I was recently asked to take part in a focus group with one of the Big 4 banks who shall remain unnamed. They had flown a (presumably) very expensive consulting group out from San Francisco to help them to define their “purpose”. Whilst having a clearly defined purpose is a great idea, I couldn’t help but think that it was just another example of the big banks doing everything they can to differentiate themselves from their competitors except the thing that would truly allow them to.
What I’m talking about of course is product innovation.
Banks are trying to innovate on everything, bar the thing that matters most – their products. I mean think about it, without products we wouldn’t even need the banks. Their core service is to provide us with great financial products that allow us to make the most of our money and help us achieve our dreams. Be it buying a home, building wealth or starting a business (now it sounds like I’m the one defining their purpose).
Don’t get me wrong, banks are doing a lot of work to change themselves through innovation in their retail arm with new branch designs and services, improved customer service through social media etc. or better digital offerings with great apps and technology. All of this stuff is necessary and hugely important but the elephant in the room is that we still have a set of financial products that seem almost identical across the major banks.
In a recent Q&A at the FinTech Melbourne Meetup, new ANZ CEO Shayne Elliot stated that his bank would be looking to invest in and partner with startups to help improve their customer experience. We totally agree with his sentiment but once again the focus isn’t on their products. Funnily enough in the same session he also said “We make most of our money selling mortgages”, yet no mention was made of the fact that their product is barely differentiable with the other 3 majors and FinTechs could help them to build out a truly unique product proposition.
At Huffle, we believe that product innovation can, and should, come from sources external to banks. Here are 3 key reasons why:
- Bureaucracy and speed-to-market: Over the years, banks have built up a number of processes and programs which make getting things to market quickly virtually impossible. No such barriers exist for a small tech company which has recently been established.
- Ability to run a Minimum Viable Product (MVP) under a different brand: Making big changes to existing products does present a risk to banks, having smaller innovative brands to test these with limits the exposure to reputational damage and allows unique propositions to be tested and refined before being adopted en masse.
- Fresh, outside-the-box thinking: Whilst there are probably a million good ideas floating around in a large bank, often people who have been working there follow a similar pattern of thinking. Startups that bring people together from a broad range of backgrounds have the ability to attack a problem creatively, from an angle which might not have been thought of before.
I would love to know your thoughts;
- Do you think the banks products are up to scratch?
- What kind of product innovation would you like to see them offer?