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Three tips to implement design-led thinking for Capital Markets

  • Posted on September 10, 2018
  • Estimated reading time 4 minutes
implement-design-led-thinking-capital-markets

“Innovation” is a misunderstood term, especially in the capital markets. Generally, innovation is marked by the introduction of something new. But, to date, many firms have changed their technology only to comply with new regulations or to compete with fintech firms threatening market share. This is adaptation, not innovation; it’s thinking defensively rather than proactively about how to improve. This “wait and see” approach is not a strategy, and banks must adapt – quickly – in order to combat pressures on multiple fronts.


Despite regulatory easing in some markets, there’s still regulation, automation, competition and disintermediation ahead. While technology has helped banks comply with regulations and carve out new competitive advantages over the last 10 years, it’s also created challenges: Different systems acquired via M&A, or a short-sighted ‘one-off’ approach to technology adoption has left banks with chaotic patchworks of technology that are expensive to maintain. In fact, capital markets firms spent nearly $80 billion on operating and maintaining IT systems in 2017, according to Accenture estimates, comprising about three quarters of IT budgets. Further still, shareholders demand returns despite stagnating growth, and finding the revenue and internal buy-in needed to combat issues can be a challenge.

Investment banks need to adopt a proactive approach and use technology as a competitive advantage. Many intend to: According to EY research, 70 percent of banks will invest in technology to strengthen competitive positioning and gain market share between now and 2021. But only 43 percent have a clear digital strategy according to BCG – a tepid response to one of the industry’s most pressing issues. Banks need to move beyond “just adoption” by redesigning the end-to-end operating model with customers at the core.

It’s a daunting remit, but by starting small and cultivating internal advocates, technological leaders at banks can effect change and cut a path for digital transformation that will deliver the added value and digital experiences that clients, traders and bankers have come to expect from every aspect of their lives. Even in capital markets, traders or advisors are still, at the core, consumers. And innovative tools and platforms must be as intuitive and value-adding as the apps they use to automate and simplify their personal lives.

Increasingly, leading firms are turning to design approaches as they seek to change and grow their business. Although design is most often used to describe an attractive thing, design in its most effective form is a process, a verb; it’s a protocol for solving problems and discovering new opportunities that accounts for what the user needs and sees – and what the “artist” aims to communicate.

This is design-led thinking. Good design takes into account business drivers, customer insight and platforms/technology. To successfully transform using design-led thinking, capital markets firms need to:

  1. Define the vision. The goal of design-led thinking is not always to create a beautiful, shiny trading platform or AI-informed advisor chatbot, although tools like these can and often are parts of solutions to problems. The true goal of design-led thinking is not to start with the idea (chatbots are so in right now), but uncover a vision of a “preferred future” and leverage our tools – data, technology, platforms, customer insights and thoughtful UX/UI – to create comprehensive solutions that will drive value for users, and unlock trading efficiencies or revenue (or both!) for firms.

  2. Avoid embarking on a massive design-led overhaul. Capital markets firms have multiple, competing priorities – MiFID II, Basel IV and now GDPR compliance; competing with agile fintechs; attracting and retaining talent; building trust with new investor demographics; generating returns for shareholders; and balancing legacy brands and reputation with innovation messaging.

    Digital innovation demands up-front investment, and securing stakeholder endorsement for projects can be challenging. But small projects can act as case studies, illustrating the value that technological investment generates. As firms deploy smaller, digital solutions that unlock efficiencies or revenue, they can reinvest that surplus into additional work. For example, Avanade created an augmented reality solution to automate and streamline risk assessment for XL Catlin, one of the world’s largest insurance firms. By bringing together stakeholders from teams in various departments, Avanade and XL Caitlin’s project leader were able to deliver a solution in 7 weeks, and reduce risk assessment time from four weeks to a few days. This kind of solution could lower risk for human error, and reduce talent costs, while also converting internal stakeholders into “transformation ambassadors” who can then champion a firm’s holistic digital transformation.

    This iterative approach must be deeply collaborative and must take into account a firm’s internal politics and the hurdles involved in making drastic changes. Rather than designing solutions to be piecemeal, quality teams will keep the end goal in mind, and develop solutions that layer, combining to unlock even more value together.

  3. Develop multi-disciplinary teams. This is a key piece of the collaborative, co-creative, design-led thinking process. By combining diverse backgrounds and job titles, including digital strategists, technologists, developers, visual designers, UX designers and analytics consultants -- each with a thorough understanding of the capital markets -- we craft an innovative cocktail of professionals. Each team member brings a different perspective to a given problem, and this diversity of opinion and expertise helps drive creativity and generates more lasting and impactful solutions.

New technologies unlock limitless potential in all aspects of our world today, and especially in capital markets, where legacy systems are a drag on efficiency and security. But this kind of change is daunting – if not downright frightening – for leaders. Design-led thinking provides a roadmap for innovation, a framework around which to organize problems, solutions and teams – it’s at once a beacon of hope and a roadmap for financial innovators. The change will not be easy, but the cost of stagnation is dire. “Wait and see” is not a strategy. But “design, test and see” is. And it’s working.

Learn more about business strategies for Capital Markets.

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