How might we align lending to the ways people think of their finances?
Capital One / 2021
Overview
Problem
During the pandemic Buy Now Pay Later (BNPL) firms such as Klarna, PayPal & Clearpay captured huge shares of the credit market. Klarna itself saw a 363% increase in users between March 2020 and September 2021.
Capital One needed to understand the shifting dynamics, develop a strategy to regain its market share, & position itself to compete long term with instalments products.]I was tasked with understanding this market, and designing a unique product to compete in it.
I was tasked with understanding this market, and designing a unique product to compete in it.
Solution
A new way of borrowing & repaying that gives customers greater control, flexibility & certainty over their finances. Payments are linked to specific purchases or groupings of purchases that match up with how customers think of their spending.
My role: project lead
I was responsible for the research, scoping, survey, designing, testing and validation. I worked with a business analyst to create the business strategy and product managers for the rollout roadmap.
Research
Desk research
Combining data sources showed that the most profitable customers (minpayers and revolvers) were some of the most likely to use BNPL services and that this would likely continue to grow. Further analysis showed that overall card spend representing a fundamental threat to Capital One's UK business model.
Survey
Combining data sources showed that the most profitable customers (minpayers and revolvers) were some of the most likely to use BNPL services and that this would likely continue to grow. Further analysis showed that overall card spend representing a fundamental threat to Capital One's UK business model.
3 areas of opportunity from the research
Loyalty
BNPL customers use a number of providers, mostly doing so because they are there. They aren’t necessarily loyal and are interested in having their finances in one place if the providers offered the same convenience and service their needs.
Security
For non-users security is more important than paying interest or fees. This preference for security is shown in the desire for buyer protection for items in certain, more expensive categories, such as holidays and household goods.
Categories
Using BNPL for clothing is common and will continue to be desired by consumers. But older and mid-market consumers are a key audience for the future BNPL product, due to having a higher average purchase value in non clothing categories such as holidays.
Competitor analysis
Concept development
I ran a series of workshops across a few orgs in the bank and distilled the ideas into 11 concepts. These were scoped and prioritised with the product, data and credit executives for further exploration and testing.
Validation testing
Multiple rounds of interviews were conducted to understand user motivations and to test the concepts and delve deeper into motivations.
Round 1
Objectives
Payment structure
Bundling methods
In-app plan adjusting
Outcomes
2 clear payment structures preferred
Bundling highly liked
Customers willing to pay for adjusting plans
Subscription service has interest
Round 2
Objectives
Desired plan values & lengths
Purchase types
Subscription service desirability
Outcomes
Plans would be £500+ for Mid and Up market segments
Length = imperceptible monthly cost
Subscription offering not competitive
Insights
A series of 6 insights drove the proposition development.
Handover
Documents
A deck was produced for handover and buy-in. It had illustrated user journeys, showcasing specific use cases and user types, a brand proposition, acquisition and marketing strategies, a rough business case and a high level roadmap of how it can be built over time.
Design development
I designed the user flow in collaboration with wider product and design teams, and iterated them further in user testing while beginning discussions with our payments architecture partners to start negotiations.
Impact beyond the project
The project redefined the company's segments and enhanced customer understanding across the business, changing credit strategies and customer engagement guidelines.
Data collected over the project showed the importance of product diversification, and how much the market was changing. It led to similar investigations into alternative offerings.
