How does Nubank create products? 6 basic principles

Money Boxes, Street Mode, Shared Balance. These are some of Nubank solutions that, despite having very different objectives, were created according to the same principles. At Nubank, technology is present in all processes, but it works much more like the cement that connects all the blocks of a building. The pillars of the business and, consequently, the creation of products, are humans.

"Nubank is a technology company. Without it, our business is not viable. But we are not interested in technology for technology's sake. We are interested in how technology can be used to improve customer lives, and how it can address customer pain points in a fundamentally different way. Our business is the marriage between an obsession with the customer and technology", says Jag Duggal, Chief Product Officer (CPO) at Nubank.

And to create the right solutions for customers, Nubank follows some principles that are applied in the process of any product and service, from the simplest to the most sophisticated.

Jag Duggal, Chief Product Officer (CPO) at Nubank: customers are more important than tools.

Principle 1: identification of customer pain points, even those that are not very clear

"We seek to understand the needs and pains of customers. And this already differentiates us from many companies that start thinking about products that meet financial needs. We start with customers. When solving their pains, profits are a consequence", says the executive.

But how is this analysis conducted?

"We research, we talk to customers, and sometimes we go to their homes, we observe them, and we listen to what they tell us and what they don't tell us, but we can see. Often, customers develop ways to work around problems that are unconscious, and we were able to identify how this problem could be better addressed. And this entire process is human", explains Duggal.

A practical example is the Payment Assistant, a tool that allows customers to organize and automate payments for their recurring bills, automatically finding bills and reminding customers of both the due date and of their balances to cover the upcoming expense.

Before the Assistant, customers had to find their own methods to remember to pay their bills, sometimes leaving many of them in automatic debit payment. Team questioned if this solution was the best way to guarantee the organization of payments and, also, whether this was the best way to guarantee less stress. From customer surveys, the answer was clear: it could be improved. And this process is repeated with each new solution you access through the application.

"Sometimes the customer says what's best for them, and sometimes they don't say it, but we observe, and this has nothing to do with technology. It's a principle", says the executive.

Principle 2: The “Double Diamond” Strategy

Since its creation in 2013, Nubank has used the "double diamond" strategy as part of the process of creating new products and services.

“We formalized this process a couple of years ago and it basically consists of diverging in our ideas and widely exploring potential solutions before we converge on a solution or a combination of things that we decide is the best answer”, explains Duggal.

This analysis is called the diamond analysis because this path from divergence to convergence forms the shape of a diamond.

This process takes place both in the discovery phase, which is the stage that analyzes customers' needs in order to find their main pains, and in the solution phase, which is when ideas are developed to solve customers' problems. And that's why the strategy is called “double diamond” - divergence and convergence happen twice.

Principle 3: security and stability

Nubank puts security and stability into the equation right from the start when creating any product. Here, no product is brought to market, even in the testing phase, without the necessary guarantees that the solution is safe for customers.

By having a range of possible solutions, Nubank assesses whether they comply with all the standards, regulations and specific rules of the financial market. And it ensures that new products comply with all the necessary rites before being taken for testing.

Principle 4: Product-Market Fit

Based on the convergences identified in the "double diamond" strategy, the product gets off the ground. This is where data, design and a lot of technology come into play. But, even before it is completely finished, it is already put to the test by a group of customers to evaluate Product-Market Fit. At this stage, customer satisfaction with the new solution is analyzed.

“Even with all the work we've done, finding ‘Product-Market Fit’ usually doesn't happen in the first version of the product. We're very focused on not only understanding customers' pains, but measuring whether the solution really solved their problem through various tools, such as the NPS, Sean Ellis Survey and others”, explains Duggal.

“We deliver something and we want to understand if the customer liked it, if they loved it, if they loved it so much that they're going to tell their friends about it. If we don't get that in the first version, which often happens, then we review it and go back to the early stages”, he adds.

The level of customer satisfaction needs to be very high before a Nubank product becomes available to a large customer base. "We are very careful about ensuring 'Product-Market Fit' as many times as necessary", he says.

Principle 5: Test, Learn, Recreate

Throughout the product creation process, Nubank always applies the rule of test and learn. Customers are present at every decision stage and, just as the solution is born from their needs, the permanence and evolution of this solution in the market also depends on their evaluation. And this analysis happens all the time and several times.

“This process of testing and learning, simply and quickly, allows us to react and create something that really impacts customers' lives”, explains the executive.

These constant tests generally assess the impact of the solution, whether it makes sense for customers and whether the flow of the solution is simple and intuitive in the app. And this process never stops - that's why, at Nubank, a product is never 100% ready. It evolves and changes even after it has been made available to all customers. The intention is to follow the evolution of customer behavior in the app.

Principle 6: teams with autonomy

The solutions created by Nubank are based on customer pains, and these needs can be identified by any team in the company. It is part of Nubank's culture to encourage team autonomy, increasing the range of divergent ideas and opening up space for innovation.

This autonomy allows Nubank to evaluate new technologies that can drive the creation of products.

“As soon as new technologies are launched, we create space for our product managers, engineers and designers to test them, because you can even say that a technology is powerful, but you can't know how much if you don't test it to understand what doesn't work and what does”, explains Duggal.

And not all tools go into this testing process. “We do this by thinking about the customer, their needs and problems. That's our starting point so we don't get distracted by all the cool things a technology can do. It's more about focusing on what this technology can enable me to build for the customers that really simplifies their life. We want our customers to love Nubank fanatically and that's not about technology. Technology is simply the means to that end”, he says.

On the path to increasingly personalized products

In the first 10 years of its existence, Nubank put people's wallets on their cell phones and created solutions and products that help customers organize their financial lives. What to expect from now on? "The next 10 years will be about putting a ‘private banker’ in our customers’ pockets. And this is possible with new technologies and Artificial Intelligence. That is our vision", says Duggal.

Having a "private banker" is like having a private financial advisor on your cell phone. And this requires a high level of customization of in-app solutions.

For Duggal, Nubank has a long way to go to guarantee these increasingly customized offers, but it has already started this journey. "We have a little of this in our products, but not as much as we could. The idea is to anticipate customer needs based on behavioral history and data they share with us, such as Open Finance data", says the executive.

Along the way, what will not change, according to Duggal, are the principles that guide the creation of these new products. The customer will remain the beginning and end of the entire development chain.

"This whole process is about how the customer lives their life. We think that technology will solve problems by making things simple, less costly, more accessible, but technology is not the first step. It’s the customer”, says Duggal.