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What does the next great banking service look like

Amar Limaye
Woman looking at laptop with credit card in hand

Why your customer’s needs, not competitors or the promise of super-apps, should shape retail banking innovation.

Mobile banking accelerated during the pandemic, continuing an evolution in the way we bank. The age of decades-long loyalty to a single provider is quickly fading. A strategic review by the Financial Conduct Authority found that consumers increasingly hold multiple current accounts, from 87 million accounts in 2018 to over 100 million accounts in 2022. 

Banks who want to compete must think bigger than shiny new apps—they need to integrate themselves into the day-to-day lives of their customers, with frequent touch points that become as ingrained as grabbing a daily coffee or tapping onto public transport. Simply, legacy retail banks need to find new ways to stay relevant.  

Apple Wallet's new open banking feature allows people to check their transactions and balances at a swipe—removing the need for them to log into online banking services and reducing the potential for banks to sell products and services. This should serve as a wake-up call for retail banks, a worrying next step in a rapidly diversifying personal finance landscape. 

The temptation can be to look at the latest trending technology and start there. Or to copy Fintechs or direct competitors. The innovation for innovation’s sake approach is doomed to fail, and many legacy banks have already felt the sting of underwhelming transformation—those in the industry will recall stories of features that were never used and quietly shut down.

Financial services leaders must avoid the technology hype trap and use consumer insights to drive meaningful product development. Here are some of the ways they can amplify transformation success.  

A strong discovery process is critical 

Too often transformation decisions are made in a leadership silo and confirmed by a flawed research process. If a small group of executives come up with a product idea based on what their competitors are doing or a demo they saw at a conference and confirm their decision with closed questions, they are likely to be strongly influenced by confirmation bias. 

Instead, banks must listen to the people that matter to their business—those they want to reach. Qualitative research is essential in the early stages of discovery. Instead of asking, “Would you consider using a new buy-now-pay-later service?”, ask “What’s the very next thing you do after checking your balance?” These are the types of open questions that will tell you where your experimentation focus should be. You can then refine your research through quantitative surveys to extract further detail.  

Woman looking at laptop with credit card in hand

You might not develop the next super-app. And that’s ok. 

What works in another market often won’t work in another. Often the temptation is to think big, really big. Super-apps in China and Southeast Asia are dominating the market, with platforms like WeChat and Alipay offering all-in-one commerce and finance services. But in many markets, trying to be everything to everyone is unlikely to work.

For retail banks, a focus on their unique customer base and their needs is much more likely to pay dividends. Banking leaders have a huge competitive advantage—large customer bases, huge amounts of accessible data, and existing, secure infrastructures. They aren’t starting from scratch and a focused discovery process can help them to make the most of these significant advantages.

What does the discovery and development process look like? 

Let’s walk through a thought experiment.

Imagine your research finds the first thing your customers do after they check their balance on your banking app is to look at something they want to purchase—often big-ticket items like vacations or cars. You could use this information to carry out further research, maybe developing an idea for a “Save now. Pay later.” service to support aspirational purchases. 

At each stage of your continuous discovery, you uncover your customer’s “next-desired service”, the next action they want to take, and you work to develop products that deliver this solution with the lowest possible friction. Fintechs are already helping people to budget, but banks have the infrastructure, audience, and mature products to do this efficiently and at scale. This is how you develop products that directly link to customer needs.

Woman looking at laptop with credit card in hand

Ready to experiment and uncover your next successful banking transformation?

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