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Case study: how we reduced loan default using design thinking process in mobile banking app


Maryna Cherednychenko - April 14, 2020 - 0 comments

Until recently, UX and design thinking sounded abstract to me. It seemed to serve only designers or other creative people. But in fact, it is a broad concept that finds use in all spheres of human life. Anyone can apply it in business or personal experience. In this post, you will clarify the idea of design thinking and see how it works on a live example.

What is design thinking?

Herbert Simon first formulated the notion of ​​design thinking in the book “The Sciences of the Artificial” in 1969. Later, the scientists of Stanford University developed the idea and founded d.school. Until now, it is one of the best creative schools that promote the Stanford design thinking process.

There are many explanations of design thinking. However, the Interaction Design Foundation gave the most precise meaning. They define it as a way to understand a user. For that, you have to deny guesses and rethink the problem to find non-obvious alternative solutions.

Principles of design thinking rely on anthropocentrism. It means that you should walk in the user’s shoes before making any decision. The needs of other parties, whether it is boss or project manager, are taking a back seat. Moreover, you should not just assume what the user wants, but precisely determine their motives. For that, you can use any methods, even if they sound silly at first glance.

Product design process steps based on design thinking

There are 5 stages of design thinking: emphasize, define, ideate, prototype, test. Let’s take a look at each step using an example of a real project.

 

Main five stages of design thinking

Five stages of design thinking

 

A few months ago, we made mobile banking for a local Eastern European bank. After that, a significant portion of financial products moved from a physical office to an online app. Along with this, the number of loan defaults also increased. With no need to go to the office for a loan, users stopped communicating with consultants and often skipped reading the loan conditions.

Given this, our client contacted us again. They asked us to place a knowledge base right into the app. Earlier, the documentation was available on the bank’s website, but as practice showed, not all users accessed it.

We agreed that adding documentation is a good idea. Yet, we suggested that it is unlikely to solve the problem completely. Together with the client, we decided to connect more problem solving tools and examine the users’ needs in more detail. Here is what we got.

Stage 1. Empathy

Empathy is the ability to experience events through the eyes of other people. It is not just about knowing, but about feeling others’ needs. Depending on the product nature, the stage may include:

  • observation
  • surveys
  • interviewing
  • expert advice
  • living in a user environment

Good developers are always empathic. They start the UX process with the user in mind and are not afraid to spend more hours on a particular feature. Playing on the client’s side, they win too. If the team studies the question carefully, they choose the right development tools and save time. 

Let’s see how empathy works in building mobile banking UX design.

To better understand the bank’s customers, we agreed to study their credit history and learn the reasons for taking a loan. For that, the CEO of the bank appointed two managers. One of them made a summary of all non-payers. In the report, he showed the amount of the loan and the overdue time. Another manager phoned clients and documented the original purpose of taking a loan.

 

Design thinking banking

We studied the credit history of non-payers

Stage 2. Define

At this stage, it is necessary to organize the knowledge that you received through empathy. You should analyze your observations and highlight critical problems. The purpose is to define the question to which you will seek the answer in the next step. It is vital not to rush and see the root of the problem. For example, if you bake cakes, but nobody buys them, you may need to change the store name, not the product ingredients.

We found out that, in most cases, clients took short-term loans. They did not need a large amount, so they did not bother reading the loan terms. Users wanted to get some money right away. However, in some time, they discovered that repayment conditions were not exactly the ones they counted on.

 

Applying UX design for banking

Users did not bother reading the loan terms

Stage 3. Ideate

The time has come to answer the raised question. Right now, you need to generate ideas – creative, crazy, farfetched – the more, the better. Start thinking outside the box, and don’t be afraid to make a mistake. The most important thing is not to criticize. Criticism may cut off a working solution. You can use the following techniques:

  • Brainstorming
  • Brainwriting
  • Social Listening
  • Role Playing
  • Mind Mapping
  • Worst possible idea
  • SCAMPER

To find the best UX design for banking, we used brainstorming and social listening. We studied the social networks of competing banks and users. Based on the comments, we picked up the most common problems. Having joined them with the reporting data, we came out with the following ideas:

  1. Connect chatbot to interview client before lending
  2. Give out the lower amount than requested
  3. Get a refund guarantee

 

UI UX design in banking app

We came up with various ideas

Stage 4. Prototype

The main task is to check the efficiency of your ideas and build an effective UX strategy. To do this, you do not need to run a full-featured app. It is enough to make a budget version to try the options of purpose.

The prototype will help in any case: whether your decision is successful or failure. With the first scenario, you can refine minor flaws, with the second – refute the hypothesis and save money. If the prototype is successful, proceed to the next step. If not, return to the second step and try to identify the problem again.

Connecting chatbot appeared to be a cool idea. When a user clicked the “Get a loan” button, the bot asked him a few simple questions: the purpose of the loan, desired amount, loan term, monthly income. Based on the answers, the bot offered the best option and explained loan terms. Thus, design thinking in banking removed the need to read long-term conditions.

 

Online banking design UX

Chatbot explains loan terms quickly

Stage 5. Test

In the end, you test the finished product. After internal testing, you can enable beta testing to polish the final version. It may happen that during testing, you identify new problems and start design thinking again. This situation is normal. It does not mean that you have to redo the product completely. You may add new options in a future version. UX design process is a repeating method that helps improve the product at any stage of development.

We implemented several chatbots for the most popular messengers. Also, we connected bank managers to the Chatinoneplace platform. It is a proprietary solution that allows managing all bots in one place. After that, we published a beta version. During the app usage, we identified several minor bugs. Having fixed them, we released the final version of mobile banking.

 

UX design banking app

The last step is to test the product

UX design thinking is awesome

It helps to sort things out, organize thoughts, and find the reason for an issue. Detecting the problem is already half the solution. It does not matter how big your business is or how many members are in your team. If you understand what the client wants, you will succeed. 

With this in mind, we work on projects at Softensy. We’re taking it slow until we get what the client needs. We listen to the partner and come up with our propositions. If you need a good result, contact us. Let’s think out of the box together!

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