Innovation: Always Start with the Customer
We all have a good idea of what innovation means. New ideas. News ways of doing things. Game changers. Doing something better. Differently. And crucially, before anyone else.
But what does innovation look like for Financial Services in today’s fast-paced world of technological change?
I was fortunate enough recently to be a judge in the ‘Best New Product or Improvement’ category at this years’ Financial Services Customer Experience awards. The entries this year were a fascinating mix that highlighted to me that the appetite for innovation in the industry is strong, exciting and continually evolving.
What struck me when judging is that innovation comes in many forms, but I could see two broad overarching themes.
Firstly, where technology is at the core of the innovation and organisations have leveraged the power of digital to create something better or something new.
Take the example of the entry from IG Group. The whole development and launch of their new fast, intuitive and reliable trading platform was based on using the latest technology and innovative approaches. They used multi-sourced insight to define their target audience and identify their needs, delving into daily trading patterns and running user experience sessions. Their sprint-based approach to design was key to developing the final solution – enabling them to get their general ideas into the hands of their users quickly, and using immediate feedback to tweak, refine and eliminate as they go. Their first in industry ‘fly-out’ menu was borne out of this process.
And secondly, where innovation is centred around people or processes.
This was certainly the case for LV with their new ‘Pop-up Pension Coach’ concept. Here they demonstrated that they understood the importance that their customer placed on having the human touch through the pensions advice process, but blended this carefully with a user-friendly digital solution to offer customers free, no-strings attached online chat with a specialist adviser.
Outside of the award entries we should also consider Nationwide Building Society, a highly trusted brand. They strongly believe that it's people who offer service, but they also understand that their members want the best of both worlds – digital convenience backed by market leading levels of human service. They’ve differentiated themselves by embracing digital - they were one of the first to offer Apple Pay back in 2015, for example – and they’ve committed to investing heavily in their branch network reinventing the role of the physical channel.
Innovation is also about not being afraid to rip up the rulebook.
If we look at what Bought by Many have done. They harnessed the power of social media using Facebook to create, and connect with, a group of people with a unified passion – pets – and a common issue – dissatisfaction with current pet insurance products. Using their collective voice and the buying power of this 188,000 people-strong network, they set out to find them the products that they were looking for. And, when they couldn’t find them, they created them in-house.
And, in the recent case of Royal London, they’re rewriting the rulebook for the protection market. Using predictive analytics to reduce the 30-odd questions to make life cover decisions, down to just three medical and three lifestyle questions. This really is a game-changer.
Innovative companies are also not afraid to take a step back and ask themselves the tough questions. Take for example the winner of the ‘Best New Product or Improvement’ category I was judging - Direct Line. They completely overhauled their processes and developed brand new customer-led propositions. They had to. They needed to respond to the disruption introduced to the direct insurance market by the arrival of aggregator comparison sites. With a me-too offering and a brand which no longer sufficiently differentiated, Direct Line’s customer numbers had been declining significantly.
So, how did they do it? They started out by simply asking why? ‘Why buy from Direct Line?’
They scoured customer feedback and talked directly to customers to really understand their issues and discover what needs weren’t being met – paving the way for innovations focused on filling the gaps and addressing the frustrations felt across the entire customer journey.
In doing so, Direct Line created a new proposition innovation process which enabled early testing of insight-driven concepts with customers and immediate refinements based on feedback as the propositions moved through iterative test and learn cycles.
Moreover, it created a clear vision that the organisation could commit to and drive through systemic levels of change, making sure they were able to deliver on the brand promise throughout the end-to-end customer journey.
What is clear through these examples is that there are some common themes when it comes to successful innovation.
Being insight-driven. Effective innovation is underpinned by an in-depth understanding of the customer – who they are, what they do and don’t want, and what needs aren’t being met with current market offerings. Increasingly, this will incorporate analysing data at scale.
Having a clear vision. Innovative organisations have clarity about where they’re heading and are joined-up in their thinking about how to get there.
Working together to evolve at pace. Organisations that are great at creating new ideas and new ways of doing things have innovative working as a core capability embedded into their business. This is facilitated by positively encouraging cross-functional organisational working to generate new thinking with the customer at the core and putting in place agile frameworks which enable them to conduct iterative design, test and learn cycles at pace.
I have, for many years, been helping organisations from across the retail financial services spectrum to innovate by taking a future-back, insight-driven approach to identifying the needs of the customer – whether that be consumer, end client, intermediary or corporate – and finding new ways to meet their wider, more holistic needs.
From outcome-driven, flexible protection propositions, to reimagining the role of the physical channel for a multi-channel challenger bank and defining corporate health and wellbeing propositions which shifted to a ‘prevention is better than cure’ philosophy, for me the answer has always started with the customer. In the digital age, this has never been more true.
Published in Customer Experience Magazine, 1 September 2017