Creating a fintech startup is a thrill that’s hard to replicate. You take your big idea and you breathe life into it, you turn it into a business and if you’re especially lucky then some mega-corporation sees the potential in it and buys it off you for a fortune. But it’s a journey fraught with pitfalls that cause 90% of startups to fail.
To be in the 10% that make it, it’s worth looking at why they fail. CB Insights has a list of the top 20 reasons why this happens, and up there at number six is “User Unfriendly Product”.
That’s interesting. When we saw that UX or UX-related problems are a major contributor to startup failures, we decided to put together a checklist for founders that will flag up the most common ones so that they can avoid them.
But good UX isn’t only about avoiding failure. Good UX design right from the start is going to help your fintech’s fundraising efforts, too, so here’s what to do.
1. Do your UX research before you build anything. The number one slot in the CB Insights list that we mentioned above is “No Market Need.” In other words, those that failed tried to base a business on something that nobody wanted to buy. It seems a shame that they could have saved themselves a lot of trouble by investing in user research and user testing from the beginning.
UX research dovetails with this process. It’s also known as “human-centered design,” because it’s a process of asking questions about how customers use a product or service. They’re the ones who you hope will part with their money to use it, so why wouldn’t you try to create something that they love?
And yet UX isn’t always high on the list of priorities for startups, which seems odd. An engineer may be able to turn your square-wheeled bicycle idea into reality, but a UX designer can do something far more valuable for you. They can give you the bad news before you commit to production. That’s why hiring a UX designer early on makes the most business sense.
2. UX lets you build the right product in the right way from the start, so you won’t waste your own or anyone else’s development money by getting it wrong. That’s crucial because investors will always examine your track record. Can you perform within budget? They want to know.
It’s usual for engineers to spend a lot of time and money fixing bad features, patching up and redoing work that wasn’t done right the first time.
You can avoid that kind of waste through user research, lean prototyping and testing. They can help you establish what’s going to work for your customers ahead of time, and according to research, they’ve been shown to cut development time by anything from 30 to 50%. That’s a lot of time and money you could be spending on other things.
3. Investors will be keen to see a competitive analysis or overview of the market landscape. They’ll want to know who else is out there early on, and what they’re offering, so use good UX design to make sure that your product can compete.
Some companies are fortunate. They can offer a unique product or service, but that isn’t the case for most. The marketplace they compete in is crowded, so they must look for any competitive advantage that they can find. Usually, that means aiming for better functionality, greater ease-of-use, and a better emotional experience for their customers. A study by Gartner showed that 90% of companies viewed customer experience as their main differentiator.
UX design follows an iterative design process, which means that products are developed using lean cycles of researching, testing and improvement. This leads to final design solutions that have been reached incrementally, with each step forward shaped by data in increments of refinement.
Flaws in a product can be difficult to fix after-the-fact, but with the UX design process, it’s much easier to uncover them and fix them on the way.
4. Your Go2Market strategy helps you find the quickest route to your target audience, and user experience design feeds into your branding and marketing efforts.
If you know your customer and you know what they’re looking for then you’ll have a better understanding of how to sell to them. UX design is dedicated to creating a product that meets their needs, and in so doing helps to shape a product proposition that can only help to build the brand.
5. Entrepreneurs face a lot of distraction. The UX journey keeps you focused on the factors that matter and better able to respond to change.
In business, it’s tricky to manage a product through iterations and growth cycles. You can quickly lose focus on your core customers and your business model, but UX design’s iterative methodology is inherently user-centered, so it helps to keep startups focused on core business objectives, the most important features, and when and how to pivot.
Research has shown that UX design is one of the best investments a tech entrepreneur can make, as its sole focus is on turning your product into something that the customer wants.
To get a UX expert on your team book your first call with Pixels and Sense, and to benefit from the guidance of venture industry veterans, talk to Finance PM.
Schedule a free 30-minute call with our founder and design lead, Tim Strebkov, and see how we can help you reach your goals with 1st class product design.Book a Free Strategy Call