Head over to the WIRED Money 2015 hub for more coverage of the thought leaders and innovators speaking at this year's summit. "My belief is that one of the fundamental things that differs between fintech companies and the banks is design," says GoCardless' CEO Hiroki Takeuchi, speaking at WIRED Money 2015.
GoCardless was founded in 2011 and now serves tens of thousands of businesses around the world and is the UK's leading Direct Debit provider.
It is design, says Takeuchi, that has given GoCardless the advantage in the financial world over traditional banking institutions. Design not just in terms of aesthetics, but in terms of user experience. "For me design is about how somethings works -- it's about creating beautiful solutions to human problems. In our world it's being ten times easier that helps."
When GoCardless first started, it wasn't possible for small businesses to use Direct Debit at all. Banks wouldn't give them access to the complex system because they thought small businesses were not sophisticated enough to manage it. Rather than finding a way to give them access only to the parts of the system that they needed, says Takeuchi, the banks "just closed them off completely".
GoCardless swooped in and designed a new approach to Direct Debit. "We didn't think customers should think about these things," says Takeuchi. "We exposed the settings that people really care about. We really foolprooofed the systems -- it made it very difficult to make big mistakes." "It's not just a fundamental belief in design that differentiates us," he adds. He points out that unlike the banks, startups entering the financial space get to begin with a clean slate. They don't have to maintain any kind of legacy code and can build on top of open source projects, as well as take advantage of technology that big companies like Google and Facebook are building.
Another factor that stunts innovation, he points out, is that if you're a bank, you have to work with everyone and cater for everyone's circumstances and preferences. "You still have to send letter notifications and you still have to have those physical branches." Conversely at GoCardless, he says, "we get to define who our customers are". Rather than building everything for everyone, a fintech startup can build something specific for a smaller customer group, which is therefore designed especially for their needs. "Design is about making thousands of small decisions," says Takeuchi. "It's hard to make one good decision at a time, never mind make thousands." Design decisions need to be made in small increments, so all the time you can reduce the cost of each of the steps, reduce the cost of the mistakes you make, and learn as quickly as possible. "We're able to work in agile teams that can deploy code on a daily if not hourly basis."
Takeuchi's final point is that design needs focus, which is not possible if you are working on multiple products simultaneously. "The banks serve every product to every customer." As a fintech startup, this is not an option; with very limited resources and niche expertise, there is no choice but to focus solely on building one thing at a time. As a result of this, says Takeuchi, "my colleagues are the world experts on Direct Debit even though we've only been going for a few years". Startups like GoCardless have another natural advantage over those in other industries, he adds, because "fintech companies are able to go global way before they have to think about diversifying their product offerings".
So will banks ever be able to compete with this kind of innovation by design that goes on inside fintech startups?
The big challenge for banks will be changing the way they operate, speeding up decision-making and working at the same pace as the fintech companies around them, says Takeuchi. "It's about rethinking the position in the market and not necessarily being the gateway to all of the consumer experiences." How they will deal with these challenges, he adds, is it not yet clear. "What I am sure of is that users will get a much better experience as a result of this innovation."
This article was originally published by WIRED UK
