How Africa Transacts: The Movement of Money On The Continent

Needless to say, both of these scenarios have seen major changes over the last decade. With the proliferation of the mobile phone in Africa, complimented by increased access to connectivity, we have seen a convergence between telecoms and banking, with a series of businesses and solutions being borne at the intersection of these two points. Check this checkstubs generator new software to help your business out.

Mobile Money

A trend that has swept many countries on the continent has been that of mobile money. The concept behind this is that a mobile number can act as a pseudo bank account with the ability to send and receive money between parties, simply by knowing the mobile number of another user on the network.

The mobile money solution relies largely on another unique concept seen more prolifically in telecoms, but now migrating to the banking and financial services sector at a rapid rate, the “agent model”. In this model, customers are able to make use of a decentralised network of agents who operate on the banks behalf to cash users in and out at physical points in their local areas. This allows users to get access to physical cash when needed without needing to travel in to city centres to visit formal banks to carry out these transactions, while also dealing quite commonly with trusted members of their community. More importantly, it allows users to “digitise” their cash for ease of transport, incurring a small enough fee to make the process worthwhile.

In East Africa and moving Westerly, the front-runner in this domain is mPesa, a Vodafone launched service for Safaricom and Vodacom – with over 28.5 million users. In Zimbabwe who sees a staggeringly high volume of mobile transactions on a daily basis in comparison to other methods of transacting, it is EcoCash who dominate the market. To contextualise the size of the mobile money transaction volume, in 2017 digital transactions in Zimbabwe accounted for over 96% of all transactions, with the bulk (+-80%) of this being mobile money transactions. Several other players operate across the continent including MTN, Orange, Tigo (Millicom) and Airtel, but no single company owns the African market outright. Interestingly, mobile money solutions have not resonated as well as they have in the two areas mentioned above elsewhere in the continent, with what could be considered somewhat of a failed attempt by MTN at launching a similar offering called “MoMo” in the South African market in 2016. Reasons for its failure have been cited as the fact that South Africa has quite an advanced and well adopted formal banking environment which provided too much competition to the service, as well as the costs of managing a mobile money platform simply being untenable at the time. MTN have since announced plans to re-launch this service in the early stages of 2019.

Intra-Country & Cross-Border Money Transfer & Remittance

In the long distance and cross-border money transfer domain, there have always been two incumbents who have dominated the market, namely Western Union and MoneyGram.

Although they have certainly not been usurped from their position, this market has become heavily disrupted with companies like Zoona, operating in Zambia, who’s huts have become a hallmark on street corners across Lusaka. Zoona offer citizens of Zambia the ability to transfer money easily within the countries borders by using the agent model combined with a “cash-float” system which allows agents to receive, transfer and pay out cash transactions on the spot. Zoona also offer products for salary payment in bulk which are ideal in the more remote agriculture areas with large farming communities who rely on cash for most of their transacting.

In the cross-border money transfer domain, we have also seen a fair level of disruptions with providers like Mukuru, Mama Money and Hellopaisa beginning to show a marked effect on the industry. All of the aforementioned businesses approach this market with a slightly varied value proposition and rates between them may compete differently between two markets. However, by pure virtue of the increased competitiveness in the industry, the cost of money transfer has naturally begun to decrease, putting more money in the hands of the end-consumer.

The table below (click to zoom) shows examples of the rate differences between 10 competitors in the cross-border money transfer domain, listed from least expensive to most expensive in descending order. This was for a specific value transferred between South Africa and Zimbabwe in November 2018.

A comparison of money transfer costs between South Africa and Zimbabwe in November 2018.
Courtesy The World Bank (https://remittanceprices.worldbank.org/en/corridor/South-Africa/Zimbabwe)

Where to For The Future of Digital Transactions in Africa?

New solution providers are waiting in the wings in all areas of the FinTech spectrum. Already blockchain based solutions like Stellar who aim to further reduce costs of money transfer have come to the fore. In addition, serious consideration should be given to the payment abilities built in to Facebook’s messenger application, a platform who through its’ sheer scale has the ability to become the de facto payment service on the globe.

The result of the introduction of the mobile phone en mass, better network accessibility, more affordable fee structures and an increase in the number of role players in the FinTech domain have meant that people of the continent have begun to see great advances in the digital solutions provided in the financial services and management domain. Whether it is the ability for a stall vendor in Mozambique to accept payment for their goods in a remote location or a family member’s ability to easily send money home without needing to travel for extended periods, it is these small victories which cumulatively contribute to an uplifted continent.

Where to next is anyone’s guess, but as more Africans becoming truly connected to the digital economy, the increasing return in value seen from the implementation of smart digital solutions is likely to prove ever more advantageous for the continent as a whole.

Digital Strategy 2.0: Planning Frictionless Experiences For A Connected Customer

Having a clear strategy in place in this regard around which to structure your efforts and decision making is an obvious first step in providing you and your team with a clear foundation for what you hope to achieve through its implementation. With this said, it is not un-common to see businesses across the spectrum, where the strategy in place is very poorly crafted or even worse, non-existant. Creating a solid strategy does not need to be difficult but there are some key consideration that need to be taken in to account.

A United Front

Many businesses have a serious issue, most of whom are not yet even aware that it exists. The issue that I am referring to is the major disconnect between two pivotal departments in their operation who can simply no longer afford to work in silos, marketing and IT.

These two departments’ intrinsic linkage relates to the fact that as customer data is generated and stored, so the business is able to learn from the customers’ actions and behaviour and invariably make better decisions in communicating, selling and servicing this customer. Moreover, as customers look for convenience and avoid high friction encounters, they have begun to expect that interactions they have with your business are made simpler through the use of technology. This may come in the form of a customer portal, an e-commerce facility, parcel tracking, digital on-boarding, digital signing and so the list goes on. 

This marks an important departure from a traditional digital sales and marketing strategy whose main purpose was to increase revenue. The new dawn of a Digital Customer Experience & Sales Strategy aims to increase revenue as well as decrease costs and improve customer satisfaction levels. With this expanded reach, there is a necessity for a department or position within the business to take ownership of the full “digital customer experience”. The responsibility of this position will be to integrate and unite historically silo’d departments and build frictionless omni-channel experiences, where access to business systems and data is equally important as digital brand experiences which supplement the sales agenda.

Mirror Your Business Strategy

At its absolute core, a strong strategy should mirror what the business as a whole is trying to achieve and not simply be developed within a digital vacuum. The digital objectives should be an extrapolation of the objectives defined in the business strategy, with the digital context, opportunity and idiosyncrasies in mind.

These objectives should be well documented, as they will become the north star to which each team member works. They also provide a valuable acid-test when tough decisions need to be made – if the decision does not support the objectives specified then it is likely a distraction.

Set Strong Foundations

Although it may seem obvious, the efficacy of a digital strategy relies on its ability to convert your customer at the intended conversion point (e.g. checkout, book now, login, track parcel). For every business this is different but in all cases there is a tangible conversion point and key to converting your customer is ensuring that the platform (web, mobile, etc.) on which this conversion takes place provides no unnecessary obstacles to the user or customer.

The strength of the platform will be directly correlated to the success of your digital activities and so a simple step in increasing your expected ROI is to ensure that your platforms are in top working order and measurement and tracking are working as they should. Furthermore, the process of improving these platforms from a usability point of view should be viewed as an ongoing exercise, as these improvements will only contribute to an increasing ROI.

Don’t Measure Digital Success in a Vacuum

Too often, those responsible for heading up digital channels will base their planning and measurement around performance from previous months or years. Although important so as to be able to contrast successes from within channels, this can lead to confusion as return on investment becomes increasingly difficult to measure at a business level and the result of this is an eroded confidence in what value digital implementations are providing.

If a business strategy plans to decrease overheads by 15%, what can be done in the digital domain to have the same effect and make the business more efficient? How can digital spend on a customer portal for example reduce the salary or rent bill attributed to call-centre staff? These cost savings will likely be seen far from any “digital” analytics platform but rather on the balances income statement. It is important in this case to get access and visibility of these figures to quantify the true success of the implementation.

Similarly, what factors contribute to the business’s revenue figure? Is it bookings made, products sold, registrations completed? How does one quantify the success of a paid media campaign for a booking made online when the service is delivered and fee calculated at a later stage in-store? Once again, the need to tie the original booking back to the value received becomes imperative to quantify the success of the digital activity which lead to the original booking.

Measuring digital metrics against business data as well as non-digital channels will begin to reveal important return on investment (ROI) data and will provide a strong case for driving one channel more so than another, pulling out of a digital channel altogether, or shifting budget from a traditional to digital activity. For more on high return investments, check the many options available thanks to Skrumble. 

Although often quite challenging to carry out, it is imperative to contrast results achieved through digital platforms to financial data from the business and measure these against the numeric benchmarks you have set for yourself. With the evolution and integration of business systems, this should no longer be a complex task but rather be an imperative component to the set-up of your digital strategy.

Partners, Communication & Optimisation

The success of a strategy’s implementation is only as strong as the role players and partners who contribute toward its success. Critical to your partners ability to succeed in what they do is regular and open lines of communication with one another, as well as a point person within the business through which to channel questions, as well as discuss issues and opportunities.

Due to the highly interconnected nature of the digital ecosystem, partners contributing to your success are often inadvertently affecting each others’ performance by actions taken across the suite of channels and platforms on which they operate. For this reason, regular retrospective as well as forward looking conversation are imperative if true collaboration is to be achieved.

Continuing in this vein, your digital efforts require ongoing optimisation and your strategy should not aim to define a victory position but rather provide those involved with a guideline for evaluating, analysing and refining their efforts, as an ongoing loop. What is offered in the digital domain which is rarely offered elsewhere in the business is the in-depth analytical information generated by the platforms, systems and sales channels at your disposal. This data is crucial in improving how you make use of your platforms and channels and provides you with the quantitative proof to guide your hand in realising increasing returns on investment.

In Summary

These consideration are not new to those who have successfully operated in the digital domain, but the execution of these items requires focus, dedication and buy-in from all parties, including most importantly your executive team. The reality of business today is that being a digitally mature business is no longer seen to be a competitive advantage but rather a necessity. Your customer base has become expectant of a seamless tech-based relationship with your brand and if you cannot offer them this, it is very likely that there is a startup around the corner, or one of your competitors waiting in the wings to give them what they want.

Be smart! Put a solid game plan in place, walk your team through it and keep referring back to it to keep yourself accountable.

First World Solutions to African Challenges: A Continent Empowered by Technology

It is really off the back of mobile penetration that the ability exists for these solutions to be realised. One may argue that the continent has not seen the growth in mobile penetration like has been seen elsewhere in the world and there are several plausible reasons which contribute toward this, none less so than cost. Even so, consider the expanse of mobile network infra-structure that has rolled out across the continent in comparison to the extent of other essential services like access to clean water, energy, healthcare and education with proper authority. Relative to these essential services, this expansion has taken place at an alarming rate and following close on its coat tails has been the equally rapid proliferation of smarter devices finding their way on to African shores, largely from Asia. The combination of these two has meant that the foundation for smart solutions has been well established and it is really up to innovators and the people of the continent to take advantage of the environment that this has created. Continued hinderances to mention include, in the main, access to 3G an 4G data, data costs, as well as a large skills gap and steep learning curve on the part of the consumer and their ability to successfully make use of the solutions provided.

Mobile Penetration Comparison
Source: GSMA Association : The Mobile Economy Sub-Saharan Africa 2018

In Which Industries are Innovators Most Interested?

As could be expected, industries which are receiving the most attention from innovators across the continent are those within the primary sector. It is these industries which have largely remained in their foundation phase, despite being in existence for a significant period already. It is also in these industries, which often cater to the most basic of human needs where the greatest challenges continue to exist for the majority of Africans. In this vein, we consider industries like healthcare, transportation, provision of energy and water, education, banking and agriculture. If more successfully provided to the people of Africa, it is these services which have the ability to play a significant role in the rise of the continent, learn more about modern business handling by checking this paystubs generator software .

As a microcosm of the innovator landscape, we look at the likes of telemedecine solutions beings used in Botswana to enable remote diagnosis through the assistance of Skype for Business, a marketplace for farmers and buyers in Kenya (M-Farm) and energy being delivered to small village communities through the use of solar power, cloud infrastructure and a micro-grid layout in remote location across the continent (Standard Microgrid, South Africa). The list goes on with innovators making a significant difference in the lives of so many across the continent, powered by technology and the wave of digital transformation which continues to intensify.

Where to Next?

With expanding mobile infra-structure and spectrum with help from local training services like this cherry picker training company, an increase in smart devices, lowering data costs and a wealth of innovative minds, the assumption exists that Africa has a real opportunity to catch-up on what has been decades of slow growth and disparate opportunities for its’ people, when comparison to their peers the world over.

One can only hope that no unnecessary economic or political roadblocks are put in place to stifle this innovation, as has been seen elsewhere on the continent. With a new generation who have grown up alongside this technology and who are likely to be even more comfortable than the generation who came before them, one can only imagine that the future of the continent is likely to be brighter than ever before.

The Rise of The Digital Bank: TymeBank, Bank Zero & Discovery Bank

For South Africans however, this is all set to change in 2019 with the issuance of 3 new banking lisences by the South African Reserve Bank to 3 digital first banking operators. This is in an attempt to bring a more competitive environment to the industry, lower banking costs and enable higher rates of financial inclusion with services like MQL. In fact, it will be the first real shake up to the industry since the early 2000s when Capitec entered the market and managed to win over a significant portion of customers through an aggressive pricing strategy.

The recipients of these lisences are Discovery Bank – the banking division of the well known insurance group, TymeBank – the banking arm of TymeDigital, a FinTech business known more commonly for its’ money transfer service available in retail outlets Pick ‘N Pay and Boxer and finally Bank Zero – the brain-child of ex FNB CEO Michael Jordaan and partner Yatin Narsai.

What Makes a Digital Only Bank Better?

Digital first businesses have seen much success the world over. Consider GiffGaff in the UK, a mobile network which relies its community and call centre exclusively for support resolution and ships all SIM’s via the postal service, enabling major cost savings for the business and customers in comparison to many of the other networks.

This model, which has no physical presence and so also a much smaller staffing cost is able to lower its’ cost base considerably. Importantly, this model is able to avoid jeopardising the customer experience provided traditionally “in-store” by increasing the interaction and communication channels between customer and business through other more economical means. With these cost savings to the business, naturally comes the ability to pass these savings on to the consumer, meaning that the “digitisation” is really a pricing strategy at its core.

In the banking domain, this method of delivering banking services is expected to enable a cost to income ratio of approximately 25-30% in comparison to the traditional 60%. This difference is set to result in lower bank fees and more competitive interest rates, both a major driver of consumer’s decisions in this industry.

The question on everyone’s minds is how comfortable are South African consumers with “digital only” operations and will the pricing strategy be enough to switch existing “multi-banked” consumers who have developed a level of brand allegiance and familiarity with their traditional banking providers.

Approach & Positioning of the 3 Banks

TymeBank

Set to officially launch in 2019, TymeBank, majority owned by Patrice Motsepe’s African Rainbow Capital (ARC) is targeting low to middle income retail customers, known to be unbanked and underserved, as well as small, medium and micro enterprises.

Offerring an EveryDay Account with no monthly fee, free card swipes and relatively low transactional fees, as well as a GoalSave savings accounts which offers up to 10% interest with a maximum saving of R100k, TymeBank’s strategy places it head to head with traditional incumbent, Capitec.

Bank Zero

Set to launch in mid 2019, Bank Zero will offer an application driven experience and will operate as a mutual savings bank. Different to traditional banks with shareholders, a mutual savings bank is owned collectively by its members who subscribe to a common fund and are recipients of distributed profits. A major focus of the business is around encouraging savings and helping members to move away from the “instant gratification” challenge presented by conspicuous consumption.

Being entirely app driven is set to provide an interesting dynamic for Bank Zero, with data costs in South Africa still being relatively high. There is a question to be asked as to whether Michael Jordaan’s other fledgeling busines “Rain”, a newly formed data only telecommunication provider championing the lowering of data costs, will play a facilitating role in seeing the growth of Bank Zero?

Discovery Bank

Still in staff beta testing and also set to launch in 2019, Discovery Bank has kept to their routes and is positioning their banking arm as a “healthier” alternative. Through their well known behavioural modelling and use of real-time consumer data, as analysed in “Digital First Insurance : A Disruptive Wave Revitalising an Age Old Industry”, combined with their rewards/ incentives approach, Discovery Bank aim to affect your personal health by influencing the health of your banking behaviour (i.e. savings, debt).

With the benefit of already having a very large customer base in other verticals, including health, insurance and investment, as well as their partnership with FNB through the Discovery Card, they are likely to be able to migrate a large portion of customers who are allegiant to the Discovery brand and appreciate the convenience of having all of their services under one umbrella.

With a play at more than simply private banking, but also into wealth management, they will not only be taking on the big industry incumbents, but also those operating in the wealth management domain. Offering dynamic interest rates, Discovery Bank believe they are set to turn the industry on its head, a visual we are reminded upon in their launch media.

A comparison of the core characteristics of the digital only banks set to launch in South Africa in 2019.
Courtesy @michaeljordaan on Twitter Dated: 19 Nov 2018

A Tough Nut to Crack

The true success of these digital-only operations will only be seen in time.

In a country with a population who are still getting to grips with a digital business environment and an industry notoriously difficult to crack, the biggest challenge these operators will face is whether their pricing strategy is enough of a draw card to get customers already banked elsewhere to switch.

In addition, we must consider whether this new wave of banking will be the catalyst needed to attract those who are still unbanked and whether this is potentially the customer, in considering the continent as a whole, on which these operators are looking to base their future success.

Digital First Insurance : A Disruptive Wave Revitalising an Age Old Industry

Customers aside, when debating real winners in the insurance equation, there is really only one,  the insurer. The iconic “fat cat” that keeps growing by using the contributions of many  as collateral to work the financial markets, while seemingly making every effort to deny claims on a range of technicalities specified in the fine print.

Things however seem to be changing for the better. As technology permeates the industry, we are beginning to see its use as a key driver of competitive advantage. There is a new techno-centric breed of insurer making a play, breaking fundamental rules on which the industry has based it’s success, in an attempt to appeal to a new style of customer.

Discovery Heath: IoT Closing the Feedback Loop 

Although potentially not employing an entirely new business model, Discovery Health is making  use of wearable’s and the devices which have now become second nature in our lives, as a core mechanism on which the success of their business relies. An age old problem insurers have had is how to really understand the behaviour of their members. A member may promise to act in a certain way, exercise to a certain regime and drive like a law abiding citizen, but how can a business who bases its risk modelling on these tenants be sure that what it thinks about its’ customer, is in fact true.

Enter the age of IoT (Internet of Things) and smart devices. In the case of Discovery Health we have seen the mass proliferation of the Apple Watch  – a tool that is not only valuable to its wearer in being able to track exercise activity among a host of features, but equally and potentially more valuable to the Health Insurer who uses it as a mechanism to provide a feedback loop, informing them of their customers’ true behaviour. In addition to providing an accurate feedback mechanism, Discovery Health incentivises ownership of the device among its members, having watch repayments fall away as long as exercise and activity goals are met.

Discovery Health have since accommodated for a host of other approved smart devices and the culmination of this program has meant that they have found themselves in any insurers ideal position. As a start, due to their incentivisation of healthy living, the health insurer is attracting customer’s with an exercise-minded approach to life, carrying on average a lower risk profile. Secondly, they are incentivising continued healthy behaviour through a rewards based approach (i.e. watch repayments, free smoothies, free coffee’s, etc.)  and so members across the spectrum are living more active lifestyles, once again lowering their risk profile. Lastly, their model is no longer based on assumptions about their member’s behaviour, but is rather based on hard data to substantiate their modelling. All of these aspect act to lower risk, the fundamental principle on which the insurance business model is based. For more about how to handle your business you should check the new checkstubs generator software.   

The use of technology in this manner has also been seen in their vehicle insurance business where they are making use of smart devices with built in GPS’s and force meters, already owned by their members, as a mechanism to judge how one is driving. With the launch of Discovery Bank in 2018 we are sure to see an evolution of the model, where the bank now has access to transactional data on its’ members, closing the last of the information feedback loops around lifestyle related behaviour and a member’s financial standing.

Pineapple: Fair, Simple, Social

Where the Discovery Health business model has not necessarily changed but rather improved their ability to model and manage risk, new kid on the block Pineapple  Insurance have completely turned the model on its’ head. Pineapple’s model relies on the  three principles – fair, simple and social. Surprisingly, not three words one would have associated with a historically unfair, complex and insular product.

Fair

The principle of fairness is most probably the greatest change Pineapple have brought to the insurance offering. This is achieved by Pineapple allowing their customers to withdraw any contributions still left in their “wallets” after a period of 13 months. This wallet value consists of all contributions less Pineapple revenue, administrative and organisation fees and any expenses incurred to pay out on members’ claims. This model means that no longer are monthly contribution simply “lost”. Rather, in the interest of transparency, contributions reside available to the network for claim payments for at least a calendar year, at which point members have the option to withdraw the balance of their wallet. In addition, members are made privy to all deductions incurred, including having visibility of deductions made for the purpose of paying the claims of others in the network.

Simple

Although major strides have been made since the days of sales centres, form-filling and arduous waiting, there are still options available to insurers to improve and lower the friction of on-boarding new customers. Pineapple have realised this and in an attempt to circumvent the often painful and slow-moving process, have created end-to end digital on-boarding and claims processing through the use of their application. Simply take a picture of an item, add an insurable value and get a quote in real-time, then once you have accepted the quote, add your payment details and you are insured – a process which appeals greatly to a new “instant gratification” generation. Ironically, this enhancement suits both customer and business, lowering the often expensive staffing and operational costs incurred in traditional insurers when needing to facilitate customer support and claims processing.

Social

Finally, Pineapple have decided to bring in to their model the idea of social connections as a mechanism to help customers lower their risk profiles. By allowing their users to identify and “connect” with people using the platform who they know, they are able to alter their risk exposure and distance themselves from a supposedly more “risky” insurance pool. In helping the customer lower their own risk profile, this mechanism also creates an incentive for users to attract family and friends to the platform, using the social nature of “connecting” as a tool in which to more rapidly grow their customer base. 

A Welcomed Change

In many industries the inclusions and adoption of technology and digitilisation is seen to be somewhat frivolous. Perhaps they provide an enhanced, quicker, or more pain-free method of carrying out an activity already provided for in a “traditional” manner. Although this inclusion can often be highly valuable to both business and customer, changes of this nature do not necessarily have far reaching consequences for the company or industry – they simply improve it.

In the cases above however, the inclusion and use of smart devices, wearables, data and principles enabled by digitisation that have allowed humans to create a more connected environment, mean that these businesses are able to provide a tangible advantage over industry incumbents It is when the big incumbents begin to worry about the health of their own business and question whether they should buy or build similar elements and incorporate these in to their own businesses, that we see the true measure of how disruptive digitalisation can be.

Be My Eyes: When the Power of Community & Technology Combine for Social Good

What Makes this Work?

Having read up on why the blind or visually impaired find this application, which is in essence a prosthetic of the digital world, such a valuable tool, is based on the feeling that many in this community often feel like a burden to those closest to them, when continuously asking for assistance with everyday tasks. Naturally, this responsibility normally falls to close family or friends who receive multiple calls a week – all while trying to get on with their own lives, ultimately leaving those in need of support feeling uncomfortable about their continued need for assistance.

On the part of the volunteer, this application fills a very basic human yearning, the want to be able to contribute toward the greater good of society. Volunteers on the platform experience pride along with a sense of good and a resultant feeling of happiness as a result of being able to help someone, even if it is in the smallest of ways. The environment created by Be My Eyes enables the ability for anyone around the world to be able to put themselves in a position where they are able to be of assistance to another in a low-friction, short lived engagement.

But what if the recipient of the call does not accept or is busy themselves? 

The beauty of Be My Eyes is that the network of volunteers is so great that when one person is busy, there is always someone else who can take the call. This ensures that the person seeking assistance is never left without the support they require, while also ensuring the volunteer is not left feeling inconvenienced.

Willing Buyer Willing Seller

The result of these two concepts means that the blind or visually impaired need no longer feel like they are being an inconvenience. In addition, those who would like to do more by giving back a little of their time for the greater good are able to do this in a manner which is guaranteed never to be an inconvenience to them.

Be My Eyes truly shows what the power of technology, a sense of community and a simple idea can do to help solve real world societal challenges.

Download

iOS Download Link: https://apple.co/2BYS5OP
Android Download Link: https://bit.ly/2B1Xrr6

Rapid Prototyping : Lowering the Barriers to Entry in Building Digital Platforms

The Challenges

1. Lack of Up-Front Funding

In the case of small businesses and start-up’s with a small amount of seed funding, the biggest challenge faced is the price point and up-front capital required to to take their idea to market. Unfortunately the costs involved in custom developing quality digital platforms can be significant and if an investor is unable to monetise the platform and realise their investment in a realistic term, the cost is simply not worth the risk. You may argue that this can be done more economically by looking at outsourcing the development to India, the US or Eastern Europe, or potentially even looking at off-the-shelf solutions. These are both valid points but in the land of custom development, they do not always apply and be aware that they also come with their own risks.

2. Concern Around Lack of Business Buy-In

In medium to large businesses, an element which seems to be endemic in executive teams and those on the coal-face of decision making in this regard, is the differing levels of appetite to introduce digital platforms. Even where the business case calls for it, members of these teams, based on their history within the business, their frame of reference and their levels of exposure to digital transformation, are often divided on whether there is a real need, all risks considered, to offer their customers a new digital channel on which to engage. This is compounded by the concern members have around the level of involvement that they will be given in forging the platform, taking in to account their opinions and accommodating their departments’ operational requirements in the platform. 

3. Concern Around User Adoption

The final major challenge is concern expressed from within the business around the expected level of user adoption and the potential back-lash based on the experience delivered. This is something which is very difficult to ascertain prior to launching any platform and although some research can be done prior to the fact, the success of the platform only really becomes evident when placed in the hands of the end-user.

Why Rapid Prototyping Can Be A Solution

Rapid Prototyping involves the use software packages like Balsmiq, AdobeXD, Sketch, Axure RP, InVision and so the list goes on, to create, at a far more economical price point and in a fraction of the time, an imitated working model of your desired platform (shown visually below). This process involves getting to understand the user and platform requirements, building out the architecture, data model and user flow diagrams, conceptualising and designing the user interface based on brand requirements as well as the principles of UI (User Interface) design best practice. Finally, it involves creating user actions, click hot-spots and linked journeys to emulate actions that users’ would take on the platform.

Very importantly and not to be misunderstood, this does not mean that you have a solution with which to go to market. What it does however provide is an imitated model of your platform with which to move forward.

1. Breaking Down the Funding Requirement

In the case of small or start-up businesses, rapid prototyping has been used to conceive the user-interface and design components for the end-product, to be used as a demo of the intended final solution which can be used in presentations and road-shows for the purpose of raising further finance. This provides a more engaging, tactile and compelling experience, far more likely to win over a would-be investor. It is also not wasted resources, as the costs attributed to conceptual work and design would be incurred in the full development process.

2. Engendering Business Buy-In

In the case of larger business’s needing to establish internal buy-in, this is an excellent way in which to show the result of all fact-finding and work-shopping efforts, as well as the accommodation or justified exclusion of opinions and requirements expressed by those, as part of the process. This allow the business to decide on whether they feel what has come out of the prototyping process is compelling, as well as operationally and technically sound, prior to spending the majority share of the budget, earmarked for programming.

In addition, this process proves incredibly valuable to internal IT teams who will need to carry out integration components, as well as operational teams who may potentially need to enhance their ability to cater to this new platform (e.g. call-centres), providing them with a working model of the end solution off which to base their planning.

Invariably, the evolution of this process begins to show how the solution is able to improve business efficiency’s and in many cases make the lives of those who originally expressed concern, significantly easier. Alternately, if the business does not feel that the solution is worth continuing, then the risk has been significantly mitigated in terms of time and expense incurred in getting to this juncture, where a more educated decision can be taken as a result of analysis and testing.

3. Mitigating Concern Around User Adoption

On the part of user adoption and user experience, a prototype gives you the ability to collect feedback from the end-user prior to a single line of code having been written, by being able to run sample groups through task oriented exercises. Depending on the time availability, this feedback can be incorporated and used to update flows, UI elements and even large functional components to optimise the customer experience.

Does it Make Sense for You?

The decision around whether prototyping is suited to your need is very much dependent on the challenges raised above. In some cases, it can simply add an unnecessary obstacle in to your ability to expedite the process of getting your idea out in to the market place.

Having said this, my experience leads me to believe that if any of the above challenges are present, then it is in your best interest to consider using this valuable, cost-effective and timely method to de-risk your potential development.