Small financial services institutions are naturally positioned to ride the Web3 tsunami of innovation.

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Web3 Advances Innovation in Financial Services 

Since “Web3” entered the mainstream media discourse, the conversation has focused on how big brands—like <a href="https://www.engadget.com/nike-acquires-virtual-sneaker-crypto-collectibles-startup-rtfkt-064837247.html" target="_blank" rel="noopener">Nike</a>, <a href="https://stories.starbucks.com/press/2022/starbucks-brewing-revolutionary-web3-experience-for-its-starbucks-rewards-members/" target="_blank" rel="noopener">Starbucks</a>, <a href="https://www.fool.com/investing/2022/10/13/disney-is-diving-into-web3-and-the-metaverse-heres/" target="_blank" rel="noopener">Disney</a>—are gaining valuable first-mover advantage in a new paradigm of community-building and brand engagement. In <a href="https://youtu.be/8kUcP0zFJzg" target="_blank" rel="noopener">the Web3 ethos</a> of co-ownership and co-creation of value, the traditional line between companies and customers blurs: one-way transactions evolve into relationships in which both participants can create and receive value. 
Can <a href="https://www.frog.co/insights/chief-challenges/strategy-innovation" target="_blank" rel="noopener">Web3</a> provide a new level of scale to the co-ownership model of small financial institutions? At its core, Web3 is an innovative set of technologies and ideas for conducting commerce, building a community, running an organization and owning assets. Within this framework, we can imagine and contextualize new user experiences, business models and value chains.
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<h3>A new and improved model of co-ownership  </h3>
The model of co-ownership with customers is new for most businesses, but many small financial institutions—credit unions and community/regional banks—have operated within a similar framework for decades. Credit union customers are owners and benefit directly through low fees and favorable rates. Community and regional banking drives local financial activity, benefiting customers where they live and work.  
In recent history, small businesses turned to community banks for a bundle of <a href="https://www.frog.co/sector/financial-service-design" target="_blank" rel="noopener">financial services</a> like deposits, cash management, lending and payroll. But the cloud super-charged the competition from national megabanks with deep resources. Meanwhile, nimble <a href="https://www.frog.co/work/konfio-rebranding-human-centered-banking" target="_blank" rel="noopener">fintech</a> startups with consumer product DNA attracted customers with useability, simplicity, delight and stickiness.
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<h3>Web3: A secret weapon against industry squeeze </h3>
Fintechs like Square and Shopify rapidly changed <a href="https://www.frog.co/designmind/the-future-of-financial-services" target="_blank" rel="noopener">the financial services landscape</a>. <a href="https://www.protocol.com/fintech/shopify-financial-services-payments-lending" target="_blank" rel="noopener">Shopify rolled out financial services</a> in 2016 and as much as 70% of their revenue now comes from “merchant solutions” products—directly competing with traditional bank offerings for small business. And a new breed of vertically organized fintechs—Toast, for restaurants; ServiceTitan for HVAC; Mindbody for fitness and salons; DoorDash for delivery; Miter for construction—have penetrated many small business categories with their bundles of tailored financial services and operational tools. 
Many community banks are scrambling to catch up with these modern fintech offerings. Instead of chasing from behind, small financial institutions should leverage their own DNA of co-ownership and co-creation of value to leap ahead. We can apply some of Web3’s big ideas—trustless coordination, high-velocity money, self-sovereign identity and programmable assets—to build the next generation of financial services and transform the relationships between banks, small business owners, employees, partners and customers.
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<h3>Four ways Web3 will accelerate breakthroughs in financial services  </h3>
Trustless coordination 
Web3 enables decentralized coordination among network participants, reducing or eliminating a reliance on top-down hierarchy or arbitration by trusted third parties.
&nbsp;
<ul>
<li data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Could we provide an intuitive on-ramp to business formation, with corporate structure, ownership and equity arrangements, profit sharing and other contingencies codified in smart contracts, automating the integrity of the business? </li>
<li data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="2" data-aria-level="1">Could we give business owners a guarantee they’ll receive payment for a completed service or delivered product, without requiring a deposit or involving a third party? 
 </li>
</ul>
High-velocity money 
High-velocity money signifies the increased frequency of transactions among participants in an economy, reduction in the time it takes to settle financial transactions and an upending of traditional banking hours.
&nbsp;
<ul>
<li data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Could we eliminate the traditional pay cycle and stream wages to employees by the minute or hour, from the moment they clock in?  </li>
<li data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="2" data-aria-level="1">Could we power a customer rewards or referral program with a wide menu of eligible activities that pay participants in real time? 
 </li>
</ul>
Self-sovereign identity  
Self-sovereign identity is a model that gives individuals ownership and control over their digital identities and a say in how their personal data is shared, reducing reliance on a central authority.
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<ul>
<li data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Could we perform instant background checks and employment history validation when a job applicant presents their digital wallet? </li>
<li data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="2" data-aria-level="1">Could we provide customers with the convenience of seamlessly transacting for a product or service in a physical space just by providing their ID? 
 </li>
</ul>
Programmable assets 
Through the creation and execution of smart contracts, assets—from intellectual property to physical deeds—behave according to an independently verifiable, automated ruleset.
&nbsp;
<ul>
<li data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="3" data-aria-level="1">Could we transform lending arrangements through automated profit collection or royalty payments to create a self-repaying loan? Or inject ownership rights that expire when debt obligations are met? </li>
</ul>
<ul>
<li data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559684&quot;:-2,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Could we give employees spending power that automatically adjusts to revenue fluctuations, seasonality, macroeconomic data points or even the weather? </li>
</ul>
Designing for a radically different near-future is a challenging exercise requiring the right mix of imagination and forward thinking as well as an understanding of the technical, regulatory and adoption hurdles to come. The Web3 horizon is just within reach as a new framework to build the future of financial services for small businesses. As blockchain financial instruments progress from niche to mass adoption, small financial services institutions can compete and win by offering small businesses a new breed of customer-facing and operational financial services. 
Already, frog is helping companies across industries ideate, experiment and evolve their technical and strategic approach to building in Web3. At frog, we help businesses focus on emerging behaviors that create and sustain profitable growth and make a company’s vision a market-changing reality. Many of the conventions that will underpin Web3 have been pressure tested by early adopters, and the space will continue to gain clarity as regulators lean in. Web3 forces a vivid reimagining of small financial services institutions, setting up early adopters to innovate and win. Now is the time to get started, shape the landscape and leap ahead of the competition.

Michael Calfee

Sean Rhodes

Author

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5 keys to turning your most creative, industrious employees into an organized armada of low-code/no-code developers 

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Unleash Your Citizen Developers 

Welcome to the golden age of productivity. It seems that everyone is building software these days, many without even realizing it. From the Airtable <a href="https://airtable.com/templates/fashion-and-style/expxNBai7rjuqdJ06/wedding-planning">wedding planner</a> to the lawn care business CRM <a href="https://www.notion.so/8be00849e2424c72b60d3882e5ae892b?v=1529a5d4d982476792b496e93ec2ef0c">running on Notion</a>, custom applications have never been easier to build. A community of librarians even co-opted Google Forms to create <a href="https://www.theverge.com/2020/7/15/21324558/google-forms-virtual-escape-rooms-librarians-games-puzzles-homeschooling">virtual escape rooms</a> that teach history and math to quarantined students. These “citizen developers” are proving that there are other pathways to creating software than writing code. 
The stalwart Excel spreadsheet, longtime companion of enterprising workflow artists, has taken a backseat to more polished, user-friendly tools. These platforms offer the power of a relational database with an easily customizable UI. Instead of being stuck in an ocean of formatted rows and columns, users end up with a tapestry of specialized inputs, widgets, and screens that they can call “an app.” 
As employees of large organizations become more accustomed to creating software to run their personal lives, it’s natural that these low-code/no-code software tools are showing up in the workplace. The trend is reminiscent of the bring-your-own-device movement of a decade ago, when iOS and Android smartphones suddenly leapfrogged into the workplace as indispensable communication and productivity tools. At first, IT teams scrambled to restrict them—then quickly to altered course to support and secure the tools that workers demanded. 
Most employees want to do their jobs better and faster, and spend less time being more productive. And that’s a good thing for any business. However, software developed outside the central IT department of an organization has traditionally been referred to as “shadow” or “rogue” IT, implying shifty employees looking for a quick workaround, rather than industrious citizen developers seeking to fill an efficiency gap. 
Imagine the product manager in a healthcare organization who wants to track the vendor selection process for a new telemedicine offering. She wants to score the vendors across various sets of criteria and have an aggregate scorecard calculated on the fly when other members of her team input their own assessment and notes. A collaborative spreadsheet could work, but she wants a wizard-style workflow, with automated notifications sent to her teammates when their input is required. 
With the sheer number of small-scale, narrow-scope projects desired across an organization, there aren’t enough engineers to fill the need for custom software development. As a result, homegrown tools emerge and become business-critical—often with a single maintainer, no version tracking and without the visible ROI of traditional software. 
Low-code/no-code development tools are a viable way to fill the engineer void, but their selling point comes with a few caveats. They are less like magic wands than they are Lego kits. Professional software developers have already delivered the precision and depth required: hundreds or thousands of reusable blocks that snap together in consistent (yet not always predictable) ways. They even include a few recipes to get started, and then the end-user is only limited by their imagination, right? 
Before you can unleash your citizen developers, you must properly set the stage for success. The risks of empowering software development across an entire organization are real—documentation, security, testing, and duplication of effort are all legitimate concerns. But rather than stamping out shadow IT, a strategy of cultivation, governance and support applied to low-code/no-code tools and platforms can make citizen developers a force for good rather than a potential liability. 
There are five keys to turning your most creative, industrious employees into an organized armada of citizen developers—whether they know how to code or just have a great idea on how to work smarter. 
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<ol>
<li data-leveltext="%1." data-font="Calibri" data-listid="3" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Purpose: Aspire to be flexible and nimble enough to keep pace with your most innovative employees, listening to their needs and recommendations. </li>
<li data-leveltext="%1." data-font="Calibri" data-listid="3" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Talent: Identify and engage early advocates and leaders. Evangelize, document and offer both operational and technical training to anyone who wants it. </li>
<li data-leveltext="%1." data-font="Calibri" data-listid="3" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Process: Establish processes to enable visibility and collaboration, reducing duplication and encouraging knowledge sharing and iteration. </li>
<li data-leveltext="%1." data-font="Calibri" data-listid="3" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Tools: Align the organization on a common platform or a set of tools that can support a citizen developer ecosystem. Focus IT on building, securing, maintaining and documenting robust data services that can superpower citizen-developed apps. </li>
<li data-leveltext="%1." data-font="Calibri" data-listid="3" aria-setsize="-1" data-aria-posinset="1" data-aria-level="1">Structure: Define a flexible, transparent governance and support framework. Reallocate resources in IT from building tools for users to supporting safe, productive citizen development. </li>
</ol>
Harnessing the energy, creativity and smarts of citizen developers requires human-centered activation across tools, people and process as well as critical technology improvements and a fresh mindset—but that investment promises a wave of ground-up innovation.

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How can established players compete with disruptors? Start building products like them.

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Piloting Your Way to Success

Companies across industries are vying for a competitive edge by getting innovative products into the hands of their customers—fast. However, when designing and piloting new digital products in the market, our clients in large, established organizations often face competition from lean startups that aren’t encumbered with legacy IT infrastructure. Entrenched software platforms with confusing acronyms are inevitably blamed as the limiters—the bottlenecks, the crushers of dreams. They shouldn’t be. Want to compete with the startups? Start building products like one.
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<h6>Pilot like a startup</h6>
A pilot is a way to test new or disruptive ideas in the market—ideally as quickly as possible. If the pilot is successful, then perhaps IT will need to solution some legacy integrations. Or not. Maybe the systems in question will be deprecated by the time the pilot ends. Maybe analytics captured from the pilot will cause a pivot in the experience design, changing the required integrations. The point is: Thinking too far ahead when piloting a product can get you stuck in the mud.
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<h6>Learn to embrace lean development</h6>
Our clients often dread the software development process, scarred by past large-scale integrations and cross-department rigor mortis. Don’t lose sight that a successful pilot is experimental and should be an auxiliary to your established operations and technology. If a planning conversation turns to, “But how will this product leverage [insert legacy system],” the point may be valid for widescale deployment, but probably not relevant to a pilot.
During pilot planning, our clients are often tempted to lean on existing platforms and vendors, thinking that it’ll be easier, more cost effective, or will save time. Depending on the requirements, failing to look outside the familiar toolbox could result in nailing a square peg in round hole, or killing an ant with a sledgehammer.
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<h6>Most of your product is already running in the cloud</h6>
Let’s face it, most software applications contend with the same set of functional hurdles: authentication, user communication (email, push, SMS) and payments. Technology teams also face a familiar set of tasks: server provisioning, automated testing, deployment, and monitoring.
The good news is that over the past decade an entire software industry has blossomed to solve the common functional needs of every type of digital product. These “cloud software” companies are really in the business of selling “the wheel” so that you don’t have to reinvent it for every project. Your product needs authentication? Auth0 or Okta. Send automated emails? SendGrid. Send SMS or push notifications? Twilio. Payments or subscriptions? Stripe or Braintree.
Application frameworks aimed at startups—namely, Amazon’s Amplify or Google’s Firebase—can accelerate development and DevOps tasks (i.e., getting to production). Both offer simple solutions for essential services like storage and analytics, plus a fast lane to deployment on AWS and Google Cloud, respectively.
With a smart approach to leveraging the vast ocean of cloud services to accomplish the fundamentals, developing custom software with venture speed is within reach. Define the requirements, and then look at all the functionality you can offload to a cloud service. You may find that 25 percent or 50 percent of the application can be developed following an implementation guide (just hooking the right wires together), leaving a much smaller core of custom development.
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<h6>Pilot on the cheap</h6>
Many cloud service offerings, including those from AWS, Twilio, or Stripe, use the popular pay-as-you-go model, which is perfect for pilots, where service utilization may be small or unknown. It’s little up-front investment—and that’s the point. The competition among these cloud service companies is fierce, and they want to provide every incentive for customers to try out their products. They’ve lowered the barrier to entry, creating a win-win for these companies and their clients.
Disruptive SaaS companies such as Stripe and Auth0 don’t sell their products with a huge marketing budget or over a round of golf with the CIO. They sell to developers (the folks that use the product) with no upfront cost, simple APIs, and awesome documentation. The hope is that their popularity will grow with the hobbyist and hacker crowd and then bubble up to the enterprises that employ them. So far the strategy has been successful (10 years in, Stripe services more than one million businesses). The point is, your developers probably know and use these platforms, further reducing the implementation hurdles.
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<h6>Focus on creating products people love</h6>
We know from experience with our own venture programs and pilots that many common software routines, like authenticating or sending SMS can be accomplished with a few dozen lines of code. So don’t be afraid of custom software. Much of the hard stuff has already been figured out. The real hurdle is designing a digital product that people will use—that’s sticky—and will ultimately provide measurable positive impact on the organization’s goals.
Remember, the goal in testing these innovative new products for impact is to see how (and if) people use the product. If the pilot is successful, then push for the long-term investments that pay off big. And if the pilot doesn’t gain traction? You’ve learned a lot with a little investment. The next pilot will be easier. Oh, and you don’t have to figure out how to undo that legacy integration.
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For more on getting innovative products to market fast

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Michael joined frog in 2017 as a Senior Solutions Architect, bringing 10 years of experience with large-scale enterprise technology solutions, as well as with nimble custom development and prototyping. Prior to frog, he was an architect at Razorfish, leading CMS re-platforms for BlackBerry and T-Mobile, an e-commerce re-platform for Hobby Lobby, and a custom white label wealth management portal for Stephens Inc. Michael brings a strong design sense to crafting technology solutions, from high-level roadmaps and conceptual exercises to hands-on software architecture and coding.

Michael Calfee

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Piloting Your Way to Success

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