Worldwide, the Indian fintech industry ranks number two in deal volumes, attracting funds comprising 14 per cent of the total global funding. As per the Government’s Invest India portal, the country’s fintech market opportunity is anticipated to touch $2.1 trillion by 2030. As the nation’s second-most funded start-up segment in 2022, Indian fintech firms raised $5.65 billion. Meanwhile, the overall number of unique institutional investors in this space nearly doubled from 535 to 1,019 between 2021 and 2022.
These stark statistics give some idea of the ultra-competitive environment in the domestic fintech landscape. In such a scenario, fintech players must deploy unconventional means to stay one step ahead of the innovation and digital disruptions curve.
Envisioning with empathy
In this context, design thinking has emerged as the need of the hour. At the outset, it is important to elaborate on what the concept is all about. As a problem-solving process, design thinking can be loosely equated with the practice of reverse engineering. In essence, rather than first creating a new product and selling this to customers, companies begin by envisioning the needs and wants of people.
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To do this appropriately, companies must place themselves in the customer’s shoes and imagine what he or she requires, values and priorities, and then work backwards in creating this product or providing the relevant service. Consumer needs can be ascertained by speaking with relevant target audiences, conducting surveys and/or other relevant methods. In some cases, companies may need to decipher unmet wants or address any gaps in the current service provided.
In other words, design thinking entails a human-centric focus on making goods that can be used by consumers after integrating insights about their requirements. In doing the above, empathy remains the overriding prerequisite to achieving this objective. Considering the frenetic pace at which products and services are innovated and introduced in the fintech industry at periodic intervals, it goes without saying that design thinking can play a pivotal role in the success of these start-ups.
Determining the requirement
Once the consumer need is clear, fintechs should determine or define what is required to be done. Here, one must be sure about the problem or challenge to be overcome and what is the expected end outcome, depending on the insights gained from prospective customers.
It is imperative to spend time defining the precise problem and then providing curated solutions or products. That is how BNPL (buy now, pay later) products were introduced as a winning proposition for both buyers and sellers, ensuring consumers could purchase items without having to pay for them immediately.
Ideating the requisite solutions
Ideation is the crucial stage wherein ideas are obtained by engaging with industry experts or brainstorming internally. To generate exciting ideas or potential solutions, participating persons must be allowed to give free rein to their thoughts and suggestions without deriding any of them. Some of the most innovative ideas emerge when team members are permitted to voice their opinions without fear of being ridiculed.
Prototyping for winning solutions
A first or preliminary model of an item is termed a prototype. The subsequent or final form of a product is derived or copied from the prototype. This early model can be used to experiment or validate the idea with actual users. If the prototype solves a consumer problem or performs well, only then do companies need to make major investments in developing the final version.
Testing the improved or final version
Once a prototype has been used to test the waters, an improved version can be introduced in the market. By adhering to this process, fintech firms can save much time and money that may be lost when their products fail to gain market acceptance if launched directly without prototyping and testing. For instance, testing the prototype of a financial app could help fintech firms assess its strong and weak points. These could then be rectified by incorporating consumer feedback and suggestions before launching the final product in the market.
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By following these five steps of design thinking, fintech start-ups can ascertain that their product or service is good enough to address the problems or pain points of customers. The chances of success are then higher in this way as fintech firms remain focussed on finding relevant solutions for people’s real or current problems. Although these steps are mentioned sequentially, with one leading to the next, great teams will often be going back and forth across these steps with the ultimate goal of finding a solution that solves a real problem.
Since design thinking is driven by feedback, insights and recommendations from consumers, it helps in generating ideas, producing products or providing services that are relevant to the target audience. In India’s hyper-competitive market environment, fintech firms that master the art of design thinking stand a much better chance of providing greater customer satisfaction through innovative ideas and novel services that tick three key boxes – scalability, sustainability and viability.
Views expressed by Jayant Varma, Director and Head of Product, mPokket
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