no human intervention in procedures, which will eliminate any kind of goof up that could occur from human error or even an intended crime. The notion of design thinking to address the problem is to evaluate the various elements of the design thinking process and how they can be utilized in developing the framework for future institutions. The exploration of problems will be done through an emergent strategy, and it will help with consistent learning and further development.
Part 2: Ideation process
The global financial crisis has proved that the large banks had a higher risk of failure in their operation and working. Although, government bodies backed them with heavy amounts and investments collected through the taxpayers. The aid provided was crucial as these banking sectors were supporting leading manufacturers and producers in the world whose collision would disrupt the overall functioning. However, the method accomplished for the help does not seem satisfactory to the people. Collecting and investing people's money into other sectors at the cost of public objectives was unacceptable. Therefore, it became necessary to enhance the financial stability of the finance sector to ensure that the people's money gets utilized for specific reasons. The covid-19 pandemic has already hit people hard with finance and job crisis, and the failure of big finance sectors increased the people's concern and questioned their performance (Mohamed and Romouzy-Ali).
Surveys and interviews from people from different sectors clarified the thinking over the matter. The world has never felt the same crisis where large banks failed. The banking sector needs to adopt new technologies to compete in the modern market. Artificial Intelligence (AI) has begun acquiring our day-to-day activities, where people can perform multiple tasks with just simple clicks and voice commands. Large banks need to adopt the technology to enhance their efficiency and performance and reduce the risk of failures. AI programs allow better planning and control strategies, analyzing every possible structure bank can follow. The reference implementation allows selecting the best suitable pathway for higher efficiency and better productivity. Also, AI allows better network growth with digital expansion. People are now dependent more on the digital and internet world. AI programs analyze the customer needs and target the exact audience that can help sector growth.
The absence of digital communication in the banks has increased the gap with the customers. The journey map development clearly outlined the biggest drawback experienced by these banks as the lack of interaction. The virus spread has stopped the customer visits to the bank. Therefore, people lost the medium to communicate with the authorities and obtain services. Modern organizations came out of their well-established comfort zone into a competitive market, where the use of advanced technology became a compulsion.
Unlike before, people can now explore various companies and organizations for attaining required services. Banks and financial organizations need to work together with public sector companies to increase their market and customer reach. Like, if someone wants to purchase a house, people can explore online websites to search different properties at their desired locations. Banks can collaborate with these companies to provide offers and discounts on housing loans. It would bring more customers and resolve the issue for people to visit different bank branches for better options. Extra discounts can be made available for higher customer acquisition. Moreover, they can use AI models to target their audience and streamline progress. These models can help select the best offers made for an individual, satisfying both the customer and the organizational needs (Gomera and Oreku, 2020).
Before pandemic, banks and financial services have operated on a set procedure where customers visit the branch to obtain solutions for their problems. Globalization and pandemic have forced people to shift to the online platform with AI-driven programs for better and immediate resolutions. Since the customer interaction reduced significantly, the pandemic forced the banks to modify their strategy and adopt new trends. Collaboration and working with the FCT group will help the bank to get more clients. Moreover, it will increase the public reach and popularity of the offers provided.
FCT is one of the leading companies that helps people in property trade, real estate, and private equity dealing. It has already developed an intense mechanism that helped in immense growth and public reach. The company allows its customers to get the best deal for the required properties and equities. Banks can develop a co-working strategy, where it collaborates with the FCT group to provide better offers to their customers and increase their revenue. Many people willing to invest in properties, real estate, and equities fail due to a lack of funds. During the pandemic and afterward, when the financial market was shaken, there was no stabilized sector for assistance. The collaboration brought new customers to the banks with fewer efforts and higher interests. Banks can put links to allow people to open their accounts and get easy loans for the buyouts (Dam and Siang, 2018).
The collaboration increased the importance of retail banking or personal banking among people. Earlier, people went to banks and submitted documents for every paperwork request and processing. People can open, manage, and close their bank accounts from their smartphones. Modern features to operate the bank account and submit essential documents digitally improved bank process functioning. It also immensely improved loan sanctioning, money deposit, and withdrawal procedures. Also, it gave growth opportunities to fintechcompanies, which established newly into the market with modern ideas and concepts. Such companies improved the customer service and experience by resolving the primary issues encountered. These companies became a gateway between the customer and the bank, bypassing various troubles and charges dealt by the customer (Indriasari, et al.). The primary reason for building and digitizing the operation is technology advancement. Personal banking became an urgent necessity for people, and if not fulfilled by the bank, different companies could have hampered their marketing. The demand and need of people forced the authorities to adopt new technologies such as AI for the analysis and functioning of their system. It helped in protecting long-term economic self-sufficiency and minimized the upcoming chance for a financial crisis. The new machines and programs have higher accuracy and better functionality, suggesting highly impactful changes that benefit the organization. The customer now themself in the operation seat can have a clear view of what's happening around them. The program divides people into different groups, and the bank can focus and provide attractive offers to the specific groups satisfying their needs. It increases the success ratio of the organization for turning a higher number of people in minimum effort.
Part 3: Concept prioritisation and selection
Evidence of Proposition
Interviews performed with different people clearly stated the interest and needs of people from the modern banking sector. In every interview, people suggested the bank follow modern technology and new strategies to improve their performance. Many privatized banks entered the sector with strategies resolving the primary issue dealt with by the people. They focused more on making things digital and advanced. Many fintech companies operate in the market with public offices or branches. The overall operation of such companies is online through the internet and network built by the company (Sohaib, et al. 2019).
The empathy map build gave a clear idea for the required departments that need attention. AI programs studied and analyzed the big data for accurate results. Modern banks developed strategies that focus more on what people think and feel. They built platforms where people can perform frictionless and in a manner of their convenience. The amplifications helped in bypassing the existing strategies and made it better and quicker for customers. The pandemic has taught that companies with different approaches and practical methods have a higher chance of growth in the market. Since people spent more time on the internet, it was necessary to resolve their every need. Therefore, the companies that listened and performed immediately to their user response established trust and belief in the public. In order to succeed, banks need to either survive with alternate methods or get a competitive edge over others.
From the banking point of view, the banks need to generate higher profits and margins for their lengthier survival. Since the post-pandemic stage is volatile and market can change anytime if new service technologies come. It is necessary to maintain a gap to withstand the competition and maintain growth. The AI and ML programs helped forecast the long-term views and predict priority needed things. It already predicted the complete digitization of the organization as the best strategy to achieve higher stability in the market. The goal is to make the sector independent and cross-functional with platforms for larger benefits. The role of technology is the highest in achieving the goal. Moreover, the banks should remember that new services should not influence the regular functioning of the people. They need to maintain the organizational culture for customization in the financial industry. However, the issue faced in the current stage is upgrading the servers. During a server update, the bank services temporarily go down, which means people cannot operate, transfer, and withdraw money from their accounts (Melles, 2020).
Rationale BehindConcept Solution
The decisions made by the industry so far benefited both the public and the banks. The user experience improved with digitization as people need not visit the bank branch physically to process their work. Also, it helped in preserving time and energy spent on traveling, fuel, and other resources. The Human-Centered Design (HCD) involves three phases, they are:
1. Inspiration- The pandemic acted as an inspiration to adopt new technologies in the sector that performed so long on traditional methods. The financial crisis experienced worldwide increased the development scope of the banks.
2. Ideation- The primary solution obtained was the introduction of modern technologies such as AI and ML-driven programs. Various interviews and case studies showed that the industry needs to reform its structure to make it more bold and rigid. Big data was used to study and analyze the customers to develop a priority-based model
3. Implementation- Digitizing bank was the most suitable solution to satisfy everyone's needs falling into the domain. The pre-existence of smartphones, the internet, and other devices helped in adapting the service quickly and effectively. The service attracted higher authorities more and increased the investments and funding made into the project. The user experience improved immensely, and customers were satisfied with modern banking.
Part 4: Concept/solution Pitch
The process of design thinking is basically meant to seek resolution for complex issues, create a product or framework, and navigate through the uncertain environment. The notion of design thinking utilizes the core elements such as empathy, creation, play, and experimentation to work upon solutions. The design solution perceives failure as an opportunity to avenue learning and knowledge acquisition. The concept solution advocates for resolving the challenge, not addressing the problem. The challenges here are accountability and transparency. The preemptive judgement of providing credit and loans to individuals cannot be administered completely. There are many exemplary cases, where people have portrayed their ability to sustain the loan and yet banks haven’t provided them. The development of the solution will incorporate an iterative process of understanding the requirement at every step, identifying the challenges and assuming the problems, and redefining them to streamline the solution (Lewrick, Link and Leifer, 2018). The concept of design thinking is to penetrate human minds and dwell upon their ability to comprehend the challenges that could occur. Solution design is largely based on the pattern of thinking and the same is being ingrained in a digital model that works mostly on patterns. The presentation and development of solutions also depend pretty much on thinking out of the box. This means that while developing a solution framework, innovation is extremely important. This brings a few more concepts into play, which are science and rationality. It is very tough to tell rationality to machines but the efficiency of the model can be understood by the efforts to instil a sense of rational thinking in the virtual applications. Up to now, many models are in the market that is used to define the loan taking capacity of someone. But sometimes, these models are not accurate, and human intervention can be more fruitful for customers because of this very rationality (Saidi, 2021).
Design thinking solution for this banking problem is yet far-fetched. There is the various prototype of virtualized financial model that are carrying out one or the other banking operations. But they are not yet efficient. The biggest challenge with this solution is that many models are not accurate. It can be well seen from the fact that with the development of various types of credit cards and personal loans across the globe, the number of successful allocations to the ratio of applicants is extremely poor. The question of feasibility is extremely plausible for customers to ask from banks. As many of such applicants have received loans or credit when directly intervening or contacting the bank, yet the automated digital models failed to do so. From this, it can be said that bringing economic stability and global mechanism, which is smart and streamlined, will take a very long time. These models will have to learn a lot from humans. The concept of banking operations can be governed by rules and standards, but there are always elements in play that are on the line and neither side of it. Such things can be only comprehended by humans and rational thinking. That’s why those models need to revamp and remodified in several iterations to make it accurate and efficient.
The fundamental base for incorporating the design solution for traditional banking problems is Crisis Management Framework. The CMF provides a necessary ground for developing a plan to deal with bad loans or NPA (Non - Performing Asset). The banks need a framework to make everyone accountable, whether it be employees or customers. Secondly, they need to reach out to every customer and digitization give them the opportunity to conduct banking operations and activities on a global level. The concept of design thinking incorporates the art of thinking in an interdisciplinary way. This thing can be administered and analyzed by strategic management. That’s why it is advocated that design thinking and solution development depends largely on emergent strategy. The reason behind this is the notion of emergence which often comes with new information. The solution model needs to be able of learning from those emergencies. The design thinking will facilitate necessary elements for agile software development which could keep track of model development and its feasibility record. The success of digital banking depends on various factors and AI-based applications and forecasting models will play a major role.
Part 5: Conclusion
The budget for this solution will be quite high, and it will take a long time to bring about such a transformation. There will be multiple models, which will be tested one after the other. The development of models and incorporating them into test data in real-time will take approximately 2 years. Infrastructure development and expansion will be the costliest. Given the bank's size and scope of operations, if the bank has 100,000 customers with a total value of $45,000,000, then the financial cost of transformation will be $2.5 to $3 million. This budget is an estimation of all the costs that will be incurred during the development of models up to their final implementation.
Desirability, Viability, Feasibility (DVF) Analysis
DVF analysis is a great spot for innovation. This means that if DVF analysis is in favour, then the innovation can take place and bring the necessary transformation to the required objective. The desirability of this solution is extremely high because the market is already influenced by so many political, social, and socio-economic factors. Secondly, there are several unpredictable events that occur now and then, causing massive disruption in the market. Thus, it is very important to bring about such a transformation as it normalizes the turbulence to some extent. The solution of virtualization is a viable solution, considering the historical cases of financial crisis and various bad loans around the globe. Finally, the feasibility of a new model or framework for financial institutions is doable because the world is already undergoing tremendous digitization and many people are becoming immensely dependent on technology.
The solution to the business problem discussed in this report is largely a reform that is needed to be brought into the market and banking institutions. This reform is targeted to prevent the financial crisis and credit collapse. The solution is dependent on technology, which majorly incorporates the concepts and technicalities of big data, artificial intelligence, and digitization. The biggest impact of these technologies is that everything becomes transparent and everyone can be held accountable for any kind of problem. And the biggest benefit of this solution is that, at least, there won’t be any human intervention that cannot be identified.
Potential Go Ahead
The transformation of financial institutions to become virtual is a big challenge in itself. The banking institutions are transforming each instrument at a time. Let’s say, first they digitized the opening of an account and its procedure, then they digitized credit card facilities, and currently a huge scale transformation is undergoing to compile every payment made digitally. Thus, it resolves various kinds of problems that can be associated with cash handling and it facilitates ease of transaction and commercial activities for customers. Banking institutions can develop one model at a time for a particular functionary of banking and implement it over a course of time.
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Indriasari, E., Prabowo, H., Gaol, F.L. and Purwandari, B., Adoption of Design Thinking, Agile Software Development and Co-creation: A Qualitative Study towards Digital Banking Innovation Success. https://www.researchgate.net/profile/Elisa-Indriasari/publication/357873686_Adoption_of_Design_Thinking_Agile_Software_Development_and_Co-creation_A_Qualitative_Study_towards_Digital_Banking_Innovation_Success/links/61e78c9fc5e3103375a52c0f/Adoption-of-Design-Thinking-Agile-Software-Development-and-Co-creation-A-Qualitative-Study-towards-Digital-Banking-Innovation-Success.pdf
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Saidi, B., 2021. Design Thinking for Promoting Social Innovation in Small Businesses.https://scholar.archive.org/work/f4rwart7ubh2jhq776nqvizu3i/access/wayback/https://ir.library .carleton.ca/pub/28564/Saidi5.pdf
Sohaib, O., Solanki, H., Dhaliwa, N., Hussain, W. and Asif, M., 2019.Integrating design thinking into extreme programming. Journal of Ambient Intelligence and Humanized Computing, 10(6), pp.2485-2492.https://link.springer.com/article/10.1007/s12652-018-0932-y Dam, R. and Siang, T., 2018. What is design thinking and why is it so popular. Interaction Design Foundation, pp.1-6.https://athena.ecs.csus.edu/~buckley/CSc170_F2018_files/What%20is%20Design%20Thinking%20and %20Why%20Is%20It%20So%20Popular.pdf