The FXD Conference - Challenges and Collaborations

The inaugural Financial Experience Design Conference opened Tuesday with the acknowledgement that financial services organizations are struggling with “an ethos of financial wellbeing at existing companies,” according to conference Chair Mike Kirkpatrick.

“New companies are challenging business models, inventing new app-based approaches,” he told the 150 participants in the opening session of the day-long meeting.

Kirkpatrick, who also is senior vice president of Client Experience & Strategy and leader of the Financial Practice at design consultancy Mad*Pow, originator of the conference, cited the insurance industry, where at least one company could be transforming that industry with a “micro-transaction mindset” by introducing the ability to switch coverage on and off at will, for example, to cover property in different ways when on vacation.

Amy Cueva, chief experience officer and founder at Mad*Pow, urged the gathering to remember that design is a channel for motivation. “Design with a sense of purpose and find a sense of direction to fuel innovation in our business.”

“We’re confronting life challenges in financial services. Sometimes joyful ones, sometimes heartbreaking one,” she said. “If we approach those experiences while considering the emotional state (of consumers) we’ll have come a long way.”

Asking, “Does this product or service make a positive difference in the world” should be central in financial design, given that the “purpose of business is to improve our lives and create value for stakeholders,” she said. “Is solving wicked problems too lofty a purpose?”

“The answer is no, and we are just the right people to do it, designing to promote widespread financial wellbeing.”

Helping Decisions, Not Forcing Them

Dan Egan, director of behavioral finance and investing at premier financial robo-advisor Betterment, is bringing a lot of challenging ideas to the investment world, with the guiding principle of “don’t nag people.”

The online-only organization builds heavily on user-focused experience and data gathered from its army of consumers, able to test quickly test ideas in real time.

“A lot of financial advisors, including us, have really good intentions” but if you don’t test “you might be shooting yourself in the foot. What if I’m wrong and I don’t know it?”

He also noted that much of the messaging in traditional financial services outreach actually is a disincentive to financial wellbeing. For example, in most all 401k savings plans, people have to choose to cut their paychecks in order to make deposits in the plan. He contrasted that with experience design-focused organizations that automatically enroll employees in the plans – making them opt-out, instead of opt-in – so the withdrawal from the first, and subsequent, paychecks is never noticed.

Egan said Betterment quickly learned that taking the time-honored customer service approach of updating and “informing” clients of market conditions backfired, worrying people who otherwise weren’t concerned about day-to-day market blips. Now, the firm launches relevant pop ups to clients who log in when there’s an unanticipated market condition, offering insight under the assumption that those clients may be more sophisticated and market-centric.

Bat Cave vs the Boardroom

A thread of commentary running through the day was “they don’t understand us.”

“They” being top corporate leadership, and “us” being the experience design community.

And then came Greg Marion, VP, enterprise senior strategy officer at financial behemoth USAA, a self-described “strategy guy” near the top of the major organization.

“I’d like to provide some perspectives on how it works from the business side,” he said. “Very few senior executives are at the top of large corporations because they come from a design background”, he added to laughter.

Business strategy, he explained, includes the “vision, who, how, and metrics” while experience strategy is “a part of the how and influences the metrics.”

When do you need an experience strategist?

“When there’s a reason to be revising a significant portion of your business strategy … maybe a disruption in your business,” he said. “Then you need an experience strategist alongside the business strategist.”

But, “don’t lose the science while making art,” he warned. Remember you’re dealing with a “business executive who doesn’t understand how (experience design) affects the bottom line …At the end of the day businesses run on metrics” that need to be consumable by senior executives.

It’s Not About Glamour

Separately, Jason Henrichs, managing director of FinTech Forge, simply said senior executives need to learn “design doesn’t mean making things pretty” because such a fixed mindset “impacts financial performance.”

He recalled Kodak, which had developed digital photography years before others, but was unable to wean itself from film and paper prints. Kodak executives, he said, didn’t realize they were not capturing photos, “their business was capturing memories.”

That fixed mindset compares negatively with a growth mindset, as evidenced by a company like Amazon, which realized it could be more than a bookseller, evolved to a logistics company, and now also serves as a major web services company.

Henrichs argues that financial services suffers from the “innovator's dilemma” in that the industry “innovates, then stays the same for a long, long time.”

The survivors in financial services, he said, will be the ones asking “what business am I in?”

Melissa Gopnik, senior vice president at the non-profit Commonwealth, said her organization focuses on encouraging and building solutions that make people financially secure, specifically those who make less than the US median income of $54,000.

She said turning savings and investing into game-type activities has produced outsized rewards. Wal-mart and Green Dot Bank successfully encouraged 200,000 people to save $500 million by offering prizes linked to savings.

Some Road Signs to Innovation
Earlier, Adam Connor, VP organizational design & training at Mad*Pow, talked about lessons learned while helping financial services organizations build their innovation capabilities, “how do you build innovation capacity, how do you build teams that work together effectively.”

It comes down to:

· Training: developing the capability, motivation, and opportunity to change behavior

· Frameworks: creating some sort of structure so collaborators understand the beliefs behind the frameworks and align with those in the organization

· Silos: are inevitable, but can be a way to connect because people group around shared interest and values. “Leverage the strengths that grouping offers and plan for the gaps it creates.”

· Innovation: is only a midpoint. “Design for the complete process, not just the creation of ideas, but what feeds them and how they grow and evolve.”

· Collaboration: is a balancing act. “It can paralyze groups…because no one makes a decision while waiting for some magical moment of agreement. Sometimes that doesn’t happen.” So, “build on consensus when it develops and empower decision-making when it doesn’t.”

To underscore that while experience design is certainly art, Issac Slavitt, co-founder and data scientist at DrivenData, Inc., said human-centered design and data science are “better together.”

He outlined a recent project his company completed in harmony with a design firm as they examined why “mobile money” wasn’t taking hold in Tanzania as rapidly as in the rest of East Africa. Mobile telephone companies, with thousands of agents throughout the country, weren’t attracting deposits and transactions enabled and accessed via their phones.

The teams of data analysts and designers began work at the same time. Design headed into the field and data had access to all the transactions every completed via mobile phone.

He said the data team talked to subscribers and agents to see why customers weren’t making deposits to their mobile accounts and purchases. They quickly found a correlation between agents the customers used and how much customers used the product.

Data, he said, was able to identify patterns that inspired design of tools for agents. Data didn’t just complement the designers, it helped identify and avoid vulnerabilities in the processes.

It’s an Innovation Lab, not a Foreign Outpost

Continuing the innovation discussion, a three-person panel of financial services pros discussed how they move experience design forward in their organizations. They all touched on a familiar theme.

“We’re trying to get folks to talk to customers before they build stuff,” said Jason Goodwin, director of Innovation Practice & Enablement at the LOFT, the innovation arm of Manulife/John Hancock.

He said a pressing issue is how to bring the mindset of his lab into the business. “If you isolate the lab and make it safe (to do innovative work), then no one can figure out why everybody hates you … You need to be open and honest about not being very different (than the rest of the organization), just doing things differently.”

Dariane Hunt noted that traditional organizational structures certainly have their place, “but it can work against you when trying to make change. Decision-making from top down doesn’t encourage innovative thinking.”

From her perspective as SVP, senior interactive designer at Bank of America, Hunt says let people make decisions because “the vast majority of decisions are reversible.”

On the topic of internal innovation labs, Jennifer Fabrizi, experience design director, strategy & research at Travelers, warned that often teams “rush to solve things” in a lab culture not integrated with other disciplines. “That becomes so incestuous after a while that no new ideas come,” she warned.

Mad*Pow SVP, Behavior Change Design, Dustin DiTommaso took a look at motivational perspectives on financial wellbeing, noting “changing financial behaviors is almost never about the finances themselves.”

So, forming new financial habits is about finding good reasons to fuel and sustain change.

Motivation as Fuel for Behavior Change

“We can design to increase someone’s value of important changes, make changes easy, make people confident, and show them outcome,” he said.

He noted there are five basic motivating factors for humans: external, internal, identified and valued behavior, integrated behavior that supports other important life goals, and intrinsic motivation/interest for the activity itself.

He said it is hard to maintain positive financial behaviors with the first two motivators, but the last three are more likely to motivate positive behavior that will be maintained.

DiTommaso, like Egan before him, also said a lot of common financial services design messaging is counter-productive. He pointed to the ubiquitous income calculators that ask questions like “How much do you need to retire,” and “How long must it last.”

“That’s basically asking ‘when are you going to die’,” he said

Turning to underserved areas in financial services, the panel of George Castineiras, founder and CEO of Lifetime Income Technologies, Inc.; Mariana Dimova, managing director, design and innovation at Women’s World Banking; and Olga Elizarova, senior behavior change analyst at Mad*Pow, agreed a major problem in those areas is a lack of trust.

Financial engagement is “100 percent predicated on trust, and it’s not around a financial advisor,” it’s around friends and family, Castineiras said.

Dimova echoed that, saying the challenge of engagement and customer experience rests heavily on “who is the first person that presents a product to a new customer to build trust and engagement.”

All agreed that today’s financial institutions largely are behind the curve in addressing underserved populations worldwide.

“The sheer mass of balance sheet wealth in companies is creating imbalance,” Castineiras said. “(The organizations) are so big that they’re reluctant to shift gears and make money differently. The challenge preventing progress is the economic models of established institutions.”

Dimova added that the same institutions are slow to accept that women interact, think about, and use financial products differently than men, and to take into account that geography also plays a role. In many cultures, she said, women basically stay within a 20-minute walking radius of their homes, with no banking facility located in their neighborhood.

What Happens When “They” Know Best?

Today’s financial environment was summed up succinctly by Steve Turbek, managing director at Goldman Sachs.

“What are you going to compete on? How are you actually going to win in the marketplace?”

Experience designers are “defined by tools . . . an amplification of our natural abilities.” The differentiator may be “speed to learning” as opposed to “speed to market.”

Heidi Munc, AVP of user experience at Nationwide, introduced her panel on the gathering of insights for CX by noting design thinking could only be successful when based on deep empathy and an understanding of the problem being solved.

Her panelists – Melissa Ferere, research & strategy lead, Insights & Product Design at MetLife, and Jennifer Briselli, managing director of experience strategy & design at Mad*Pow – immediately were asked how to deal with design when insights run afoul of preconceived notions in an organization.

Ferere said it was an opportunity to iterate.

Briselli said there’s a difference between “having a hypothesis and having a sacred cow. Sometimes it’s not about tearing down walls, it’s just about looking at things a different way.

AI, Machine Learning, Blockchain
Evan Schnidman, CEO of Prattle, which uses sophisticated algorithms to produce predictive analytics based on the language used by analysts, corporate executives, and corporate announcements, said given the inherent bias in the reports and coverage by financial analysts, an AI and machine learning approach was providing clear and objective market directions.

And Bettina Warburg, founder & managing partner of Animal Ventures, attempted to demystify blockchain technology, the rapidly evolving new foundation for market transactions.

She noted that the fundamental process of commerce hasn’t changed in centuries, with middlemen playing a central role. Blockchain changes that, removing the middleman and resulting in a decentralized economy and one-to-one direct trade by “unlocking the enabling of machine trust.”

“Robots,” she said, “should be thought of as a new consumer class … allowing machines to trade one-to-one.”

The Financial Experience Design Conference was developed by Mad*Pow to provide a collaborative way for organizations to share their challenges and reveal potential solutions. Mad*Pow has partnered with financial services companies for nearly two decades, creating new ways to improve the bottom line through enhanced client interaction. The research, strategy, design, and development from the company is focused on delivering measurable results, ultimately helping clients deliver engaging, intuitive, and meaningful experiences to their target audience.


By: Karl Swanson

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