Design thinking in finance - Monzo case study by Yoann Hui

Design Thinking & Sustainability Case Study - Monzo

Case Study of

Monzo Design Thinking and Sustainability

Prepared by:

Unit title:

YU SHAN, HUI

Design Management 2

17527777

BA (Hons) Design Management & Cultures Year 2

Design Thinking & Sustainability Case Study - Monzo

Contents

“We believe there should be an alternative to the banking of the past” - Monzo

Design Thinking

Context

P. 06

P. 07

Financial Services Sector

04 - 05

‘Fintech’

P. 08

Company Background

P. 09

Doing Design

Indentify

9 Principles of Sustainability

SWOT Analysis

P. 16

10 - 11

12 - 15

Successful Impact of Monzo

P. 17

Conclusion

P. 18

Bibliography

19 - 20

21 - 25

Appendix

Source(From Monzo Website)

Survey Report

Design Thinking & Sustainability Case Study - Monzo

Design Thinking

Design thinking is a human-centred approach problem-solving tool that able to apply in different industries, the process is divided into 5 phases include empathy, define, ideate, prototype, and test. It provides a framework from research to testing and some of the stages may have to repeat depends on the situation, that assists the team to define the real problems and design creative solutions effectively.

Design Thinking Process

Due to business competitiveness, lifestyle and rapid technological change, traditional business models, services and products are no longer fulfil consumer’s needs. Those pressures force providers to continuously search for a new way that help improve themselves and be competitive in the market. The most prominent issue is to be able to truly understand their consumers’ expectations and needs, thereby adjust and position their business settings. Design thinking has been widely applied in different businesses, that help companies to seek a new direction that fits social needs and boost their value. Furthermore, design thinking minimises the innovation risk and uncertainty by engaging users thought prototypes and test. In this case study, I would like to focus on digital bank - Monzo’s rapid growth in recent years and how design thinking helps Monzo to shape their business. In doing so, I seek to answer: Is it Monzo able to replace historical banks to be future banking?

“

Source : Design thinking process (Dnxdesign, 2018)

“

Design innovation is becoming a powerful basis for companies to compete in global markets. Design thinking helps companies see new opportunities for innovation that are prompted by a deep understanding of people’s needs. These innovations start with the primary goal of creating offerings that are desirable for users and meet their needs, creating what is often called ‘‘user value.’’ Creating offerings with more user value in turn raises the economic and business value of the offerings.

-Kumar, V. (2009)

Design thinking should be at the core of strategy development and organisational change in order to create a culture that’s focused on this way of solving problems. This way of thinking can be applied to products, services, and processes; anything that needs to be improved. - Ursrey, L. (2014)

”

“

Design Thinking & Sustainability Case Study - Monzo

Context

“

iPhone has become one of the most important, world-changing and successful products in history. It’s become more than a constant companion. iPhone is truly an essential part of our daily life and enables much of what we do throughout the day.

- Tim Cook , Apple chief executive officer

“

Clark, E. (2017)

Living in a modern society, high technology products and systems are driving a lot of aspects of our everyday lives. With the development of technology, smartphone penetration has been expanding to almost everyone. According to the online report by consultancy.uk, it shows that the ownership of smartphone in the UK rose from 52% in 2012 to 85% in 2017 of the adult population and some of them have more than one smartphone. Due to the popularisation of the smartphone, the behaviour of our daily lives has been changing accordingly. Smartphones are heavily used, the total time that people spend on their phones in 2017 was more than 4 hours per day, according to the report on hackernoon.com. which is about 25% of our daytime (assumed 8 hours for sleeping). But what do people do with their phones? We can do almost everything on our phones. For example, online shopping, paying bills, booking flight, and etc. It saves a lot of our time and becomes our second wallet.

Financial Services Sector

Digitisation has become a trend of innovation in different industries. Legacy financial institutions have dominated the retail banking sector market share in the last couple of decades. Due to the growth of digitisation, e-banking services and mobile apps have been developing to fulfil the market needs, but its fundamental value proposition of innovation is still behind. Furthermore, the Financial Conduct Authority published the discussion paper ‘Smarter Consumer Communications’ in 2015. It mentioned the importance of communication, especially in the financial services sector. Traditional banks’ terms and conditions of their products and services add to consumer misunderstanding, that consequently leads to a lack of trust. According to a YouGov survey in 2017, it showed that only 35% of adults in Britain trust banks to work in the best interests of society. Obviously, trust and transparency are generally lacking in the UK financial services sector.

“Thanks to mobile payments, it is entirely possible that we will see a major country such as China become a predominantly cashless society in five years’ time, if not sooner.” -Bryan Zhang, Co-founder Cambridge Centre for Alternative Finance in the UK

(Peachey, K., 2015)

Design Thinking & Sustainability Case Study - Monzo

‘Fintech’

Design Thinking & Sustainability Case Study - Monzo

Company Background

What is ‘Fintech’ ?

Source: Prepared by the author according to FinTech Weekly : Fintech Definition

Fintech, is a short term of Financial Technology, is descibes a business that aims to offer financial services or products by making use of software and modervn technology. In contrast with high street banks, a new approach of banking services, digital-only bank - ‘Fintech’, has been offered and proliferated in recent years. It is a financial technology mobile application that has no physical branch offices. It is designed for those who are technology-savvy but lack time. The aim of ‘fintech’ is to provide a modern banking experience while offering the security of traditional banks and moving beyond typical banking features for the younger generation of customers. It is a quicker, easier and clearer process for users to manage their finances without location and time limitations. ‘Finteches’ are rapidly growing in number, have greater importance and pose more challenges in the industry. One of the recognised example is Monzo. According to the report ‘Best and worst banks’ on which. co.uk in November 2018, Monzo is voted to be the best bank. That survey was rated by thousands of current account holders based on customer service, transparency of charges, application process, and etc.

Source : Monzo Digital Bank (Townsend, M., 2018)

Monzo was founded by a term of 5 co-founders, who disagreed with traditional banks’ operation process and unsatisfied with their customer experience, according to co-founder - Tom Blomfield’s interview with Steve O'Hear in 2017. They all had a common thought of making a change to that and hence started to design a user-friendly mobile app and deliver more human-centred product and service that helps users manage their finance as easy as social media apps, painless and fast, according to the Guardian newspaper article “Is Monzo the Facebook of banking”. The company originally operated as a mobile app and prepaid debit card (recognisable colour hot coral) before they received a formal UK banking license in 2017. Monzo has grown from an initial team of 13 to over 500 employees, and over 1,000,000 users today and have now, added features to their service such as currency exchange. The growth has been increasing at an astonishing speed in a short period of about four years.

Design Thinking & Sustainability Case Study - Monzo

Doing Design

The founders grasped the importance of design thinking which helped them in their business development. It has been a core part of the business from the first beginning. Monzo's design team was formed by 13 people including the head of design Hugo Cornejo from the start. The design team mainly focuses on customer context and user research to collect the data on how people manage, spend, save their money and their behaviours. Those research are based on the design thinking methodology (refer to source: Design thinking process in P.4), human-centred approach research process that assisted the team to understand those ‘pain points’ and define the actual needs of people. With the growth of the company, the design team has been expanding to 12 in 2018 with more systematic design process and management. Agile methodology is a specific approach to project management that is used in software development. This method helps the team respond to the unpredictability of software and helps the team to upgrade and develop the new functions and respond to technology development change regularly and effectively. This hence allows Monzo to improve their services continuously and address user needs, keeping Monzo competitive in the industry. Prototyping and user testing (refer to source : Monzo user testing) has been running regularly in office.

“

The fact that we don’t have branches, don’t have a smiling face to tell you we’ve kept your money safe – we don’t have that legacy, so design helps us do that and build that trust. ” - Monzo (Design Council, 2018)

Source : Development progress (Screeshot from Monzo Website, 2019)

Source : Monzo User testing (Design Council, 2018)

They have also created a community on the Monzo website to interact, understand users and get feedback from them. “We’re building Monzo together” a slogan on Monzo website. It not only helps Monzo to shape their services and products but also builds the relationship with their customers and earns trusts by high transparency. Furthermore, Monzo takes customer opinions on board, they set future goals and share their internal development progress (refer to source: Development progress) on their website that keeps their customers updated. ”We’re transparent about what we’re doing and why, and we don’t hide behind ambiguity" is mentioned on Monzo website. Monzo treats their users as a friend, their tone of voice and actions remove the gap between them and users. Empathetic services and high transparency are the keys why Monzo got the top place of best banking service sector.

Design Thinking & Sustainability Case Study - Monzo

Identify

Identify 3. Transparency Providing an opportune revelation of information that allows stakeholders to make informed decisions

Monzo:

9 Principles of Sustainability : According to the nine principles of sustainability by L. J. Furman (2009), it provides a framework to help understand what sustainability is in the context of corporate responsibility. And able to measure the sustainability potential of business through 9 principles.

Internal Transparency • Every employee can access to email list and see the email had been sent in Monzo. • Meetings are open to every member of staff to join

1. Ethics Founding ethical practices in the company’s behaviours, including business processes and conduct with relevant stakeholders

Monzo:

• living wage company (commit that every member of

Monzo or employed by third-party contractors receives at least minimum living wage according to living wage foundation yearly guide) • Transparency (investment / current statement) • “focusing on solving customer problems, rather than selling financial products” value of Monzo • Top ranking by Ethical Consumer (independent, not-forprofit organisation that is providing ethical consumer guide based on ethical rating system)

2. Governace

4. Business Relationships Providing an opportune revelation of information that allows stakeholders to make informed decisions

Monzo:

• Uses systematic design process and project management methodologies (eg: Agile methodology) that helps Monzo have more structure and effectiveness. • The transparent policy allows relevant stakeholders involve and respond

• Minimal accessible information available

5. Financial Return Compensating provider of capital with a rival return on investment and the conservation of company property

Monzo:

• According to annual report 2018 by Monzo, there is a disparity between the records and returns.

• High customer support cost.

The efficient and earnestly use of resources, while balancing the interests of relevant stakeholders

Monzo:

External Transparency • Show an open “roadmap” Trello board [business development timeline plan] • Provide Annual Report including year reviews and future plans • Share regularly news on their website community • A large amount of publicity published information • Open office Q&A sessions on their website community

6. Community & Economic Development Fostering a mutually beneficial relationship between the company and community in which it is sensitive to the culture, context and needs of the society.

Monzo:

• Uses • • • •

human-centred approach that focuses on consumer’s context and needs of the society to develop their products and services Design team using Agile Methodology for technology development with regularly user testing. Innovate products and services brings positive impacts for the society and relevant industry growth Shares financial knowledge how to manage finance effective in their website community Emphasises on community involvement in its growth and development 13

Design Thinking & Sustainability Case Study - Monzo

Identify

Identify SCORE CHART - Measuring Effectiveness

7. Value of Products / Services Responding to the needs, demands, and rights of its customers to deliver the highest levels of product and service values.

Monzo:

• User-friendly app helps user to manage their money as easy as social media app

• Useful features - budgeting, saving pot, quick transfer payment have positive impact of user financial goals.

• Empathetic customer services

“We are focussing on solving customer problems, rather than selling financial products, as a way to offer what we hope will be the best current account in the world.” Our Ethics and Value -Monzo

8. Employment Practices Promoting employee’s personal and professional growth, diversity, and empowerment.

Monzo:

• Ethical employment practices • Six-monthly salary reviews to remove social or cultural differences related to asking for a pay-rise

• Employ of application forms rather than CVs to avoid hidden bias in recruitment

• Paid sick leave including for mental health reasons • General employee’s benefits (profession development, job training, insurance, and etc.)

“It’s hard to persuade someone that you care about them and their wellbeing and career goals if you’re going to pay them the absolute minimum that you legally can. If you make the effort to invest in your team and show them that you actually care, you’ll find they work harder, perform better, and are more invested in their work.” -MARIA CAMPBELL, Head of People, Monzo (The Living Wage, 2018)

9. Protection of the Environment Striving to preserve and recover the environment and advocate sustainable development.

Monzo:

• Minimal accessible information available

Source: Prepared by the author

According to the results by using 9 Principles of sustainability methodology, Monzo achieved most of the aspects. There is no doubt that Monzo is working hard to move toward to be a sustainable business. Ethics, transparency, community and economic development, the value of products/services, and employment practices those built a strong base of Monzo's growth. However, as a business, it is impossible to develop without profitability. Perhaps business relationship would be a good aspect for Monzo to discover and will lead to a positive impact of Financial return.

Design Thinking & Sustainability Case Study - Monzo

Identify

Successful Impact of Monzo

SWOT Analysis : The SWOT analysis is a simple but useful tool for understanding and decision-making for all sorts of state in business and institution. SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. It provides a clear framework for reviewing, direction, position leads company for business planning, development and marketing.

Strengths:

Weakness:

• • • •

User-friendly app High transparency Empathetic services Emphasis on community involvement in its growth and development Fee free foreign transactions Brand value Ethics Employment practices

Lack of advertising One-way access (mobile) Financial return High cost of customer support

Opportunities:

Threats:

• • • • •

• High cost of customers support • Financial return • Competitors

Huge potential of growth Advertising Add on feature Partnership International expansion

From the SWOT framework of Monzo, it clearly shows they have a lot of positives which also are the reasons drive Monzo rapidly growth in a short time of 4 years. Furthermore, the opportunity section, there a lot of fields Monzo able to expand. For example advertising, according to the report from Monzo, it shows 80% of Monzo current users are recommended from friend or family. So I believe if Monzo able to work on advertising that will leads to a huge impact of user growth in number. And also, partnership and add on features may help to narrow the weakness due to loss.

“Bank (Monzo) that’s apparently so cool it’s become a chat up line in London’s bars ” Liza Hearon (2017)

As an innovator in the financial services sector, Monzo brings a ‘wave’ not just affecting in the financial industry but also in social and economical as well. Monzo successfully designed a "Facebook banking app" with a human-centred approach design method. It helps the younger generation especially who hates banks or not good at managing their finance, are able to budget and control their money easily without complex financial terms and conditions. User-friendly app, simple, clear and transparent policy leads Monzo won the top ranking of the banking service sector. Changed user's financial management habit, quicker and effective. It leads to a positive impact of banking image and also creates a positive competitive atmosphere for the industry to works the best interest for the society. In addition, successful business model becomes an example to different organisations.

Monzo Business Model:

Source: Prepared by the author

To better understand and know the pattern of how the users manage their money with Monzo, I did a survey with 44 Monzo users. According to a survey I conducted in December 2018 using an online survey platform - onlinesurveys.ac.uk (result refer to appendix P.21-25), I discovered the following results: over 93% of responders are using Monzo daily, 86% said Monzo is their primary card. Surprisedly, 70% of the users set Monzo as their payroll account, and near 40% of payroll account holders are new joiners (less than a year). For a new licensed bank, who launched their current account just more than a year, this result is unexpected, and that shows users have a high trust of Monzo. Although Monzo hasn’t developed a full and stable system, however, they put user as the main focus to develop a good fit service and aim to provide a better banking experience which more beyond than traditional bank does for the customer. According to the basis of the SWOT framework and 9 principles of sustainability, Monzo has a strong base with a high level of potential to grow with the trend of smartphone popularisation and digitisation.

Design Thinking & Sustainability Case Study - Monzo

Conclusion

Bibliography Caitlin Stanway-Williams (2018)

“

How Monzo used radical transparency to build a bank for the people. Available at: https://channels. theinnovationenterprise.com/articles/how-monzo-used-radical-transparency-to-build-a-bank-for-thepeople (Accessed: Jan, 2019).

Canvas (2017)

We need to ensure that the solutions are purposefully built around people’s experiences and can provide real value. We also need to make sure that these solutions add economic value for the companies producing them.

-Kumar, V. (2009)

“

Canvas Conference 2017: Stories from Hugo Cornejo, Monzo (2017) Directed by Canvas. The Guardian, Available at: https://vimeo.com/243163429 (Accessed: Jan, 2019).

Cavaglieri, C. (2018)

Best and worst banks. Available at: https://www.which.co.uk/money/banking/bank-accounts/bestand-worst-banks-a3q5d8c6dj7y (Accessed: Jan, 2019).

Clark, E. (2017)

‘The iPhone at 10: Growing Business, Changing Habits’, WWD. Available at: https://wwd-com.arts. idm.oclc.org/business-news/technology/the-iphone-at-10-fashion-brands-ecommerce-app-mobileanniversary-10928875/ (Accessed: Dec 26, 2018).

Collinson, P. (2017)

‘Monzo? It might just be the future of banking’, The Guardian, Available at: https://www.theguardian. com/money/blog/2017/sep/09/monzo-future-of-banking-smartphone-tom-blomfield (Accessed: Jan, 2019).

Consultancy.uk (2017)

UK smartphone penetration continues to rise to 85% of adult population. Available at: https://www. consultancy.uk/news/14113/uk-smartphone-penetration-continues-to-rise-to-85-of-adult-population (Accessed: Jan, 2019).

This case study shows the importance of providing creative solution for business to sustainably grow; this is increasingly necessary in a complex modern society. On reflection, I now feel that design thinking is an incredibly useful human-centred approach and problem-solving tool for different situations of innovation. This mindset helped Monzo successfully create a new model of banking that is working well so far by understanding what people do, including their behaviours, activities and needs. Design thinking helps Monzo sharpen their products and services, and is the key to building relationships with users through interactions on the app and website communities. My research and survey have shown that significant successful features of Monzo include the high level of trust, transparency of business structure, and empathetic services. In addition, a user-friendly app and system have been designed to help people manage their finances easily and incentivise people to save money. However, becoming a sustainable business includes achieving different aspects of social, environmental and economic, not just user needs. The SWOT analysis and nine principles sustainability provide an outline methodology to measure a business’s value and potential of future growth.

Deloitte (2018)

Finally, the question remains:

Glassdoor

Can Monzo be the future banking?

According to the SWOT analysis and nine principles sustainability frameworks, this case study explains how Monzo has a strong value and huge potential to grow in future. Furthermore, ‘Fintech’ is drawing more awareness in the society and financial technology companies are growing in number. This shows that the trend will continue and I believe Monzo can lead the way to the future banking.

The future of the smartphone. Available at: https://www2.deloitte.com/uk/en/pages/consumerbusiness/articles/the-future-of-the-smartphone.html (Accessed: Dec 26, 2018).

Design Council (2018)

The Design Economy 2018 – Monzo. Available at: https://www.designcouncil.org.uk/resources/casestudy/design-economy-2018-monzo (Accessed: Dec 27, 2018).

DNX DESIGN. (2018)

‘Design Thinking’, DNX DESIGN. Available at: http://dnxdesign.com.pl/en/design-thinking/ (Accessed: Jan 15, 2019).

Financial Conduct Authority (2015)

Smarter consumer communications. Available at: https://www.fca.org.uk/publication/discussion/ dp15-05-smarter-consumer-communications.pdf (Accessed: Jan 2, 2019).

FinTech

A definition by FinTech Weekly. Available at: https://www.fintechweekly.com/fintech-definition (Accessed: Jan 16, 2019).

Furman, L.J. (2009) ‘

The Nine Principles of Sustainability’, (Popular Logistics). Monzo Bank Employee Benefits and Perks. Available at: https://www.glassdoor.co.uk/Benefits/MonzoBank-UK-Benefits-EI_IE1557148.0,10_IL.11,13_IN2.htm (Accessed: Jan 11, 2019).

Hacker Noon (2017)

How Much Time Do People Spend on Their Mobile Phones in 2017? Available at: https://hackernoon. com/how-much-time-do-people-spend-on-their-mobile-phones-in-2017-e5f90a0b10a6 (Accessed: Dec 26, 2018).

Hearon, L. (2017)

The bank that’s apparently so cool it has become a chat up line in London’s bars. Available at: https:// mashable.com/2017/10/26/monzo-bank-mobile-intro-startup-uk/ (Accessed: Jan 11, 2019).

Design Thinking & Sustainability Case Study - Monzo

Bibliography

Appendix

Hugener, C., Courbe, J. and Mavros, K. (2017)

Financial Services Trends. Available at: https://www.strategyand.pwc.com/trend/2017-financialservices-trends (Accessed: Jan, 2019).

Jones, R. (2018)

‘Monzo is ‘one of the best’ ethical current accounts’, The Guardian, Available at: https://www. theguardian.com/money/2018/may/19/monzo-ethical-current-account-app-bank-triodos-ecologybuilding-society (Accessed: Jan, 2019).

Josemaria, S., Thomas, K., Dieter, S., Sam, T. and Inigo, A. (2017)

Design Thinking - The new DNA of the financial sector. Available at: https://www.oliverwyman.com/ content/dam/oliver-wyman/v2/publications/2017/apr/Design_Thinking.pdf (Accessed: Dec, 2018).

Kumar, V. (2009)

‘A process for practicing design innovation’Journal of Business Strategy Emerald Group Publishing Limited, pp. 91-100.

How did you first learn about Monzo?

Lewis, T. (2017)

‘Is Monzo the Facebook of banking?’, The Guardian, Available at: https://www.theguardian.com/ technology/2017/dec/17/monzo-facebook-of-banking (Accessed: Jan, 2019).

Monzo

Monzo Website. Available at: https://monzo.com/ (Accessed: Dec, 2018).

Munford, M. (2017)

‘Mobile banking is saving us ‘billions’ in charges’, BBC News, Available at: https://www.bbc.co.uk/news/ business-392900 (Accessed: Jan, 2019).

O’Hear, S. (2017)

‘Monzo, a UK digital-only challenger bank, granted full banking license’, TechCrunch, . Available at: http://social.techcrunch.com/2017/04/05/monzo-a-uk-digital-only-challenger-bank-granted-fullbanking-license/ (Accessed: Jan 16, 2019).

Palenicek, J. (2017)

Most Brits trust banks but don’t think they work in customers’ interests | YouGov. Available at: https:// yougov.co.uk/topics/politics/articles-reports/2017/05/19/most-brits-trust-banks-dont-think-they-workcustom (Accessed: Jan, 2019).

Peachey, K. (2018)

‘Banking by app ‘to overtake online by 2019’’, BBC News, Available at: https://www.bbc.co.uk/news/ business-44166991 (Accessed: Jan, 2019).

Peachey, K.

Money changing, BBC - The disruptors, Available at: https://www.bbc.co.uk/news/resources/idt-sh/ The_disruptors_money_changing (Accessed: Jan 10, 2019).

The Living Wage (2018) ‘

Business Benefits Case Studies - Monzo | Living Wage Foundation, Available at: https://www.livingwage. org.uk/sites/default/files/TheLivingWage_CaseStudies_Monzo_Apr18.pdf (Accessed: Jan, 2019).

Townsend, M. (2018)

‘Four Things You Can Learn From One Of The Best Brands On Social Media’, Wolf Digital Marketing. Available at: https://www.wolfagency.co.uk/articles/social-media-best-practice-from-monzo/ (Accessed: Jan 15, 2019).

Ursrey, L. (2014)

Why Design Thinking Should Be At The Core Of Your Business Strategy Development. Available at: https:// www.forbes.com/sites/lawtonursrey/2014/06/04/14-design-thinking-esque-tips-some-approaches-toproblem-solving-work-better-than-others/ (Accessed: Jan 2, 2019).

Design Thinking & Sustainability Case Study - Monzo

Appendix

Is Monzo your primary bank/ debit card?

How long have you been using Monzo?

Do you manage your payroll account with Monzo?

If no, would you consider switching to Monzo as your payroll account in future?

Design Thinking & Sustainability Case Study - Monzo

Appendix

Design Thinking & Sustainability Case Study - Monzo

Appendix