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Mike Strange
Mike Strange
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Banks Need to Move at the Speed of Innovation

How banks can build an innovation strategy to keep up with the pace of changing customer expectations.

Consumers have historically valued stability in their relationships with banks. Some still do. But consumers now have more choices than ever, making convenience increasingly important. The trend toward thinking “mobile first” is clear: Consumers want to manage their money using familiar tools and techniques – which often means their phones or tablets.           

Consumer expectations are being set by highly innovative, fast-moving organizations. And the bar is high: Instagram, Facebook, Snapchat, and the thousands of mobile-friendly utilities have set a high standard for ease-of-use. Admittedly, many of these companies do not have the same regulatory and procedural expectations that banks have, but consumers don’t care.

So, what can financial institutions do to compete in this fast-moving arena? Banks can and should embrace innovation as a core discipline, by taking into account the following guidelines.

Choose innovation projects: Some projects demand methodical, careful planning. But many projects (particularly the mobile-centric or online-centric ones that are of most interest to consumers) do not. So, segment your portfolio into core projects, which will be measured based on compliance and predictability, and innovation projects, which will be measured based on customer engagement and value creation. Core projects have predictable periodic release cycles; innovation projects will be much faster. Core projects optimize for scope; innovation projects optimize for speed to market.

[For more on innovation in banking, check out: To Patent or Not to Patent]

Experiment: Innovation is not a methodical beast. The kind of innovation needed to keep the interest of US consumers requires us to think and behave differently. For innovation projects, opt for experimentation and iterative learning over classic, requirements-driven methods. Try single-purpose mobile apps for specific payment scenarios. Target small businesses with collaborative solutions. Experiment with edgy user experiences and gamification. Give consumers choice. Fail fast and try again.

Partner to drive innovation: Embrace the multi-faceted ecosystem that is currently targeting consumers -- mobile wallets, payment services, prepaid, social media, virtual currencies, biometrics, mobile identity solutions, etc. These should be seen as opportunities to partner rather than counter-banking trends. The vast majority of these companies are neither for nor against banking. They are for the consumer and for profitability. So, find the areas of potential partnership, and build an innovation ecosystem for your bank, based on your internal strengths and the capabilities of your partners. This requires that you think differently about some of your partnerships. Ask yourself: How many of my partners are incentivized to provide innovative new ideas on a regular basis? If there are few (or none) then you are not maximizing your innovation ecosystem to your benefit.

Expectations are high among the growing number of consumers who think “mobile first.” Consumers want and need the banking establishment to meet them where they want to be -- at the intersection of convenience, stability, and cool. Speed it up. Choose your innovation projects. Experiment. Fail fast. Partner to drive innovation even faster.

If we don’t move at the speed of innovation, alternative providers and competitors will.

Mike is an experienced mobile technology leader. Prior to joining Mitek, Mike was CTO of Green Dot, where he led the strategy architecture and implementation of their reusable mobile platform to serve the underbanked. Mike also served as a director at Neudesic, where he led ... View Full Bio

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Elliott Wilkins
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Elliott Wilkins,
User Rank: Apprentice
4/8/2015 | 11:59:45 AM
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KBurger
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KBurger,
User Rank: Author
10/24/2014 | 5:20:10 PM
Re: Speed vs research?
Voice-of-the-customer research is not new in financial services, my sense is that it probably is getting more sophisticated (not just focus groups or "man on the street" interviews in branches), especially with so many more digital-based ways to interact with customers. Once you factor in feedback (formal or otherwise) that is available to FIs via social media channels, banks and others have the opportunity to gain a lot more insight into customer attitudes and expectations. That probably creates new challenges about "weeding out the chatter" to glean the insights that matter.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
10/23/2014 | 5:02:20 PM
Re: Speed vs research?
Focus groups and surveys are definitely big in banking. Getting customers to fill out surveys though can be difficult. They have to be engaged. And social media is also playing a huge role in now in getting customer feedback.
Kelly22
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Kelly22,
User Rank: Author
10/23/2014 | 4:59:52 PM
Re: Speed vs research?
I've heard the same from plenty of insurers developing mobile apps. The app stores are popular for getting customer feedback. As for determining what customers want, I've heard of companies using focus groups and surveys to gain their opinions - not sure how many banks are doing that, but it seems to be effective. 
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
10/23/2014 | 4:33:25 PM
Re: Speed vs research?
The mobile channel can also help with getting that customer feedback. I keep hearing from a lot of banks about how they are using comments from the mobile app stores on their apps to help improve their offerings.
KBurger
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KBurger,
User Rank: Author
10/16/2014 | 12:23:56 PM
Speed vs research?
I guess another way of thinking about this shift is that stability is table stakes, a given, most customers will assume this (financial crisis notwithstanding) and that convenience is where banks can distinguish themselves and differentiate. Good insights, Mike. question about the speed/fail fast factor -- do you ever see that, in the effort to do things quickly, companies make assumptions about what their customers want, and skimp on the research/voice of the customer stuff? I could see that being a challenge.
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