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