Financial Services Innovation

Financial Services Innovation

Innovation in financial services is like watching a car crash in slow motion. The adrenaline is pumping, everything is whirling action and catastrophe is only a heart-beat away. Slow motion until impact because like most of the fundamental innovations of the past it seems to take forever to take off but the resultant change goes further and deeper than can be imagined, and will result in major casualties.

#1 Whirlwind of Change

Today’s accelerating whirlwind is driven by regulatory change, such as open API and automated advice, capital markets sensing blood and funding high risk, high energy Fintech start-ups and phase 2 digital technologies such as Artificial Intelligence (AI), machine learning and chatbots, Blockchain and Internet of Things (IOT). The traditional players are fighting to break through the constraints of legacy systems and culture.

Incumbents may be able to partner with Fintech start-ups and develop innovation pathways but there is real fear that the likes of Google and Amazon will leverage their advanced digital capabilities, large global customer bases and deep pockets to change the playing field forever. Indeed, Facebook is planning to launch a digital currency, Libra.

Innovation has become a business imperative in Financial Services focussing largely on consumer payments, delivery channels, mobile wallets and lending but is quickly spreading more widely with for instance Habito and Molo tackling buy-to-let mortgages and digital challenger banks like Starling entering business banking.

The major players are moving beyond Phase 1 digital innovation fuelled by PPC web search, online dashboards and mobile apps providing peripheral digitisation of key touch-points and moving towards true Phase 2 digital transformation with re-imagined journeys for frictionless experience. Fully digital mortgage fulfilment for instance will be able to provide funds in hours or minutes, instead of weeks transforming the overall dynamics of house purchase for customers. These business model transformations will be the next goal, generating winner-take-all returns as the prize.

#2 Innovation Culture

The innovation imperative has forced traditional large-scale Financial Services enterprises to consider what is required to create an innovation culture. In these organisations the culture of careful risk averse incrementalism and internally looking design and build is no longer fit for purpose. Although 20 years ago I headed “new product development” at Barclaycard with a multidisciplinary team and top-level support the challenge today is fundamentally more demanding for sharp vision, agility and creativity, and vision to action.

The primary requirement for a successful innovation culture is a focus on customer experience. There is no shortage of good ideas, but do they add customer value?

What customers value is what they are paying for, and why they come back. It’s their choice to use your services based on their assessment of what is valuable to them. So, you can’t assume you know best on their behalf, you have to get close to customers and really understand their value assessment before you design and build your offer, and then stay in close touch to keep your offer relevant and competitive.

You may think it is easy to understand what customers value, in even so obvious that you don’t need to ask them. Or you may think that you get this feedback from detailed usage data but remember data is not insight and does not generate creativity and value on its own. Essentially data alone does not answer the question “why?” and without that understanding creativity is choked off.

Or you may have an excellent technology team who keep coming up with features that the customer is certain to need. Or you may be undertaking a digital transformation that will reduce cost and increase convenience – so what’s the problem?

#3 Involve Customers in Your Innovation Process

All these approaches fail to check directly with the customer, not just about the individual elements of your offer, but holistically and in context. To unlock the cookie jar of successful and distinctive innovation you need to get close to your customers to understand at a deeper level what they really value. This is the difference between inside-out thinking where the business is designing the customer offer to suit the business, and outside-in thinking where the offer is defined to add value in the eyes of the customer which requires the continuing involvement of the customer. The holistic, in context, value creating offer is the customer value proposition and runs end to end encompassing rational elements of convenience, cost and effort and emotional aspects of brand and in-use service experience.

So how do we bring the customer into the innovation dialogue? It is essential to talk directly with customers. There are many insight techniques for this, but the gold standard is a direct conversation facilitated with professional expertise. Building on this will be continuing dialogue, bringing the customer into a collaborative design relationship where ideas are jointly developed that create mutual value. Collaborative design is completely consistent and indeed synergistic with rapid prototyping, Minimum Viable Product (MVP), Agile development and Design Thinking.

In business markets it is often appropriate to form a strategic partnership working jointly with the customer to look ahead and create solutions that add value, by reducing waste and stock holding or developing novel solutions to previously unconsidered issues.

Taking this deep understanding and aligning it to the client business model to define an achievable, profitable and compelling growth strategy is the essence of Customer Thinking.

#4 What’s Stopping you?

What are the barriers? If it is so straightforward why do more businesses not employ Customer Thinking as a matter of course? The first issue is mindset, which needs to be championed from the top. Functional silos often pursue their own agendas, but Customer Thinking is a cross-functional opportunity to unite organisational goals behind a common theme – providing new value to the customer. Fintech founders must be careful to avoid “Founders Curse” where they are so focussed on the race to market with their technologically sophisticated idea that they burn their cash without checking-in with customers and then find sales disappoint.

In summary Customer Thinking provides a route to successful innovative growth and profit through a practical goal and organising cultural principle.

With this mindset it becomes vital to really understand what customers value rather than what we might assume they want, what is easy or low cost to provide or is the latest feature to emerge from the technology lab.  Indeed, we should be building solutions jointly with customer involvement, so that we deliver what is really valued.


BeyondCuriosity is a specialist insight and customer strategy consultancy with deep experience in financial services and technology innovation.


“The main reason that we would choose them as a strategic partner is their pragmatic and innovative ways of working to achieve outcomes that can be acted upon. Their recommendations are always clear, concise and actionable and this has enabled us to move our business forward at a significant pace” Aldermore Group Marketing Director




To learn more call or email Chris Little

M: 07957686366


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