Tip 2: Make product innovation customer-centric

One of the key challenges faced by banks today is differentiating products from a host of similar offerings. No sooner than a bank launches an innovative service or product bundle in the market, it has to fight competition from equally worthy rival offerings. At the same time, regulations constrain banks from getting too “creative” with their offerings. Thus, innovative product features alone bring very little differentiation or first mover advantage.

In fact, it is the impact on customer experience that swings the momentum towards a particular product innovation. It follows that any product innovation must be customer-centric right from the start. Since product design must satisfy the needs of the target audience, it is vital to understand the latter beforehand. Until now, banks have taken a rather simplistic “bank balance” approach to customer segmentation, which is quite inadequate in addressing the nuanced needs of individual customers. So, along with product innovation, they should perhaps consider innovating on their customer segmentation strategy leading to customers creating their creating their own products. Similarly, banks must assess whether new products can be easily accessed by customers and procured and used in a few easy steps. If the answer to either question is a “no” there’s a case for channel and process innovation.

But that’s a discussion for another day.

You can read my earlier post –

Tip 1: Transform for greater reward, lesser risk