In August 2019, Atom Bank was awarded a £10 million grant from the Capability and Innovation Fund (CIF), part of a £775 million package administered by Banking Competition Remedies Ltd (BCR).
It’s been widely reported that the BBVA New Digital Businesses portfolio company will use the grant to “help transform banking for small businesses and deliver an additional £3 billion of business financing by March 2024.”
But how did this story come about? What led Atom to seek this grant? How did they go about creating a proposal that went up against 76 other bids — and was one of only four winners from Pool C of the £425m Capability and Innovation Fund (CIF).
Atom’s current business banking proposition has matured over the last couple of years, but the bank’s Net Promoter Scores were lower for business lending than its consumer-facing products — prompting a reimagining of what customer-centric business lending could look like in a digital world, according to Michael Sherwood, Atom’s Head of Customer Experience.
“We wanted to take a blank sheet of paper approach and completely redesign things, from the ground up, with customers at the center of our thinking”
They code-named the effort “Project Hook,” with the aim to “discover, design and build a digital proposition that would make Atom the partner of choice for SMEs in the United Kingdom,” Sherwood said.
Project Hook was the ambitious product of a small team made up of stakeholders from several departments: propositions, marketing, visual design, user experience and product managers. It took them 10 weeks to design the solution from a blank sheet of paper to a fully realized proposition the Board could sign off on, which they would then present to the BCR.
Let’s take a look at how the team tackled the project.
Exploring Jobs to Be Done
To build the solution, the team used a framework known as Jobs Theory or Jobs to Be Done.
“The framework plays to one of our strategic aims: To be the most customer-centric bank on the planet,” Sherwood said.
Jobs to Be Done has a singular focus, which it pursues through listening and talking to prospective customers to understand the jobs that need to be done in their daily lives. If those jobs aren’t “being done” in the market already, you work to build an innovative solution customers might “hire” to fulfill them.
“If you ask somebody who’s cutting their grass what they’d like to see, they might say they want a better lawn mower. Perhaps a self driving AI powered machine that has an electric motor,” Sherwood said. “But the job that the customer needs doing is that they really want to keep their lawn looking nice — so rather than focus on creating a better mower, perhaps you look to invent a grass seed that only grows to a few centimeters and always grows green.”
The Double Diamond
The Atom team used a design thinking framework known as the Double Diamond to discover and develop its solution.
The model uses two types of thinking, divergent and convergent, to approach problems and their potential solutions.
- Divergent thinking allowed the team to think broadly, considering anything and everything
- Convergent thinking encouraged narrower scope of thought, to bring back focus and identify the most pressing problems and most promising solutions
- Discover customer problems
- Define specific customer problems
- Develop potential solutions to these customer problems
- Design feasible and viable solutions to serve the underserved customers jobs
Discovering Customer Problems
In the first half of the double diamond, the team conducted 90-minute exploratory interviews with 28 different small-to-medium enterprises — some successful and others less so — from across the country, to understand what it’s really like to run a business as an entrepreneur.
“We very deliberately probed these entrepreneurs to get under the skin of what it’s really like to run your own business both practically and emotionally. We only probed financial service provision at the very end of the interview, ” Sherwood said.
Several themes emerged during those interviews:
- I need help to develop my business going forward: SMEs want to better understand how their business is performing and need simple options to help run their businesses more effectively in the future.
- Managing my cash flow is an issue: SMEs want tools to help them manage cash flow better, including efficient invoicing tools to get paid on time.
- I want to spend more time on my business and less time on financial admin: Provide data, insight and tools that take the effort out of running my business finances.
- I need a financial safety net to fall back on: Sometimes, SMEs need a cash safety net to see them through until their next invoice is received.
- Professional services leave me wanting: They know they need help, but don’t know who the best people are to provide it.
- I’d like help improving my financial literacy: Many entrepreneurs started their business because they had a dream, and they didn’t realize how much work was required to manage the finances.
These interviews served to flesh out the “jobs” that need doing in the marketplace. Then, once the Atom team understood the jobs to be done, they performed a quantitative piece of research to validate the findings with 638 UK SMEs. Once validated, they continued researching the existing market for solutions aimed at getting those jobs done.
They discovered, after a market analysis of the UK’s “Big 6” banks, neo banks and fintechs, that the majority of the jobs are underserved. “Business banks are not geared to serve many of the true needs of SME customers” Sherwood said.
Developing a Solution
The work continued into the second half of the double diamond: The Project Hook team delved into design, using different design-thinking techniques to generate many ideas for the proposition in a short time. Then they built low-resolution prototypes for business-lending propositions they could take back to the original 28 stakeholders they interviewed.
“We presented them with our findings and three different prototypes,” Sherwood said. “We asked what they thought, then we iterated based on their feedback.”
From there — and keep in mind, this all happened in a 10-week window of time — they devised a business plan that they presented to the Atom Board.
The team’s approach resonated with the Board. “They really bought into the customer-centricity of it.”
Moving on to Next Steps
But after a strenuous application and vetting process with the BCR, Project Hook did get the go-ahead — and £10 million — it needs to create the proposition.
Now the real work begins: Atom has many milestones to meet as part of its grant, including public commitments to job creation and customer acquisition, not to mention the development of the actual products. But the team will stay on task by remembering their commitment to customer-centricity, Sherwood said.
“The £10 million is big in the mind, but this all really boils down to wanting to go out and listen to customers”, he said. “You’ve gotta really care about people, and obsess about how we can leverage our collective capabilities to help make running their business easier.”
Visit Atom at https://www.atombank.co.uk