With current market saturation, companies need something more than just a product and technology to make it happen. They need a strategy. Nowadays, everyone with a skill can create an app; it’s not a problem. The real challenge comes from securing the “what’s next” phase. How to run a successful discovery phase? How to use it to draw conclusions for fintech products? Why is UX important in the process, even necessary but often missed? Dive into the article for this and a lot more.

What is the discovery phase in software development?

The discovery phase is the initial step in the lifecycle of a software project that involves clarifying ambiguities, identifying potential obstacles, and developing a strategic plan. The process aims to assess the idea’s viability and ensure that investments are justified while gathering and analyzing project requirements. This helps create a detailed delivery plan with accurate time and cost estimates.

At this stage, the software development company and the client do all the groundwork – analyze the market and competition, study the target audience, gather industry insights and best practices as well as explore technologies and business opportunities that could be relevant to the project.

During the software development discovery phase, the software development team gathers requirements, assigns priorities, and creates a roadmap that describes how the system will evolve from idea to launch.

Typically spanning from one to three months, the duration of the discovery phase varies based on the project’s complexity.

Every discovery phase can be broken down into five steps:

  • defining business goals
  • identifying methods of measuring the success
  • conducting user research
  • identifying customer journey
  • investigating the competition.

Why is the discovery phase important?

The short answer: because it unifies stakeholders from the client’s and vendor’s side. They let them work on a project with a single vision, roadmap, timeframe, etc. A seasoned cross-functional team is an essential element of the discovery success formula.

Who is on board when it comes to this process? Here are the main roles. Not all of the stakeholders are necessary, but it’s good to have them all. For example, a Security Specialist’s skillset doesn’t always apply, but a UX/UI talent is a must for the reasons we will explore in a bit). For now, let’s just stick to descriptions.

  • Project Manager. He defines project scope and establishes realistic timelines, milestones, and deliverables. He manages risks by identifying potential challenges and developing mitigation strategies. He plans resources, aligning with project goals and constrains. He organizes workshops, ensuring effective communication and collaboration between the team and stakeholders. He oversees documentation and generates regular reports to update stakeholders.
  • Business Analyst. He collects business requirements during meetings and workshops with the client. He analyzes and documents requirements in a clear and structured manner. He validates requirements with stakeholders and prioritizes them based on the business value they bring to the table. He identifies potential risks that go with the proposed requirements. He prepares user stories and customer journey maps.
  • Quality Assurance Specialist. Here, identification quality and resting-related risks come into play. This person also develops comprehensive test strategies aligned with project goals. He participates in early testing efforts to identify and address faults. He also proposes improvements based on lessons learned during the discovery phase.
  • Designer. He develops visual wireframes and prototypes to illustrate user interface and flow. He creates visual design concepts aligned with brand and project goals. He works closely with business analysts to translate requirements into user-centric design solutions. He also collaborates with developers to ensure designs are technically feasible and adjusted based on constraints.
  • UX/UI Specialist. He does market research to get himself familiar with the potential impact of the project and already existing market solutions. He develops wireframes, prototypes, and project models to make sure everything fits into place and product navigation is user-centric.
  • Security Specialist. He identifies potential security risks and vulnerabilities with exploits potential. He ensures alignment with industry regulations, standards, and compliance rules. He identifies threats and designs matching security controls. He monitors the landscape for potential new threats and applies strategies that work for other products. He reviews the project’s architecture and advises on building security best practices. He evaluates the security of third-party components.
  • Development team. Offers insights on suitable technologies and collaborates on technology stack decisions. Code & Pepper being an Angular development company, a ReactJS development company, React Native development company, we have this process simplified. Next, the specialist assesses the technical feasibility or proposed features and identifies potential challenges. Estimates development efforts and aiding in setting realistic project timelines. Identifies and mitigates technical risks. Reviews the code of any existing solutions that the project will be built upon.

What are the problems with skipping the discovery phase?

Yes, you can absolutely don’t go with it and head directly to the development. However, there are some consequences to that. Skipping the discovery phase in software development can lead to the illusion of efficiency since the “unnecessary” stage was avoided and the product is on its right way to the market. Is it tough? Let’s see what are the dangers here.

  • Unviable solution. Without validating the idea’s viability, a company might invest in a system that turns out to be technically or financially unfeasible.
  • Scope creep. Unclear project scopes can lead to continuous additions or changes without proper evaluation, resulting in projects that exceed budget and timeline.
  • Mismatch with stakeholder expectations. Without clear alignment on project objectives, the result may not meet stakeholder needs, potentially requiring costly adjustments post-launch.
  • Poor resource allocation, timelines, and budget estimates. The lack of proper planning can cause inefficient resource utilization, unrealistic timelines, and increased expenses. 
  • Insufficient expertise. Not assessing technical demands early and securing the necessary expertise can lead to setbacks and inferior-quality products.
  • Integration challenges. Not considering the current technology landscape may result in integration difficulties with existing systems, limiting your product usability and efficacy.
  • Security vulnerabilities. Overlooking security considerations at the outset can expose projects to risks that jeopardize data and system integrity.
  • Quality issues. Not putting a premium on quality assurance planning comes at a price of bug-ridden software, which is detrimental to the company’s budget and, in the worst-case scenario, reputation.
  • Misalignment with broader business goals. Projects that don’t align with the organization’s overarching objectives fail to provide true value.
  • Increased project costs. Software projects often see costs going up due to changes made later in the development lifecycle, though they could have been prevented with upfront analysis during the discovery phase.
  • Delayed timelines. Unforeseen challenges almost always mean pushbacks of the launch date.

What are the benefits of the discovery phase?

The product discovery phase in software development is vital not only for the reason of making great market product. It also solidifies the team and makes them efficient for the current and next projects as well. Not to mention delivering business value, which is all the client cares about.

At Code & Pepper, we believe that the discovery phase:

  • makes data-driven decisions instead of following assumptions
  • works out the best user experience possible
  • ensures that you and your vendor are on the same side before the phase of design and development begins
  • discovers the best tech and business solutions
  • aligns business goals and strategy with technology stack and technological solutions
  • gains an in-depth understanding of a project, its target audience, and the business goals
  • sets the project timeline and establishes core features
  • establishes core user needs and provides the best solutions for them
  • gathers user feedback from the target audience and real end users
  • builds an interactive prototype of an application
  • reduces risks; poor product requirements lead to project failure in 39% of cases, expertise-related issues (30% of cases), or misalignment in stakeholders’ perspectives (57% of cases)
  • make stakeholders more engaged
  • leads to on-time and on0-budget project delivery
  • enables efficient project scope change control.

What should be the deliverables of the discovery phase?

In IT, there are lots and lots of meetings. We often forget about artifacts that can be accessed by any participant after the meeting. Artifacts, which are physical results of the meeting. Notes and summaries are the most natural and obvious ones. What should be the artifacts of the discovery phase?

We see these ones as natural candidates:

  • Business requirement document
  • Project technical description
  • High-level architecture plan
  • Product roadmap
  • High-level backlog
  • MVP definition
  • Dependency map
  • Software stack listing
  • Project charter
  • Product vision
  • Business requirement document
  • Sitemap
  • Persona definition
  • User scenarios
  • Design deliverables
  • Test plan
  • Risk assessment
  • Project timeline
  • Budget forecast

The role of UX in the discovery phase

Many clients have an idea behind the product. They know what they want to achieve but not necessarily how to do it. Not always. They rely on the vendor’s expertise to not only build but also consult on the project. That’s totally fine. What is most important, though, is that the product’s features should always be considered and designed as user-centric. It all has to be useful and the product secure.

It’s especially important in the artificial intelligence era. With the Framework Convention on Artificial Intelligence and Passportable Financial Intelligence, fintech is under scrutiny. UX needs to stand guard to protect users from misclicks, involuntary data sharing, etc.

On top of that, in many cases there are many stakeholders, with different approaches and perspectives, so trying to get to the final vision to be addressed with the design and further development is not easy, and again you can fall into subjectivities.

Generally, in the UX discovery process, we should get two things:

  • an understanding of where we are. The current situation, and context: business objectives and expectations, user expectations, and best practices from industry and competitors
  • shared vision of the product to be developed. This is key to setting up a common vision on what should be prioritized and considered on project scope and what will be considered for upcoming projects, phases, or within a continuous development way of working.

Many UX discovery techniques apply here and can be used to start the project:

  • Interviews with stakeholders. Key players should be involved to consider their needs, perspectives, and expectations; this will reduce significantly the changes or amendments to be done during the design or development phase.
  • Interviews with potential users (one-on-one, focus groups). Observe users and talk to them to understand how they are using the product and what their expectations are towards it.
  • Market benchmarking. Discover trends, strengths, and weaknesses of relatable products, take notes on the best practices of your competitors.
  • Heuristics review. It’s about usability analysis on the current clients’ website, applications, etc.
  • User persona. Personas are fictional characters that on average consist of a picture, name, occupation information, demographics, a personal story, pain points, and challenges. By working with those, you can predict to some extent how users with behave and what would they want in a given situation. This doesn’t cancel the results of the work done with focus groups. It should precede them.
  • Data analysis. Understand accessibility, usability, pain points, and current issues affecting the customer experience. Important note, though – if you want to work with data, make sure it’s structured. Data is only reliable when you can make sense of it.
  • Flowchart design. Those are diagrams that display the complete path a user takes when using a product. User flow mapping allows UX professionals to evaluate and optimize the user experience, and thereby increase customer conversion rates.
  • Usability testing. Is based on the observation and analysis of how a real user uses the application/functionality, taking notes of the usage problems they encounter in order to solve them later. Usability testing helps to uncover problems, discover opportunities, and learn about users.

At the discovery phase we perform the testing only on our competitors’ products, or when the project involves an existing product that needs to be redesigned.

Afterwards, when having a prototype or a new feature to be released to production, it is performed again to uncover problems with the proposal and consider any improvement in order to enhance user experience.

The final output of the Discovery process is a report to be shared with the client and project team with some ideas, insights, that are key supplies for ideation, prototyping, and development phases.

How to run product discovery experiments in fintech?

In the fast-paced and highly competitive world of fintech, running product discovery experiments effectively is crucial. As you embark on this exploratory journey, it’s essential to have a clear roadmap to maximize insights and ensure meaningful outcomes.

Here are some tips for the smooth process of the fintech discovery phase:

  • Collect data. When running experiments, it’s vital to have mechanisms to gather data. The primary goal of the experiment is to gain insights from user interactions. Collaborative analysis involving data science or analytics teams can ensure more accurate interpretations.
  • Keep your team on standby. Even after initiating the experiment as there might be a need for quick fixes or modifications based on real-time feedback. Immediate action can save an experiment from failing due to small, correctable issues.
  • Collaborate. Before finalizing any findings, sharing a draft version with a select group can help validate your interpretations. Different people might see data differently, so getting a consensus is essential.
  • Prepare for worst-case scenarios. Having an exit strategy is essential in case an experiment needs to be terminated early.
  • Don’t over-extend experiments. Keep your experiments concise. Running lengthy experiments can consume a lot of resources, from time to funding. The objective is to learn quickly and iterate, not to linger.
  • Don’t misjudge the scale. Don’t design your experiments for large scale right from the start. Begin with the minimum viable product (MVP) or minimum testable product. This allows for faster iterations and reduces the risk of major setbacks.
  • Don’t stop at one experiment. One experiment is rarely conclusive. If you’re basing significant decisions on a single experiment, you might be heading down the wrong path. Multiple experiments ensure you’re working with robust and diverse data.
  • Don’t choose the wrong metrics. Metrics are the compass of your experiments. Choosing the wrong metrics from the outset can send you on a wild goose chase. It’s crucial to identify and monitor metrics that directly relate to your hypothesis and goals.
  • Don’t choose too many metrics. While secondary metrics can provide additional insights, avoid fragmenting your primary metric excessively. Too much data can clutter the analysis, making it challenging to derive meaningful conclusions.
  • Don’t miss out on analysis support. If you’re diving deep into secondary metrics and amassing a large volume of data, ensure you have the analytical expertise on hand. A data expert can help you navigate through the maze of numbers and provide actionable insights.

How to conduct product discovery experiments in fintech?

  • Identify the problem users are having. In our fintech and healthtech highlight series, we have introduced many companies that were successful simply because they correctly identified problems. Take a look at Florence, Lindus Health, or Superfluid to get inspired.
  • Solve customers’ pain points. People tend to choose useful products. You can have great ideas but if you don’t solve problems in a specific range, the product fails.
  • Choose and prioritize. What is the biggest concern – features or technology? The number of currencies covered by your app or UX underperformance?
  • Make data-driven decisions. Data like transaction histories, app usage stats, or customer feedback, can be goldmines of information. If a digital lending platform notices that loan applications spike at the end of the month, they can tailor their marketing efforts accordingly.
  • Change the team structure and company culture to enable experimentation and discovery. Cross-functional teams should cover all aspects of the creation of a modern fintech product. You need a culture that encourages that or a vendor who has these teams and allows them to work, removing all obstacles on their way of the ultimate creation.

Summary

At Code & Pepper, we believe in such a culture. That’s why we are driven by innovations. We hire only 1.6% of the top software engineers. We have a talent identification methodology to help us create digital products fast and with the help of AI.

In fact, we believe in centaur developers, where top engineers work hand in hand with machine learning and artificial intelligence tools.

Code & Pepper, being an Angular development company, a ReactJS development company, React Native development company has been around for more than 17 years. For you. For future innovations. For reliable and powerful fintech products. Let’s discover your next project. Together, through the discovery phase.