Focused Innovation in Financial Services: Aligning Product Design-Build to the Drivers of Brand Preference
Banking executives today are under intense pressure to find new ways to meet rapidly changing consumer expectations. Seemingly, it’s not enough anymore to just have good products — the clamor is for solutions, web-based platforms and digital tools that make demand deposit accounts, mortgages and business loans seem as quaint as emerald green banker’s lamps.
So how do leaders make informed resource allocations to develop solutions, products, platforms and tools? And how does marketing differentiate one from any of the other to create competitive advantage? To answer those questions BVK favors a rigorous design-build process that starts with clear insight into what matters most to customers and then draws on that insight to design-build the right products.
CREATING NEW VALUE
Let’s start with some definitions. A tool might be an online loan calculator. It might be a smart-phone App to map locations and find nearby no-fee ATMs or to check account balances. A product can be a home equity loan, demand deposit account, a commercial real estate loan or an insurance policy. Both products and tools are often offered “as-is” to the end user, with little need or opportunity to customize.
A platform aggregates and organizes products and tools and commonly extends single-sign on access to that collection of offerings in a way that works well for customers. Think of a web-portal. Platforms are not configured to individual customers but the interface can usually be personalized by the user to reflect what matters most to them as they think about managing their money and monitoring their return.
Solutions can take on one of several forms that combine products and services to create a new value that is greater than the sum of the individual parts. Specific types of *solutionsÂ include:
– Flexible bundles, which aggregate products and services that are completely independent but add large value when combined. An example might be treasury management services that are offered with C&I loans to prospects looking to finance operations and monitor and report performance.
– Peace-of-mind bundles, which combine complementary “best of breed” products with a commoditized service to create incremental new value. One example might be offering demand deposit accounts for online bill pay bundled with home mortgage products.
– One-stop bundles which combine unrelated products and services usually for convenience at the point of sale. Examples can include classic cross-selling of wealth management, insurance and banking to prospects.
INNOVATING FOR RETURN ON INVESTMENT
The challenge facing bank leaders is knowing which products and tools, platforms and solutions best correlate to what matters most to the customer segments the bank seeks to target. At a time when growing net interest margin is vital, it is important that banks not over-invest in innovations that will underperform relative to the cost that they add.
This means that banks can no longer succeed by trying to be all things to all people. Leadership teams must define a brand position and use it to frame and inform a product strategy that makes trade-offs based on what matters most to the target customer cohort. To learn more about how BVK thinks about this process of mapping innovation investments and discerning what matters most to customers see our contact information below.
Kevin Steltz and Mike Eaton lead brand and business strategy planning and operational alignment for BVK clients in the financial services sector. Learn more about our approach.
* A Practical Guide to Combining Products and Services by Venkatesh Shankar, Leonard L. Berry, and Thomas Dotzel; From the November 2009 Issue of the Harvard Business Review