Why do qualitative research in innovation?

At Finthropology we build human insights for finance. The industry is undergoing major changes due to changes in technology, competition, regulation, and consumer preferences. So much of our work is related to innovation. We are often asked two questions:

When change puts pressure on the speed of innovation, will the research process not be too slow?

Is qualitative research representative? Shouldn’t we rather do quantitative research like surveys or pattern analysis based on artificial intelligence?

In November 2022 we had the opportunity to discuss this at the European Women Payments Network (EWPN) Summit in Amsterdam with a panel on how to use research to build future financial services.

Beatrice Widmark, Behavioural Scientist at Whateverland, introduced the discussion. Her focus was on the need to understand what customer problems to solve when building new solutions. 

Gunjan Singh, Senior User Experience Researcher at Adyen, brought a design perspective to the dicsussion, pointing out that developers must always remember that they are not their own users. Users may not adopt a solution as intended but rather appropriate it to suit their own needs. 

Dr. Erin B. Taylor, Managing Director and Founder at Finthropology, developed these perspectives by pointing out that the best way to understand future needs is to study people’s current behaviour and the human ways in which they solve problems.

Understanding why people need new solutions

Quantitative research often builds on mathematical analysis of surveys, providing us with great knowledge when we have precise questions on the nature of “how?” or ‘“how much?’” Increasingly, another way to work is to gather large amounts of customer data–including information on behaviour like frequency, search history and decision making. These can then be analysed by artificial intelligence to help build an understanding of the use and the difficulties that people experience. 

It is much more difficult to get answers from quantitative data when we want to know “why?” How can we relate patterns and answers to reality? Why do people interrupt a purchase–because of doubts or because of an unhappy child or a doorbell?  Why do people adopt new solutions–and why not? Why do they use solutions in ways that were not anticipated?

These are questions that are particularly hard to answer when speaking of the future and the introduction of new solutions or innovations. Here we usually don’t even know which questions to ask, which tends to make surveys difficult to read.

This is where qualitative research–built on interviews with people about their context and expectations–can help us to understand how new products and services could solve existing problems and how they might be adapted (or, rather, appropriated and integrated) to solve user pain points.

A good example comes from a small study that we did in 2021 on the use and adoption of Buy-Now-Pay-Later (BNPL) solutions in the USA. Without going too deep into the characteristics of these solutions, we noticed that their advantage for retailers lies in a deepening of customer loyalty–relying on increased sales. 

When we looked into people’s behaviours and their comments in different web groups and communities (using digital ethnography), we realised that users of BNPL are extremely aware of the differences between the many BNPL offerings available on the market. They will use them for different purposes, rather than choosing one BNPL brand and staying loyal to it and its retailers. We had the opportunity to discuss this with a payments expert who was equally surprised by this insight.

Building for the future

Some people in business feel the pressure to innovate fast, driving the continuous launch of new digital services. They consider that by the time research is done and processed it will no longer be relevant. 

We argue that this is exactly where they go wrong. We would never argue that surveys and data analysis are irrelevant, particularly in a shorter term perspective. But when it comes to understanding broader changes in customer needs over a longer term perspective, there is much that qualitative research (such as anthropology) can bring to the table to help the innovation process.

Future strategists try to stretch our understanding of what might happen in the future. By relying on a combination of strategic goals, data analysis and different tools to clarify megatrends, they build a series of options for companies or even industries to help make fast decisions when change happens quickly. They call the result “future preparedness”.  

Understanding the present in depth, including understanding trends in society, industry and people, creates a very strong foundation for deciding on possible developments in the future. Some analysts and advisors already include qualitative research in this type of work. We hope to see more in the future development of financial services.