Banking customers are diverse indeed! From the HNWI to the upstart, the teenager to the 70 something, from the big corporate house to the neighborhood mom n pop setup, they’ve all got to bank! Truly, do retail banks need reasons more compelling than these to innovate in terms of their offerings? After all, they must deliver on mandates that differ vastly across the demographic and economic spectrum. From simple savings accounts and credit cards to complex corporate accounts, insurance, mutual funds and loans, the takers want them all. While conceptually the proposition is acceptable, I wonder if banks and credit unions, across the States, have leveraged this potential on the ground.

Legacy system complications, regulatory restrictions and the still-prevalent fear of a rerun of the financial crisis – are concerns holding banks back from looking at all that’s new…and more importantly all that’s needed. I hear discussions sometimes that center around exotic financial products innovation, and how they brought about all that triggered the economic turmoil. Now if that’s not laying the blame at the wrong door step, what is? I think it’ll serve us well to remember that clearly thought-through innovations that focus on the customer’s well-being and enhance his service experience, is bound to rake in profits faster and more consistently than those focused merely on monetary gains.

To extend their offerings spread to a wider customer spread, banks across the globe are relooking at the age-old question – ‘Should we buy, build or ally?’. But even before this, they must ask themselves if their business unit will be able to design, incubate and deliver a product, in addition to marketing it successfully. Needless to say, this process requires time and an appetite for experimentation, that most banks don’t have the luxury of indulging in. Possibly, ‘Co-opetition’ – cooperating with competitors for mutual gain – will emerge as a profitable option.

As the pressure to sustain business increases, banks, I think, must set up what I call – innovation-led product factories. An integrated view of the design, development, delivery and distribution cycle of products will prove invaluable. Out-of-the-box product strategies like bundling are worth exploring – in fact, I see them now gaining greater customer acceptance and delivering higher return-on-investments.

I’ve penned more thoughts on the subject in my paper Products and Services Innovation. I’d be delighted to learn about other perspectives.