Successful innovation in business requires much more than just a good idea.

Strategic planning and having the proper teams and technology are also key, but what might be the most important element is listening to what the client wants.

Banks need to listen to specific client feedback to determine where to invest time and capital for product launches or tool enhancements that will have direct impact to positively change the digital journey.

In fact, according to Gartner’s Top R&D Priorities for 2023, 86% of research and development leaders said understanding critical customer needs is a top priority to improve the overall performance of R&D departments. Understanding customer needs is one of the top challenges facing R&D leaders as they get further into 2023.

Client collaboration

Listening to clients is an integral part of the innovation process at PNC Bank, Tom Lang, executive vice president and head of treasury management product and operations, told Bank Automation News, noting, “The best way to build is with our clients.”

When PNC is planning a product launch, a pilot program for users is created to test the products, Lang said. “[The bank has] a community of clients that are the first users of the product to help build out feature sets so we can improve on what we’re doing.”

Having an innovation strategy in place is key, according to CCG Catalyst Director of Research Kate Drew. “First, a bank needs to determine what it wants to achieve, then it can begin to think through the tactical elements necessary to get there.”

Along with listening to clients, innovation is expected to come from across the financial institution, Lang said. Innovation is not the responsibility of one individual or group — it comes from those who interact directly with clients on the service front and then flows to the dedicated innovation team.

“We innovate throughout the organization,” he added.

PNC products

Products that are direct results of the bank’s client-driven innovation include payroll tool PNC Earned It and Pinacle Cash Forecasting.

PNC Earned It: PNC Earned It, for one, surfaced out of a need for an earned wage access (EWA) tool, which was especially accelerated by inflation, Lang said.

“About two-thirds of Americans live paycheck to paycheck, and the traditional ways of payroll were not meeting the needs of many Americans – and ultimately that meant many of our customers’ employees.”

The product was in the works for five years from initial discussion to building out the models and functionality to the pilot program which was live for 18 months before the product launched in February 2022, Lang said.

The bank worked in collaboration with EWA fintech DailyPay, which offers on-demand pay to employees during any point of the payment cycle, Jeanniey Walden, founder and chief marketing officer at LiftOff Enterprises and former chief marketing officer at DailyPay, previously told BAN at Money 20/20 in Las Vegas.

“For the average American with $400 in their savings account and living paycheck to paycheck, your DailyPay balance actually can mean the difference between you getting a higher interest rate and a low interest rate if [your money] is all consolidated in one place.”

DailyPay’s integration capabilities, based on APIs, can be up and running in a matter of hours, Walden said. Additionally, DailyPay has a partnership with TD Bank.

PINACLE Cash Forecasting: The bank’s cash forecasting tool, which launched in November 2021, also derived from client conversation, Lang said.

During client discussions and feedback challenges, cash forecasting was brought up as an area of friction for business clients, he said, noting that traditional cash forecasting was done through spreadsheets using an Excel-based process, human resources, and hours of time of tedious work to produce the predictions.

“What we did is by using technology, AI and machine learning, we built out PINACLE Cash Forecasting that allows our clients to upload their banking data into the system, then we run various models to produce a forecast,” Lang said.

In some cases, for larger companies with many divisions, 20-plus hours can be saved through the forecasting tool, he noted.

“If you’re doing cash forecasting manually, you need to understand a lot of complexities around your data, around the inflows and outflows, the receivables, and you need sophisticated people — ways that we can help our clients automate using machine learning and AI, free up those resources to focus on decision-making,” Lang said.

Meaningful execution

To prioritize innovations — in addition to listening to client feedback and implementing an internal strategy — banks must have a balance of talent, infrastructure and leadership, according to a recent study from CCG Catalyst, Successes in transformation: Lessons From the Field.

According to the study, prioritizing innovation requires the following:

• Executive alignment and vision;
• Culture and operational structure;
• Technology and infrastructure;
• Risk reward balance; and
• Inspiration.

“The most successful innovation efforts are tied to a coherent strategy,” CCG Catalysts’ Drew told BAN. “If you’ve got a well-defined strategy, prioritization of opportunities get much, much easier.”

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