The financial services landscape is constantly changing. From cryptocurrencies to digital payments to disruptive new investment and insurance paradigms, design has a critical role to play in ensuring the financial sector drives innovation in a way that is as good for people as it is for business.
On this episode, we’re joined by Toshi Mogi, AVP of Strategy, Financial Services, based in frog New York. Toshi’s here to share his insights from two decades of working on consulting and design programs in the financial sector. Toshi also shares a story of Futurecasting, a frog method of scenario building that helps business imagine plausible futures for their business.
Design Mind frogcast
Episode 11: Building Trust into Digital Futures
[00:09] Welcome to the Design Mind frogcast. Each episode, we go behind the scenes to meet the people designing what’s next in the world of products, services and experiences, both here at frog and far, far outside the pond. I’m Elizabeth Wood [EW].
[00:27] Today on our show, we’re talking about designing for trust, specifically in the financial services sector. Establishing trust in this space is not…easy. There’s all sorts of reasons for consumers to fear that a financial product or service might be, well, untrustworthy—especially in a digital era of data breaches and emerging currencies, not to mention the general uncertainty that tends to come along with, say, a global pandemic.
[00:49] For this episode, we’re joined by Toshi Mogi, [TM] AVP of Strategy based in frog’s New York studio. Toshi is a strategist, a professor, a master of puns, a beekeeper, a speed Rubik’s Cube-solver, and the type of person to listen to podcasts at 2x speed, which I have to admit, I’ve been wondering who these people are. Toshi also leads our financial services practice at frog. He’s here to share why trust is so foundational in this space and why imagining plausible futures can help companies be more proactive in their innovation. Here’s Toshi now.
[01:23] TM: When you live in New York, chances are you’re working with the financial services firms. And those are the firms that are also on the forefront of investing in technology and in innovation and really looking for ways to differentiate themselves. I got the chance to work with a lot of financial services firms across the board in retail banking, in investment banking, in capital markets, in payments and insurance, gaining more and more experience for a couple decades now, and seeing how those different industries and businesses have evolved.
[01:58] It is an ecosystem. And there’s many times difficulty in drawing the line as to where one company ends and another begins. There’s a lot of synergies going on. What ties them together is transactions and finances and relationship with value.
[02:15] I’m Toshi Mogi. I’m AVP of strategy at frog. And I work out of the New York studio, and look after the financial services practice.
[02:26] I started off as an engineer and a scientist, and got into the management consulting world after I got my doctorate degree. I then worked in several types of companies, in private equity startups and technology.
[02:42] I ended up at frog, sort of by accident. A colleague of mine who was working with me at a prior company asked me if I would be interested in working at frog and I said, “Wait the same frog design that designed the Macintosh back in the 80s?” And he said, “Yeah!” And we started talking about what frog does and how frog doesn’t just design things, but designs new business models, and helps companies create new experiences. And they need skills that are related to understanding business strategy and understanding technology feasibility. And once I started learning more about it, I was hooked.
[03:21] We’re working with BCP, which is the largest bank in Peru. We’ve been working with them over the past couple of years to build out their strategic design capabilities. Not only a great company to work with, but they’re really making a lot of progress, and creating a strategic design and design-centric mentality within the overall bank. They’ve grown their design team to one of the largest, if not the largest, independent design teams in Peru. They’re just continuing to amaze us with the kind of capabilities they’re able to develop there.
[04:03] One of the big custodian firms here in New York, we did a lot of work there. What was interesting and satisfying about that work is we worked across many different organizations within that company. We helped them to be able to scale their design and design capabilities, which had not just an impact on their overall design, but helped them to release new experiences and new capabilities, new businesses very quickly using their digital components.
[04:30] EW: Along with his work on financial services programs at frog, Toshi also teaches a class on business specifically for designers.
[04:38] TM: I teach a class at SVA here in New York, the School of Visual Arts. It’s in the Products of Design school. It’s a business class for designers. So the students are all graduate-level designers. The department chair really believes that these designers to come out of the program really need to be well-rounded. As we know at frog, we are always looking at the cross-functional synergies and capabilities when we’re working on client problems to solve for the desirability, feasibility and viability components of a solution. And together really making things that are very practical.
[05:20] If a designer is only focused on this creative design desirability pillar of this equation, then they’re going to be a little bit limited having a more rounded solution and more impactful solution.
[05:35] On the first day of class, I ask them, “What are your feelings about business and what do you think about it?” And one student said, “I think it’s kind of like corruption science.” And I said, “Well, what do you mean by that?” And he says, “Well, it’s, you know, very numeric and calculating, but the foundation is in things that are based on greed and corruption.” And I said, “Okay, well, that’s an interesting starting point. But let’s see if you think that way as we get into more of the details later on in the class.”
[06:07] The goal of the class from my perspective in teaching is I want to give them some foundational components and insights that they’ll remember five years out, 10 years out. I don’t want to get too esoteric or too detailed on things you’re just gonna forget about, but give them some basic fundamentals.
[06:24] I tell them, “Look, business people are afraid of designers, you know?” A business person learning design is more difficult than a designer learning business, right? And a designer, with very good business savvy can be very, very powerful.
[06:43] EW: Okay, so maybe business doesn’t have to be pure corruption science. But it is true that businesses, especially financial institutions, are facing a crisis of consumer trust. That’s why Toshi advocates for keeping trust front of mind—he wrote a whole report on it. Check today’s show notes for a link.
[07:02] TM: I’ve written about this. I’ve spoken about this: the notion of trust in financial services, and digital trust in particular, of how important that is to really consider across all touchpoints. It’s like climbing a cliff right? You’re making these incremental motions in the positive direction, but one bad slip up will bring you all the way down. Hopefully you have a safety rope to keep you safe. But, it’s something that as we get more and more digital in these experiences, it’s an important thing to consider: “How do we maintain trust, right?”
[07:39] EW: According to Toshi, there are four pillars for establishing trust in the financial services sector, or really in any organization that’s looking to create more trustworthy customer experiences.
[07:51] TM: So, when we think about trust, we think about these four components. Credibility. So how do you make sure that you are saying and doing and being the expert in your field, right? Reliability: so how do you show up? How do you perform? How do you make sure you’re maintaining that ongoing reliability with your clients? The third component is empathy. So, how do you personalize? How do you really understand the emotional connection with your clients? The fourth one is around aligned interests, or the opposite of that is conflict of interest.
[08:28] These four components work together, and we can now break down trust into some things that we could solve for in a more structured fashion, right? So if you say, okay, “We’re losing trust, because of this situation,” we can turn around, say, “Is it a competency issue? Or is it a reliability issue? Or is it empathy, right?” You can do all the mechanics, but if you don’t really get me you don’t understand my situation, and how this is going to help my goals and outcomes, maybe you’re not the right partner for me.
[09:03] And of course, the last one, around aligned interests, right? It’s very difficult, particularly in financial services, because conflicts of interests are there in the business model. Companies who are trying to make money on fees, for instance, are trying to charge the customer as much fees as they possibly can, right?
[09:24] Companies who make money off of interest want to get as much interest payment from that customer as possible. Meanwhile, that customer wants to be as financially healthy as possible and reduce their interest rates and interest payments. A lot of times these incentives are at odds with each other. And it’s obvious. The trick and the challenge is to find ways in which you do have aligned interests and you are helping look out for the overall financial health and helping your clients achieve the goals versus achieve the transactional value out of the solutions that you’re creating.
[10:03] Trust is the foundation of financial services, right? So without trust none of this could really happen. You see it in the architecture of the bank branches in the past. They made such big, foundational, monumental buildings that people would go to and feel that this company is stable and they’re not going out of business. They have enough to invest in these buildings, they must have enough to support what I need for them for my business or for my personal needs.
[10:35] As we get into, you know, the digital era, we have to think of different ways to make sure that we are creating trust, and we are managing and improving the trust over time. And it’s not new. It’s from the beginning of financial services when the first currency was created, from when the first loan was given out. It was all based on trust.
[10:59] EW: Trust as signalled by architecture in bank branches made me think about the type of branding we see in financial companies, too. Don’t the logos always feature symbols for things that are strong, built to last and weather the elements? Like fortresses, rock formations, giant oak trees? In an increasingly digital, post-COVID world, however, physical structures have an entirely new role to play.
[11:22] TM: In terms of the structures and the physical experience, you know, we’ve gone through a really big year in the pandemic where, at the beginning of it, financial services did not know what to expect. With lockdowns going on across the world, with constraints on what customers could do and also uncertainty in the marketplace in terms of people’s jobs, or, you know, whether they wanted to purchase homes or automobiles and all that. At the beginning, it was very uncertain. We didn’t know what dynamics would change given the situation in the pandemic.
[12:00] There were a lot of things that accelerated. A lot of digitization was accelerated. So people were not just doing Zoom and conference calls, but also doing a lot of digital transactions and financial services had to adapt very quickly to that.
[12:13] Even prior to COVID, we’ve been working with companies on thinking through what that physical location and physical formats could be. For a bank in Italy, Intesa Sanpaolo, we helped them think through how to increase the advisory component of the experiences that go on in the bank. And, you know, we got companies like Capital One who have cafes in there and business meeting spaces—changing the expectation of what you do at a retail bank. We have companies like Umpqua Bank in Oregon, who try to make these much more of a human, approachable, fun space for communities and so they have yoga studios and financial learning events that go on in their space.
[12:58] We’re working with clients to really figure out how do they focus a lot more on people’s lifestyles, more of their goals and life events, and not just the financial transaction, but what is it that that financial transaction is for? Whether it’s building a new house, whether it’s moving to a new location, whether it’s helping educate your family or retirement, and just helping be a partner and supporter of those things.
[14:23] When it comes to trends in financial services, there’s so much changing all the time. We’re seeing innovation everywhere in the customer experiences, in the products themselves. Digital transformation is driving a lot of new experience-driven things, but we’re seeing a lot of trends and companies, building platforms and partner integration, integrating other companies into their customer flows more seamlessly.
[14:48] Now that companies like Coinbase have gone public and, and JPMC has announced their Onyx program for business-to-business and blockchain services. Cryptocurrency, decentralized finance and blockchain are really entering their market entry in a big way and becoming much more present in the mindshare of our clients. There’s a lot of innovation in payments, as we see in lending investments and wealth management becoming much more customer-centric.
[15:17] And, of course, an important topic for us is financial inclusion. How do we create more equity and more equality in offering these types of services in meaningful ways that better balances the fairness of availability, and servicing across the board in all levels of society? We’re hoping that companies are taking it a lot more seriously now that they have the capability to serve these historically underserved markets utilizing technology, utilizing more creative approaches.
[15:51] I mean, this is something I teach in the class as well on value and really understanding our relationship to things of value. Currency, money, you know, is an abstraction. It’s something that you have to believe exists in order for it to be valuable. As the centralized currencies are being challenged with these decentralized currencies, and as we’re seeing things like NFTs take off, the value of these digital assets in more digital worlds and experiences become more appreciated. It’s changing people’s relationship with understanding and being comfortable with different types of value.
[16:33] EW: According to Toshi, design has a role to play in helping people understand and engage with an evolving notion of value.
[16:42] TM: We did an interesting project for a client once a while ago, where we were helping children learn about finance, right? We wanted to create some financial awareness and just financial acumen but very young levels so that we could increase their long term savings behavior over time. It was a very interesting project because we were working with some behavioral scientists and child psychologists to understand: at what age is too early to start teaching about the value of money and currency, right? So we ended up looking at seven year olds to 13 year olds, and looking at how they are starting to really develop the capability to think more abstractly and to understand the value of currency.
[17:28] So yeah, it’s an interesting thought in how do we start processing these abstract notions in different ways. And, you know, we’ll see, right? We have certain countries who are going more digital in their currency. So can you imagine not having bills or coins? Ever? You know, it’s probably going to happen very soon. And so we have to change our mindset on on the way we think about overall value.
[17:58] EW: Changing mindsets in the financial sector starts with broadening perspectives on everything from currency to policy to who has access to what products and services. As it turns out, imagining what the future may have in store can be a very powerful design tool.
[18:14] TM: There’s an interesting story. We worked with an asset management company, and they asked us to help them think about what the world will be in the future and how that might change financial services. We apply a methodology, which we call at frog “futurecasting.” Futurecasting is a version of scenario planning, where we look at the different components of change and trends that are happening across society, across technology, across the government policy, and across the environment. We don’t try to predict the future here, but we create different potential futures, different plausible futures usually anchored around one of these big components that we can really tease out. We call it a future world.
[19:02] We immerse our clients in this in this world through creating a scenario, where they could walk into this studio—into this room in our studio—where we would put headlines of the future. We had a deep fakes video running on loop. We had artifacts of the “future” within that space to help our clients really immerse themselves in what that world could be. And then we come out of those, we’re really starting to think about the implications, their businesses and different types of responses and different types of proactive efforts that they could take to address these different potential realities.
[19:39] When we looked at these trends, we created three different worlds. One was called unparalleled customer power about how that customers are now able, at the individual level to assert their collective power and collective influence on larger businesses.
[19:57] The second world was a world without trust. So here, going back to the theme of trust, but really taking it to the next level were things that were not as they seemed. People, and individuals did not trust institutions, they didn’t trust media. They didn’t even trust their government. They didn’t trust the relationships that they had. And they had to make decisions in this murky world of uncertainty and uncertain truths.
[20:24] And then the third world was what we call the “ultimate intelligence.” So this is where our machine learning, our sensing, our computing capability just becomes more and more focused. And people will know a lot more about what’s going on, understanding our models of how economic influences change certain kinds of financial indicators. And we had this real-time, knowledge and transparency of data across all institutions, so competing against others was more competing against you creating better, better algorithms all the time, right.
[21:00] The one that’s relevant to consumer power, the unparalleled consumer power world, we took that to an extreme. We really started thinking about how the customers, the end users, particularly in investing, we’re going to start influencing policy and influencing investment behaviors of bigger institutions, because they now are able to assemble and they’re able to wield more collective power. So we see this in things like, you know, the GameStop scenario or episode recently that has moved stocks and moved markets. We see this in the environmental ESG movement where people are much more engaged in understanding how their investments are impacting the environment, or social or the overall governance of these companies. So getting more activist investors at a retail level is something that we’re potentially seeing as well.
[22:00] And, again, this is not to create a prediction of the future, but just so that just creating a situation where our clients are ready to see how these different situations could affect their business, and they’re able to respond quickly, right? They’re not reacting to it, they’re able to be more proactive.
[22:18] It’s a good exercise to do every once in a while with companies to say, Hey, you know, today, we think of our world as incremental, but if we look 10 years ago, there’s been so much change that we really have to start addressing, you know, what potentially could be a big game changer and all these things, right? I think technology and trends move a lot faster than people imagine. And just being ready for it is a good practice.
[22:46] EW: Apparently, Toshi’s focus on artfully and strategically transitioning into the future is rooted in his past. Here’s Toshi sharing the best advice he’s ever received.
[22:56] TM: My father was an architect. He told me when I was a kid, “You work the first third of your life with your hands, the second third of your life with your brains, and that last third on your reputation, right?” You know, you’re working hard now, but how do you transition to these different stages knowing that this is how you’re going to be known. Always remember that as you advance your thinking of your job, your career, your life in different stages. That was helpful.
[23:34] EW: That’s our show. The Design Mind frogcast was brought to you by frog, a global design and strategy consultancy. Check today’s show notes for transcripts and more from our conversation, plus links to reports, case studies and other info mentioned in this episode. We really want to thank Toshi Mogi, AVP of Strategy at frog, for sharing so much insight into the changing world of financial services. We also want to thank you, dear listener. If you like what you heard, tell your friends. Rate and review to help others find us, and be sure to follow us wherever you listen to podcasts. Find lots more to think about from our global frog team at frog.co/designmind. Follow frog on Twitter at @frogdesign and @frog_design on Instagram. And if you have any thoughts about the show, we’d love to hear from you. Reach out at firstname.lastname@example.org. Thanks for listening. Now go make your mark.
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