It has become increasingly common to invest in crypto assets. According to Swedish trading platforms and the survey Swedes and the Internet, it is estimated that around 500,000 Swedes own crypto assets - a figure that starkly contrasts with the number who actually report crypto assets on their tax returns. On behalf of the Swedish Tax Agency, we have applied service design to analyze and develop solutions to bridge this gap.
So, why do so few crypto owners report their assets? A hypothesis based on customer feedback and feedback from tax officers at the Swedish Tax Agency was that many avoid reporting crypto assets because calculating and reporting gains and losses in the tax declaration is too complicated. It may not necessarily be about intentional tax evasion but rather that the current system makes it too difficult to comply.
Design Thinking: Solving the Right Problem the Right Way
To determine whether our hypothesis was accurate, we approached the question from a design thinking perspective. Design is fundamentally about solving the right problem in the right way, and design thinking as a methodology provided us with a structured framework. The process involved two phases of the methodology: exploring and creating.
The Exploration Phase: Research and Insight Work
The exploration phase focuses on research to identify and define key insights. Here, we aim to build empathy with the user, understand the organization's capabilities, and gain knowledge about relevant external factors, such as trends, competitors, and legislation. By deepening and challenging our understanding of the problem, we can ensure we are truly addressing the right issue.
In the case of the low reporting rate for cryptocurrency, we might have easily assumed that the problem stemmed from a general tax morale among crypto users. Based on that problem framing, we could have developed solutions to address it. However, by exploring the challenge, we found that the issue also arises from difficulties in calculating gains and losses.
The Customer Perspective
Immersing ourselves in the world of crypto users was a real luxury for a curious service designer. We quickly realized that crypto is not just about tech enthusiasm, love for blockchain, or quick thrills for stock junkies. Although the Swedish central bank describes the opportunity to make money as the primary motivator for investing in crypto, the idea is rooted in criticism of the traditional financial system. The phenomenon of crypto is founded on libertarian values, expressed in the right to own one's assets without interference from third parties like banks.
Our insights work was extensive and consisted primarily of qualitative primary data, along with analysis of internal materials and external reports. In understanding the perspective of crypto users, it was important for us to grasp:
The current tax reporting experience and how it can be improved
The reasons for not reporting and what crypto users need to start reporting
Common mistakes and misunderstandings
The Organizational Perspective
In service design, mapping out the organization’s needs and capabilities is just as crucial as mapping the customer journey. Therefore, we placed great importance on identifying internal needs and experiences through discussions with tax officers and experts at the Swedish Tax Agency.
A common metaphor among service designers is that of viewing customer experience as a restaurant. The customer experience is built on what they encounter in the restaurant, such as decor, the menu, and service. However, a positive experience requires a well-functioning kitchen behind the scenes. This includes good ingredients and kitchen tools, but also collaboration and communication among staff. The point of the metaphor is that it’s futile to work only on what the customer sees if we don’t also consider the organization’s ability to meet customer needs.
By the end of the exploration phase, we had a solid understanding of both crypto users' needs and the organization’s capabilities. We also mapped out legal implications and conditions for future development, which led us to identify several potential areas for innovation to carry into the second, creation phase of our work.
The Creation Phase: Ideation and Prototyping
In the creation phase, we built upon the insights into needs and behaviors generated in the first phase. We crafted problem statements and identified opportunity areas, initially focusing on quantity over quality—every idea was welcome, and no idea was too large. We then prioritized ideas and developed prototypes. Without delving into specific solutions, here are some methods we used.
Happy Flow and User Stories
Using the customer journey as a starting point, we generated and detailed ideas for each step in the journey. We then wove these ideas into a single story, presented in both text and images from the perspective of a crypto user. The result was a visually engaging material that could be tested with users and was easy for a development team to work on in implementation.
Design Sprint
The design sprint format is used to tackle large problems and test new ideas within five focused days. We ran a design sprint for one of the identified opportunity areas, which resulted in a selected and tested prototype. A major advantage of the sprint format was the ability to gather a cross-functional, carefully chosen team that fully dedicated its time and effort to solving one particular problem. As one sprint participant noted, “The progress we made in five days would have taken us months without the focused approach of the sprint.”
Epic Hypotheses within the SAFe Framework
The Swedish Tax Agency works with the SAFe framework for development, so it was natural to describe our solutions with corresponding epic hypotheses. This enabled a smooth transition to development for implementation.
Design Thinking + Public Sector = True
Working with citizens as users and a well-functioning society as the vision is complex and requires structured, holistic methods. Our mission at the Swedish Tax Agency has shown that design thinking is an excellent support in achieving this. A pioneering country to look up to is the UK, which has implemented design methodologies and a citizen-centered approach in the public sector—a transformation that has generated significant benefits both economically and for British citizens.
Being part of the Swedish Tax Agency’s efforts to navigate the rise of the digital economy has been incredibly instructive. For many of the Swedish Tax Agency employees we collaborated with, design thinking was a relatively new concept, but we encountered a great deal of openness and curiosity about solving problems in new ways—an excellent foundation for success!
Would you like support in working with design thinking? Don’t hesitate to contact us at hey@frankfam.co!
