Here at DWC we have scaled up significantly over the past months to a 15 person strong team and consequently this has drawn the majority of my time and energy away from writing new content. This guest article, written by James Taylor of the Fintech Network, caught my eye though and together we agreed to share it through DWC. I think James raises pertinent questions - and from a well informed perspective - on retail banking innovation.
I hope you enjoy James' writing as much as I have.
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As retail banks continue to jostle for position in the digital transformation race, I’ve found myself considering what innovation within banking really means and who is going to get it right. My remit at FinTech Network requires me to speak daily to individuals who are responsible for innovation, design and digital transformation in both incumbent and challenger banks alike - and the one thing that strikes me is the variety of responses I get to the question “why and how are you innovating.”
Some innovate to reduce cost. Some innovate to create new products. Some innovate to push the organisation to become more customer focused. Some innovate purely as a marketing exercise. There is innovation in response to regulatory change and innovation in response to the latest must have technology. Some banks are innovating through acquisitions, JV's, partnerships and accelerators. Some are changing their business model and culture.
All are trying to ride the digital wave with a specific outcome in mind for their business and their customers. But they can't all be right, can they?
Only a few I've spoken to seem to spend their time thinking about the future and what we, the consumer, are likely to be demanding from our banks in say 5 or 10 years’ time. Based on our future experiences from every facet of our digital life how are expectations and behaviours likely to change.
For instance, how is the way I book a holiday going to influence the way I bank? How is the technology I carry with me going to change the way I pay for things? Which technologies that have had marginal adoption today going to become an overwhelming feature of my life in the future? What unknown unknowns are going to emerge that none of us could predict?
The process of making these predictions has been referred to as the “art of the future” and the reason it’s so critical to innovation functions within banks is without considering what customer behaviours are going to be in the future, how can you innovate now to create a business and a set of products that meet those future needs? How are you going to create meaningful customer insight and design customer focused products if you can’t confidently predict how your customers are likely to behave?
How are you going to ensure that the sweat and tears given in the name of innovation now don’t turn out to be wasted when the technology you pinned your hopes on has been leap-frogged (chip and pin anyone?) and is now obsolete. Or that customers are behaving in a completely unforeseen way that makes your particular proposition irrelevant? (Pokemon Go??) Or that you realise you don’t have the back end systems and processes in place to support the scramble towards a new model of banking? (PSD2 and the CMA on open banking??) The risk of neglecting future customer behaviours is pretty significant then.
It sounds like a luxurious use of time when there is data to be analysed, a customer journey to be mapped, a new proposition to test and a partnership with a tech partner to be negotiated - but all these other tasks could be meaningless if we don’t have our best guess in place on what the future is going to look like.
The art of the future should be the very first step in any innovation process. What do you know about your customer’s behaviours now and what can you confidently predict about them in the future? What are the trends, technologies, emotions and desires that shape future behaviour going to look like in 5 years time? How do you begin to apply this thinking to the range of demographics you serve to ensure you don’t leave anyone behind? Most importantly how are you going to build in flexibility so that you can adapt as real world information starts to inform your prediction.
Once you have a picture of the way your future customer is likely to behave you can begin the process of aligning this with your vision, your products and your culture to deliver the experience you promise your customers. Then the challenge of gaining stakeholder buy-in begins!! Good luck with that.
Fortunately I don't actually have to do this. (Please take note of the number of question marks used in this article. I have questions, not answers!) But if I did, this is what I'd be betting on:
- We’ll bank exclusively through a piece of wearable tech, something like Google Glass, which in turn utilises the augmented reality principles of Pokémon Go to create a fully interactive but personalised environment that is both local and connected. Everything we see, we will see through our banking platform and we'll be able to interact with it. No need then for mobile or internet banking solutions.
- This “view” of reality will be overlaid with data. All the data that we generate in our digital life will be amalgamated in one place to inform all our banking decisions. Think about looking at a digital menu above the check out in your favourite lunch time haunt and making your decision based on what you've eaten previously, how far you walked that day, what your friends eat and anything else you'd like to see. Your order will be made from your banking view straight to the vendor.
- Through this “view” we’ll also have the option to access a sector agnostic retail platform. Something that combines the best bits of Amazon, John Lewis and MoneySuperMarket.com. A banking platform that allows us to access the best deals based on our data, location, habits, likely future behaviours and gives us reviews and advice with an excellent customer experience. Like those trainers that guy in the gym is wearing? Your banking platform will know where you can get them for the best price, your size and the insert you need for that dodgy leg. All delivered in time for your next session!
- Something like Siri with advanced AI machine learning and natural language recognition provides a fully interactive, dedicated personal assistant to remove any friction from our banking experience. It knows who are friends and family are, our financial situation and our likely spending patterns. We just need to tell it what we want to do and it will speak directly to the seller through open banking principles, simultaneously offering us advice. That monthly, budget crippling impulse buy will be a thing of the past!
- We'll be protected by advanced biometrics for security and authentication so all of this will be secure and just for us.
What's your prediction?