12.2 Design Thinking and Agile Development in FinTech
7 min read•august 14, 2024
Design thinking and agile development are game-changers in FinTech innovation. They focus on understanding user needs and creating solutions through iterative processes. These approaches help FinTech companies build products that truly resonate with customers and adapt quickly to market changes.
By combining design thinking's user-centric approach with agile's flexible development methods, FinTech firms can create innovative, user-friendly products faster. This powerful combo allows companies to stay competitive in the rapidly evolving financial technology landscape, meeting both user needs and business goals effectively.
Design Thinking for FinTech
Human-Centered Approach to Innovation
Top images from around the web for Human-Centered Approach to Innovation
A user centred, Agile approach to software development | | Aptivate View original
Is this image relevant?
100 Minutes Of Intense Innovation, Or Changing The World In One Class View original
Is this image relevant?
Design Thinking - Guia Rápido View original
Is this image relevant?
A user centred, Agile approach to software development | | Aptivate View original
Is this image relevant?
100 Minutes Of Intense Innovation, Or Changing The World In One Class View original
Is this image relevant?
1 of 3
Top images from around the web for Human-Centered Approach to Innovation
A user centred, Agile approach to software development | | Aptivate View original
Is this image relevant?
100 Minutes Of Intense Innovation, Or Changing The World In One Class View original
Is this image relevant?
Design Thinking - Guia Rápido View original
Is this image relevant?
A user centred, Agile approach to software development | | Aptivate View original
Is this image relevant?
100 Minutes Of Intense Innovation, Or Changing The World In One Class View original
Is this image relevant?
1 of 3
- Design thinking integrates the needs of people, the possibilities of technology, and the requirements for business success to develop products that are desirable, feasible, and viable
- Focuses on deeply understanding users' needs through to create solutions that address real problems and create value for users and businesses
Five-Stage Design Thinking Process
- The design thinking process consists of five key stages: empathize, define, ideate, prototype, and test
- Empathize: Conduct user research (interviews, observations, immersion) to gain an empathic understanding of users, their needs, behaviors, and motivations in the context of the FinTech problem being solved
- Define: Synthesize findings from the empathy stage to define a meaningful and actionable problem statement that frames the right challenge to address using techniques like personas, journey maps, and insight statements
- Ideate: Generate a wide range of potential solutions through techniques (brainstorming, worst possible idea, SCAMPER) focusing on quantity over quality to explore a broad solution space
- Prototype: Transform ideas into physical or digital prototypes (low-fidelity sketches to high-fidelity working prototypes) that can be experienced and tested with users to make ideas tangible, learn, and refine solutions
- Test: Evaluate prototypes with users to gather feedback, refine solutions, and iterate through informal feedback sessions or structured usability studies, using insights to improve the solution and inform next iterations
- While the stages are often presented sequentially, the process is non-linear and iterative, allowing for flexibility and adaptation based on learnings and feedback
Guiding Principles and Mindsets
- Design thinking principles guide the process, including a focus on user outcomes over outputs, collaboration across multi-disciplinary teams (designers, developers, business stakeholders), a bias towards action and experimentation, and an iterative approach to problem-solving
- Key mindsets for successful design thinking include embracing ambiguity, maintaining optimism in the face of challenges, and adopting a beginner's mindset to question assumptions and explore new perspectives
- Empathy, creativity, and a willingness to learn and adapt are critical skills for design thinking practitioners in FinTech
Agile Development in FinTech
Iterative Approach to Software Development
- Agile development delivers value incrementally through short development cycles called sprints (typically 2-4 weeks) to adapt to changing requirements and gather frequent
- Agile frameworks like and are commonly used in FinTech projects to manage work, roles, and artifacts in an iterative and collaborative manner
Scrum Framework
- Scrum organizes work into time-boxed sprints with defined roles, artifacts, and ceremonies
- Roles: (represents stakeholders, prioritizes backlog), (facilitates process), Development Team (builds product)
- Artifacts: Product Backlog (prioritized work), Backlog (sprint subset), Increment (usable end product)
- Ceremonies: Sprint Planning (define goal and backlog), Daily Scrum (synchronize activities), Sprint Review (inspect increment with stakeholders), Sprint Retrospective (plan improvements)
- Scrum emphasizes cross-functional teams, iterative development, and continuous improvement through inspection and adaptation
Kanban Method
- Kanban visualizes work on a Kanban board, limits work in progress (WIP), and manages flow to identify bottlenecks and optimize delivery
- Work items are represented as cards that flow through defined process states (To Do, In Progress, Done) with WIP limits to improve focus and throughput
- Kanban promotes transparency, collaboration, and continuous delivery by making work visible and fostering a culture of improvement
Agile Practices and Principles
- Agile practices commonly used in FinTech projects include user stories (capture requirements), story points (estimation), pair programming, test-driven development, continuous integration and delivery, and frequent releases to gather user feedback
- Agile development emphasizes close collaboration with stakeholders, adaptive planning, early and continuous delivery, and fast response to change as key principles
- Cross-functional teams, face-to-face communication, working software, and regular reflection are also integral to agile ways of working in FinTech
Design Thinking vs Agile Development
Advantages of Design Thinking
- Focuses on understanding and solving user needs, resulting in user-centric products that are desirable and meet real needs (personalized financial advice, intuitive mobile banking apps)
- Encourages exploration and experimentation to generate innovative solutions (alternative credit scoring models, -based payment systems)
- Identifies and mitigates risks early through and user testing to validate assumptions and refine solutions before significant investment
- Facilitates collaboration and alignment across business, design, and technology stakeholders to create a shared vision and understanding of the problem and solution
Limitations of Design Thinking
- Can be time and resource intensive, especially during the user research and testing phases, which may require significant investment and stakeholder buy-in
- Requires a shift in mindset and organizational culture to embrace experimentation, iteration, and learning from failure, which can be challenging in risk-averse FinTech environments
- May not be suitable for all types of FinTech problems, such as those with rigid regulatory requirements (KYC/AML compliance) or technical constraints (legacy systems integration)
Advantages of Agile Development
- Allows for faster time-to-market and earlier value delivery through incremental releases, enabling FinTech firms to respond quickly to market opportunities and customer needs
- Adapts to changing requirements and market conditions through regular feedback loops and prioritization, ensuring that the most valuable features are delivered first
- Improves transparency and alignment through frequent communication and collaboration with stakeholders (demos, reviews), building trust and confidence in the product
- Reduces risk by catching defects and issues early through continuous testing and integration, minimizing the impact of failures and enabling rapid recovery
Limitations of Agile Development
- Can be challenging to implement in large, complex FinTech systems with interdependencies (multiple payment rails) and legacy constraints (mainframe systems), requiring significant architectural and organizational changes
- Requires significant team discipline and maturity to execute agile practices effectively, including consistent estimation, prioritization, and delivery cadence, which may require training and coaching
- May not provide a complete long-term picture due to focus on short-term sprints and changing priorities, making it difficult to plan for strategic initiatives and roadmaps
- Can be difficult to maintain architectural and design consistency with evolving increments, requiring strong technical leadership and governance to ensure coherence and scalability
FinTech Product Development Plan
Product Vision and Research
- Define the product vision and objectives aligned with business strategy and user needs (increasing financial inclusion, improving customer experience)
- Conduct preliminary user and market research to identify opportunities and constraints, such as customer pain points (high fees), market trends (open banking), and regulatory requirements (data privacy)
Team Formation and Training
- Assemble a cross-functional product team including roles such as Product Owner, Scrum Master, UX Designer, Developers (front-end, back-end, full-stack), and QA to ensure diverse skills and perspectives
- Provide necessary training on design thinking and agile practices to build a shared understanding and language across the team
Design Thinking Workshops
- Conduct design thinking workshops with the team and stakeholders to empathize with users (customer interviews, shadowing), define problem statements ("How might we reduce the time to open a new account?"), and ideate potential solutions (mobile onboarding, digital KYC)
- Use techniques like user personas (millennial investor), journey maps (loan application process), and brainstorming (SCAMPER, crazy 8's) to generate insights and ideas
Product Roadmap and Backlog
- Create a product roadmap that prioritizes features and epics based on user value (improved security) and business impact (revenue growth), balancing short-term wins with long-term vision
- Break down epics into user stories ("As a customer, I want to reset my password online, so that I don't have to call customer support") and estimate them using story points (Fibonacci scale) or t-shirt sizes (S, M, L)
Agile Development Environment
- Set up an agile development environment with tools for backlog management (Jira), version control (Git), continuous integration and deployment (Jenkins), and team collaboration (Slack) to streamline workflows and automate processes
- Define sprint duration (2 weeks), team capacity (20 story points per sprint), and working agreements (definition of done, code review process) to establish a consistent and sustainable pace
Design and Development Sprints
- Plan and execute design and development sprints in parallel, with designers working one sprint ahead to create and test prototypes before handing off to developers
- Design sprints focus on prototyping (wireframes, mockups) and user testing (usability studies, A/B tests) to validate and refine solutions
- Development sprints focus on implementing and testing user stories, with daily stand-ups to synchronize progress and remove impediments (blockers, dependencies)
- Conduct sprint planning to commit to user stories, identify tasks, and define acceptance criteria to ensure a clear and shared understanding of the work to be done
- Perform sprint reviews with stakeholders to demo completed stories, gather feedback, and adapt the backlog based on learnings and changing priorities
- Conduct sprint retrospectives to identify improvements (better communication, faster feedback loops) and adapt processes (adjust WIP limits, automate testing) based on the team's experience and metrics
Continuous Improvement and Experimentation
- Regularly refine the product backlog based on user feedback (surveys, interviews), analytics (engagement metrics, conversion rates), and changing priorities (new regulations, competitor moves) to ensure that the team is always working on the most valuable items
- Continuously monitor and improve key metrics such as user engagement (daily active users), retention (churn rate), and satisfaction (NPS) to measure the impact of the product and identify areas for optimization
- Foster a culture of experimentation, learning, and continuous improvement by encouraging the team to take risks (try new technologies), fail fast ( quickly), and iterate based on data and user insights (A/B test results)
- Celebrate successes (major releases, positive customer feedback) and learn from failures (missed deadlines, defects) to build team morale and resilience
Key Terms to Review (20)
A/B Testing: A/B testing is a method of comparing two versions of a webpage, app, or any other digital asset to determine which one performs better. By randomly assigning users to one of two variants, A or B, organizations can analyze metrics such as conversion rates or user engagement to identify the more effective option. This approach helps in making data-driven decisions that optimize user experience and increase performance.
API (Application Programming Interface): An API is a set of rules and protocols that allow different software applications to communicate with each other. It acts as a bridge between various systems, enabling them to share data and functionality seamlessly. This capability is especially crucial in FinTech, where rapid integration of services is necessary for innovation and user experience.
Blockchain: Blockchain is a decentralized digital ledger technology that securely records transactions across multiple computers so that the recorded transactions cannot be altered retroactively. This technology underpins various applications, including cryptocurrencies, smart contracts, and peer-to-peer systems, ensuring transparency, security, and trust among users without the need for intermediaries.
Design sprint: A design sprint is a time-constrained, five-phase process that uses design thinking to reduce the risk when bringing a new product, service, or feature to the market. This method allows teams to rapidly prototype and test ideas within a short period, typically five days, helping them understand user needs and refine solutions efficiently. By engaging stakeholders and focusing on user-centered design, a design sprint accelerates innovation and decision-making in developing financial technologies.
Digital Wallets: Digital wallets are electronic applications or software that allow users to store payment information and make transactions securely using their mobile devices or computers. They streamline the payment process by enabling users to pay for goods and services quickly, while also providing features like transaction history and security measures such as encryption.
Empathy: Empathy is the ability to understand and share the feelings, thoughts, and experiences of another person. In contexts like design thinking and agile development, empathy is crucial because it helps teams create solutions that truly meet the needs and desires of users. By putting themselves in the users' shoes, developers can identify pain points and areas for improvement in financial technology products, ensuring they are user-centric and effective.
Ideation: Ideation is the creative process of generating, developing, and communicating new ideas. It serves as a crucial phase in innovation and design thinking, where potential solutions are explored and refined before being implemented. In the context of developing new financial technologies, ideation fosters collaboration among team members and encourages diverse perspectives, leading to more innovative and effective solutions.
Kanban: Kanban is a visual workflow management method used to optimize and streamline processes by limiting work in progress and improving efficiency. This approach involves using a board with cards that represent tasks, allowing teams to visualize the status of work items, identify bottlenecks, and enhance collaboration. By focusing on continuous delivery and flow, Kanban supports agile development practices and aligns well with design thinking principles in FinTech.
Lean startup: The lean startup is a methodology for developing businesses and products that aims to shorten product development cycles and discover if a proposed business model is viable. It emphasizes rapid prototyping, customer feedback, and iterative design, which allows startups to quickly adapt and pivot based on market responses, minimizing waste and maximizing learning.
Minimum viable product (MVP): A minimum viable product (MVP) is a basic version of a new product that is developed with just enough features to satisfy early customers and provide feedback for future development. It allows startups to validate their business idea and test the market without extensive investment in fully developed products. By focusing on core functionalities, the MVP approach helps in iterating quickly based on user feedback, fostering innovation and adaptability in product development.
Pivot: In the context of FinTech, a pivot refers to a fundamental shift in business strategy, often driven by new insights or feedback from users. This process allows companies to adapt their offerings or target markets based on what they learn during the development phase. It highlights the importance of flexibility and responsiveness in innovation, ensuring that the product or service aligns more closely with customer needs and market demands.
Product owner: A product owner is a key role in Agile development, responsible for defining and prioritizing the features of a product to maximize its value for the business and its users. They act as a bridge between stakeholders, such as customers and the development team, ensuring that the right features are developed at the right time. By managing the product backlog, they help maintain focus on delivering high-quality products that meet user needs and drive business success.
Prototyping: Prototyping is the process of creating a preliminary model of a product or service to test and validate ideas before full-scale development. It allows for rapid iteration, enabling designers and developers to explore concepts, gather user feedback, and make adjustments early in the development cycle. This process is crucial in fostering innovation and ensuring that final products meet user needs effectively.
Robo-advisors: Robo-advisors are automated platforms that provide financial planning and investment management services with minimal human intervention. They utilize algorithms to assess an investor's risk tolerance, goals, and preferences to create tailored investment portfolios, making investing more accessible and affordable for the average person.
Scrum: Scrum is an Agile framework for managing and completing complex projects, often used in software development. It emphasizes collaboration, flexibility, and iterative progress through structured roles, events, and artifacts, allowing teams to adapt quickly to changing requirements. Scrum promotes transparency and encourages continuous improvement by breaking work into manageable units called sprints, typically lasting two to four weeks.
Scrum Master: A Scrum Master is a facilitator and servant leader for a Scrum team, responsible for ensuring that the Scrum process is followed effectively. This role involves coaching team members, helping to remove obstacles that hinder progress, and ensuring that the team adheres to Agile principles. By fostering a collaborative environment, the Scrum Master plays a crucial role in promoting continuous improvement and effective communication within the team.
Sprint: A sprint is a set time frame, typically ranging from one to four weeks, during which specific tasks or features are developed and completed in an Agile development process. Sprints are essential in fostering iterative progress, allowing teams to quickly adapt to changes and feedback, ensuring that the final product aligns closely with user needs and expectations.
User experience (ux): User experience (UX) refers to the overall satisfaction and effectiveness a person feels when interacting with a product, especially in digital environments. It encompasses all aspects of the end-user's interaction with the company, its services, and its products. In the context of design thinking and agile development, UX plays a crucial role in ensuring that products not only meet user needs but also provide an intuitive and engaging experience.
User feedback: User feedback refers to the information, opinions, and experiences provided by users regarding their interactions with a product or service. This input is crucial in design thinking and agile development, as it helps teams understand user needs, identify areas for improvement, and enhance the overall user experience. By incorporating user feedback, businesses can create more effective solutions that resonate with their target audience.
User interface (UI): User interface (UI) refers to the space where interactions between humans and machines occur, encompassing all the elements that users engage with when interacting with a software application or website. It includes visual elements such as buttons, icons, text fields, and overall layout design. A well-designed UI plays a crucial role in enhancing user experience and satisfaction, making it a key focus in the processes of design thinking and agile development.