Risk centric design basics

The benefits of UX prototyping are widely acknowledged. From time and budget savings, early feedback from potential clients, to outlining the product spec granularly enough for programmers to take it from there, prototyping is more than simply getting that core functionality to fly. Ideally, it's also a reality check for the founders when it comes to addressing their clients' real needs.

Where this becomes a bit more complicated is when you are an aspiring fintech targeting partnerships in financial services, insurtech or regtech. It turns out that your ecosystem is a bit more complicated as to terms as basic as "needs" and "clients" really. This is as needs become synonymous with legal and regulatory barriers to entry due to the regulated nature of the market you are aspiring to penetrate. The said needs are also to be met for the benefit of stakeholders quite often more varied than say retail users of a mobile app you are about to build or that high street bank you have envisioned to partner with.

Realistically, the market regulator is also somewhere high there on the list (or actually several of them - home and host ones - especially if you are hoping to expand in APAC), as well as other regulated infrastructure providers (depositaries, clearing houses, etc.). Their feedback on your prototype may essentially make or break your business idea, if what it represents is deemed too risky from a reputational or governance perspective.

What is a risk centric product?

Fundamentally, risk centric design does not diverge from the 101 of product design objectives recognized by any product manager. Now, where risk centricity makes a difference is as follows: the earlier your prototype spells out and addresses the real or perceived risk profile it represents in the eyes of your clients, the more appealing it becomes.

The "what", "how" and "who" of your risk centric design is in fact a multidisciplinary umbrella stretched across your design process, where empathising - the basic component of design thinking - takes a whole new dimension in the context of product or service functionality.

Let's start with the "what". This is where your solution not only addresses needs, but also the legal and operational (and potentially other) risks it generates in the first place. Consider handling personal data on your digital platform, cybersecurity of your cloud based solution or auditability of the algorithm your product runs on: factoring in the risk profile of your MVP as seen from your target client perspective might prove that winning strategy.

Onto "how", where a holistic approach to product management transparently outlines strategic and implementation risks. This is where the maturity of your business idea shines, as it gives an indication of how realistic your team is as to how competitive, scalable and attractive the proposition ultimately is to the potential client, corporate partner or investor.

Finally, the "who", that is your product managers, who understand risk considerations made by stakeholders they pitch to, primarily when it comes to financial institutions partnering with non-regulated actors. Let's be honest: it is 2020 and your product manager should by all means be familiar with what operational resilience, 3rd party risk management (that's your startup!), consumer harm protection or regulatory licensing entails.

Why risk centric prototyping is worth a try?

One could claim that the whole idea of prototyping is to come up with novel and original solutions, initially judgement free and subsequently subject to iteration incorporating user feedback. As such, it may seem counterintuitive to deliberate on whether and to which extent the idea is potentially too high risk for your clients to consider (we are all disruptors here, in the end!) or for that matter, that your very startup is too much risk to take on.

Now, there are clear advantages to taking the whole prototyping process in this very direction as early as possible.

Here is just a handful of examples how profiling, mapping and parametrising the risk inherent in your product or service is worth a while.

To begin with, risk-minimizing functional attributes ultimately represent an added value to the user. Take Revolut as an example, where the language of benefits is used to declare "we're 7x better at stopping card fraud than the high street banks", whereas the user is given full control over the app security features. In a similar way, added value can always be brought by risk centric offering in the broader digital payments industry - think of where digital identity security features are marketed to meet users' conscious - or often educating on unconscious - needs. An example would be to publicise those darkweb scans for compromised personal data you run during standard product onboarding checks.

Additionally, you may find out that your products or services actually enhance your client's risk management policy. Fundamentally, prototyping for corporate clients brings real value where it recognizes and translates into mutual benefit. Therefore, if the competitive advantage of your product lies in its relative simplicity or speed, talk to the fact that it has the potential to minimize your client's operational risk profile. If what you prototype will secure access to granular user data, point to how data profiling can enhance your clients' loan portfolio modelling or credit exposure understanding.

Finally, flipping the coin and finding a common understanding of the risk ran by your clients while partnering with you is a sign of maturity. Using a language understandable to your clients' compliance or risk teams, auditors or regulators whilst prototyping is an early sign that your team will find a common language with the ultimate corporate buyers and investors.

Take a look at how deriskd can help, or even better - simply get in touch!