Reflection : Learning Launch

Challenge/Selection

I’m working with a local bank and get an assignment to find ways to extend new lending to SME while  maintaining an acceptable level of risks.  As we all know that lending is a traditional banking product  with intense competition, banks are chasing after big clients with high quality credit, while giving less  attention to SMEs which have higher risk profile. Through a few brainstorming and clients’ survey, we  came out with a possible idea, called “lending as a service”. Now that the idea and concept were  formulated, we chose the learning launch to test our thought.

Application

From our survey, we found that many high quality credit customers (Big Guys), who normally don’t  really need to borrow but have many banks line up to offer money, would like to help their small  vendors or suppliers (SMEs in need of cash) in the supply chain so that the vendors would be able to  deliver their product/service as expected, while nothing impacted the Big Guy’s balance sheet.  Unfortunately, banks are not really exciting to finance and fill that gap given the not so good credit  standing of the small vendors. So our team twisted the lending concept a bit by rather than having  bank making the decision to finance each vendor’s transaction, instead we offer to provide a service  to the Big Guys such that the decision on financing the transaction was with the Big Guy (including  lending price and tenor upto 180 days). Bank will do the lending accordingly with an unconditional  promise from the Big Guys to pay each financing transaction when due on behalf of the vendor thru  the bank as a repayment.  So all wins; small vendors get credit to run their business, Big Guys could  have peace of mind that vendors will render their product/service accordingly in time, and last by not  least Bank gets to lend at an acceptable risk.

A tough part is to get the whole idea into action. By learning launch, we firstly sold the concept to a  few Big Guys to test the market. The idea got highly accepted. Then we selected 2 Big Guys to really  test the whole operation, including all legal and compliance aspects. Internally, it took us a few  months before we could settle a few operational problems since our lending system is not that  flexible. Some manual works to accommodate the process are necessary. A few ping-pong affects  with our risk people as well as legal and compliance team which took forever before we could come  into the least agreement with all parties.   With our customer, we also came across a few issues on  matching the selected transaction from the Big Guys to be financed and proof of invoice from the  vendors, and the cumbersome of some process and system changes at the customer end as well.   However, at the end of the day, the 2 Big Guys were pretty satisfied with the outcomes.  Therefore,  we should be able to scale up our offering, after some improvements in the near future.

Insight

We start our project by finding what really our customer’s empathy is, in order to find the closest  solution to the requirement. It turns out that we probably hit it since the idea is easily sold with the test  group. However, it would make things a lot easier if all stakeholders, with appropriate mindsets, are  involved early in the idea development stage. And by learning launch with only 2 customers, the  problems could be resolved in a timely manner and within our available capacity. Learning launch is  really helping since you’d never know what might come during the new concept offering especially on  the financial product since all the time wasted is counted.

Approach

Actually we used many design thinking tools in this exercise to generate ideas, possible solutions,  and finally put it in action.  However, in the financial world which every second counts, it is important  to be very careful in launching product.  Therefore, learning launch is a powerful tool to really answer  the quick financial solution with a minimal loss, if any.  It truly helps to identify any weak spots in the  whole processes so that we could cover it before the full rollout.  For the next project, I will definitely  use learning launch as it answer both speed and limited loss. However, will try to better communicate  and create collaboration among all stakeholders early during idea generation to make sure that other  people are understand and align their ideas to become “one team”.

