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New research explores design thinking in the financial sector

Oliver Wyman and IESE Business School in Spain, recently released a report – Design Thinking is the New DNA Of The Financial Sector which emphasises the power of design thinking in boosting banking sector growth at a time when de-banking is seemingly imminent. The report addresses how innovative new capabilities and processes derived from Design Thinking might be applied to the financial sector by reviewing a relevant case study, and identifying possibilities to leverage the design thinking process to capture additional profit pools.

The newly published report – Design Thinking is the New DNA Of The Financial Sector: How Banks Can Boost Their Growth Through Design Thinking In An Era of De-Banking – is the result of collaborative research efforts carried out by international management consulting firm specialised in banking and financial services – Oliver Wyman, and IESE Business School, international graduate school of Spain’s University of Navarra, which offers MBA and Executive programmes that frequently rank among the top ten in the world.

The cooperative study set out to deliver a precise, evidence-backed answer to the question, “What are the main constraints on the application of Design Thinking in the banking sector; how should it be applied?”

Concern is growing within the banking world for risks posed by the fintech start-ups that are challenging the incumbents. In today’s economic environment, banks have become increasingly interested in adapting and evolving their business models to cope with these challenges and seize the new opportunities that are arising. Design thinking could serve as a useful tool to help banks in these endeavours.

Dieter Staib, Partner, Oliver Wyman: “The banking sector is going through a period of disruption, but this not the end of the industry. Instead, this disruption marks the genesis of the banking sector’s new DNA: a combination of changes in business models, agile execution, and Design Thinking.”

The introduction of the report highlights the uncertain future of the banking sector, asking whether the end is near, and what banks can do to boost growth. Innovation is then introduced as a promising solution, and a segue into the first part of the report, called Design Thinking at the core of innovation. In this first part, the Design Thinking concept is presented in a framework, and a comparison to traditional business thinking is provided. Also covered are the potential applications in financial services, as well as the key challenges that the sector will need to overcome to be able to successfully apply Design Thinking. The second part of the report focuses on the process of applying Design Thinking, reviewing the case of the National Australian Bank, among others.

Research methodology

To create structure and context for the analysis, researchers began by reviewing the relevant literature available, such as business cases and studies, some of which are cited as references in the report. In addition to this explorative literature research, 17 companies (out of an initial pool of 47) were analysed in greater depth – an arduous process that involved gathering publicly available online data about each of the companies and their initiatives related to innovation and Design Thinking. Relevant media articles were then collected using the Factiva database.

Subsequently, analysis of data was conducted using financial data and numerous global indexes, such as the Orbis database. Images of innovation labs and other items associated with the Design Thinking process that the teams had used to make improvements were also gathered. Eventually 17 cases from 11 countries were selected from the pool of 47 analysed banks. Of these 17, five banks had revenues in excess of USD 70 billion. The selection was based on a variety of criteria, for instance the amount of revenues / assets, location of the company’s headquarters, level of performance in applying Design Thinking, and so forth. In this way, researchers were able to ensure a diversified sample for analysis.

In addition to this extensive analysis, researchers also met with eight separate groups of senior executives. Each group, all of which included between three to eight people, were presented with a management challenge to solve in 60 minutes using Design Thinking Dynamics. In each of the sessions, a meeting facilitator and a researcher monitored the groups. The research member gathered feedback during and after the meetings, which was essential for identifying the eight most common challenges in the process of Design Thinking.

Banking & design thinking: a promising future

The report concludes by emphasising that, ‘De-banking is not the end of banks, but the beginning of design thinking. Design Thinking improves user experience, resulting in a positive impact to customer relationships. Likewise, it benefits the value proposition of the banking business model, and can help to generate a sustainable source of revenue growth. The image pictured below visualises and briefly details the challenges and solutions for applying Design Thinking that have been outlined in the report’s conclusion.

For detailed findings of this research study, refer to the report by Oliver Wyman and IESE – Design Thinking is the New DNA Of The Financial Sector: How Banks Can Boost Their Growth Through Design Thinking In An Era of De-Banking – by clicking here.

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