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How we shipped fast funds to UK entrepreneurs during COVID-19
This article is co-written by Megan Goodacre and Erhan D’Silva.
When COVID-19 broke out last year, we were able to pivot our product and offer funding to entrepreneurs outside the US within weeks. But designing a product to go-to-market in the complex financial sector so quickly meant we had to consider how to prioritize speed without compromising the user experience.
After successfully shipping fast using a third-party partnership and a split-application process, we soon realised we needed to speed up the application process itself — not just our ability to get to market — by bringing the entire application flow on-platform.
We want to share how we navigated a rapid 3-week initial launch of Capital UK, and then continued to design a native on-platform experience within 8 months to enable users to complete a funding application within minutes, which increased conversions by 200bps (2%).
Here’s how we did it:
Ripping up our roadmap
First, some context. Cash advances and loans are important to many merchants to enable growth, from helping to buy new inventory and hiring new staff to running marketing campaigns. Most entrepreneurs and online businesses have a hard time securing financing through traditional sources. The traditional application process for entrepreneurs applying for capital is long, complex, and, often, riddled with anxiety.
Shopify Capital aims to remove barriers to funding for entrepreneurs and has provided $2bn of funding to small businesses and entrepreneurs over the last 5 years, which is, in part, testament to the user experience.
The global pandemic meant entrepreneurs needed faster access to funding to respond, adapt to, and explore new avenues of growth. While Shopify Capital was able to provide funding to entrepreneurs in the US, we wanted to offer the same product to more global regions during the pandemic.
So, we ripped up our Capital roadmap and put feature development for our US product on hold to concentrate on getting funding into the hands of the largest number of global businesses we could. We started in the UK.
Splitting the application process
First off, we ran a rapid discovery process focused on how to enable eligible UK merchants to secure funding quickly.
During the rapid discovery process, we focused on speed to market and decided that partnering with an established institution already active in the UK was the best approach to get to market quickly and start serving merchants. So, we sourced, qualified, and selected a list of partnership candidates to figure out the best approach to get to market.
But, after choosing a partnership route for the initial launch, one of the major challenges was the need for a split application process.
In order to move fast, a large part of the application process needed to take place outside of Shopify, through a partner’s platform. Because our two systems couldn’t easily talk to each other, we would redirect qualified merchants to complete the entire application process on our partner’s platform. Although we could optimize the quality of the experience as much as possible, the application flow would start on our platform and end on another.
Splitting the application process in this way wasn’t a typical (or ideal) approach for us, but it allowed us to move quickly. If we had perfected the application experience in the first instance, thousands of merchants would have missed out on Shopify Capital funding.
Ultimately, the split-application process shipped fast, but failed to provide the right experience and value — and the data showed it.
Drop-offs and iterations
From our data, we could see that the number of incomplete applications was a lot higher than we wanted, and merchants were tending to drop off the application experience when they switched from one platform to the next. So, following a rapid launch, we continued to iterate.
From our previous research, we know that convenience and timely access to funding are key reasons why merchants choose Shopify Capital in the US. We also know that lending inefficiency can be a key barrier for merchants. Inconsistency can also increase cognitive load and harm user trust.
We therefore decided we needed to bring the entire Capital UK experience within Shopify to create a consistent experience within our platform. Our existing US product didn’t really include an application form, so we couldn’t borrow any existing design patterns — we needed to design a new application process. It took us about 8 months to circle back and ship the second native version.
Everything is now in one place: from application to offer, to making payments. That’s important beyond applying for, and managing, funding. Capital is just one part of a merchant’s business. Merchants usually have a number of things to do when they log into their Shopify account. An integrated on-platform experience, rather than an isolated Capital experience, means merchants can manage their business holistically, too.
Identifying experience barriers
To bring the entire application flow into Shopify, we analysed all the typical barriers found in more traditional loan applications, which could also cause a drop off during the application process.
A traditional process will likely require a lot of information upfront, and then make a funding offer at the end of the process. This means the application experience can be fraught with uncertainty: will I be approved? Is my credit good enough? What documents will I need to provide?
We started to address and eliminate these experience barriers to reduce user anxiety and increase the efficiency of completing an application.
This wasn’t straight-forward. The UK market had some unique challenges. In financial services, the requirements to verify the identity of individuals and businesses are becoming more strict.
Regulatory requirements in the UK meant merchants need to provide business details so they can be verified for funding, which was slowing the process down. These requirements exist for good reason: they help to prevent fraud and money laundering. But there’s no doubt the need to provide information extends the application process.
By bringing the application process on-platform, we can utilise data processed through the Shopify platform to remove some of these barriers, reduce user effort, and create a low-friction experience. Here’s what we did:
Flipped the offer back-to-front
Using our data, we provide upfront information. We show the available funding amounts at the very beginning of the application, and we let the user know what to expect before they start: how much will you get, how will you repay, and how long will the application take. (Because the merchant is using Shopify, repayment is also easier: Shopify takes a percentage of ongoing sales, which means upfront, allocated cash repayments aren’t required.)
Providing this information before the application process begins is crucial: it puts the financial offer at the beginning, and immediately eliminates user uncertainty.
Minimized user effort with pre-filled information
If the user then decides to start an application, we then make it easier to fill it out. Merchants are required to provide info such as business details, payment data, ID, and bank statements, which can take up a lot of their time and effort. To validate their business information more quickly, we aim to pre-fill as much information as possible within the application to minimize user effort.
Working through this process of pre-filling information and proactively communicating, we were able to reduce the number of steps in the application process significantly to make it more efficient:
Utilized in-application copy to set expectations
Setting expectations throughout the process and form is also key for increasing efficiency and reducing anxiety in the application process. Applying for funding is a significant decision for our merchants, so it’s important we communicate what’s happening, and what to expect next. Whether a merchant is applying for $500 or $500,000, prompt communication provides transparency into the process so the application and approval process can move along as briskly as possible.
After providing upfront information to set expectations, we use in-application copy to communicate the next step in the process, and make the process as transparent as possible. This instant feedback within the application helps keep the merchant engaged in the process to prevent any unnecessary concern caused by mis-matched expectations.
Next steps for Capital UK
By far the biggest challenge of this project was to bring the user application experience entirely within the Shopify platform. In doing so, Shopify’s on-platform UK Capital user experience has evolved the traditional loan application experience.
Identity validation and user uncertainty were previously key barriers for completing funding applications. The UK Capital experience has removed these by pre-filling user information and providing pre-emptive offers at the start of the application process. The application form itself is then designed to use in-application copy to set expectations and guide the user to make the experience easier.
UK merchants prequalified by Shopify can now view Capital offers and apply for funding in a few minutes — without ever leaving the Shopify admin. As a result, conversions have increased by 200bps (2%) with the new experience.
But the project is far from over. A big challenge on the horizon for UX in financial services is designing quality experiences in an increasingly complex landscape where technology and regulations never stop changing.
Every iteration we ship is an opportunity to learn and push towards a user experience that’s free of barriers, efficient, and is trusted. We’ll use what we learned from our approach to Capital in the UK to continuously improve the overall Shopify Capital experience. For example, we’re already using some of our design patterns from the UK project for verifying information in a new project, and pushing ourselves to innovate new and better solutions.
With each iteration, we’ll continue to design approachable and transparent experiences that help merchants focus on what matters most: growing and building their business.