If there is one thing that developments in recent years have made abundantly clear about the financial services industry, it’s that there is little to be gained from staying still.
We are currently witnessing widespread and exciting change. Tech innovation, the ongoing growth of the fintech marketplace and the move towards open banking are all contributing to greater choice for consumers and a combination of new challenges and opportunities for financial institutions (FIs).
As we move into 2018, all businesses (but particularly established FIs) must be open to experimentation and innovative thinking if they want to stay relevant.
Why experimentation is more important than ever
Showing a willingness to experiment and do things differently is becoming increasingly critical in financial services. The simple reason for this is that the industry is becoming more diverse, competitive and innovative all the time.
Those providers that rely on legacy systems, traditional technologies and established service delivery models have never faced a higher risk of losing their customers to new, more progressive rivals.
With an increasing number of businesses of all sizes recognizing the need to experiment and innovate, those that simply stick with what they know could soon find themselves left behind.
Some of the biggest names in the US banking industry have shown their willingness to invest in new services and experiences for their customers.
In October 2017, Chase launched Finn, which is pitched as an “all-mobile bank” that is designed to give people greater control over their everyday spending and saving. Targeted specifically at millennials, the service provides tools that allow users to rate potential purchases as things they ‘want’ or ‘need’, set personal saving rules on their own terms and avoid spending beyond their means.
Thasunda Duckett, CEO of consumer banking at Chase, said: “We continue to invest in technology that makes banking easier for our customers and gives them the confidence they need for their financial future. Finn is yet another way we’re innovating for millennials by designing a product that lets them spend and save on their terms.”
Wells Fargo has taken a similar approach with Greenhouse, a “mobile-first banking experience” that uses artificial intelligence and personalized insights to help customers manage their money.
We can expect to see further innovation along these lines in 2018 – with a particular emphasis on delivering a bespoke, relevant experience via the mobile channel.
Finding the right approach to experimentation
It’s understandable for businesses to be wary of experimentation, given the inevitable risk that accompanies any venture into uncharted territory. But with the right planning and strategies in place, the eventual benefits can substantially outweigh the drawbacks.
Firstly, it’s important to ensure that your experiments and innovations are targeted, with a focus on creating a new solution to a problem or taking an existing solution and improving it.
Equally significant is the need to take an enterprise-wide, collaborative approach to change. The entire business must be committed to embracing new ideas and methods, particularly if you hope to deliver a coherent, omni-channel experience for customers.
It can also prove beneficial to adopt a ‘fail fast’ mindset – which relies on regular testing and analysis to evaluate the success of your experiments. Failures are inevitable, but can prove valuable if the business learns from them.
For those FIs that are willing to commit to experimentation and have the right processes in place to get maximum results from their efforts, 2018 could be a hugely exciting year.
Image credit: Evgeny Gromov via iStock