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What problem does your innovation solve?

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I’ve been involved in quite a few conversations recently about the challenge of migrating customers.  Not migrant customers, but migrating customers towards new channels.

The fact is that people don’t like change and no matter how much you push new fangled ideas, if the customer doesn’t like it then they don’t like it.

Having said that, many will expect it of you, even if they don’t like it.  For example, I might not use mobile banking but I expect you to offer me mobile banking, just to show you’re a decent bank and keeping up with change.

What is really interesting in this process is that it is not always the consumer that is the problem here, but the companies that service consumers.

Banks have innovated rapidly and radically over the past decade in their offers to corporate customers, but often corporate customers don’t want to adapt and change, or do not see the point.

SEPA end-dates and products are a case in point.  Most corporates see no reason to change their systems to support SEPA instruments as there’s no business case visible, only costs.

Costs to change systems, costs to adapt processes, costs to collect information, costs to support new products and costs to take out old ones.

The same may be true of things like contactless payments terminals and the movement of cheques to new payment instruments.

So we could look at corporate and companies as being the block in the innovation cycle between bank to business to consumer.

But that would be wrong.

Corporates are not the blockage as they adapt to suit their customers.

If their customers are demanding being able to pay with alternative instruments, then companies will offer them.  If all your customers are Bitcoin users, you’ll take Bitcoins.

Equally, if your customers are moving towards mobile payments apps, then corporates will offer such apps.  More importantly, if the app enables the corporate to get more business, they will move there even faster.  You only need to look at Square for an illustration of that game changer.

So the issue is not that the corporate or the consumer is the block, but that the innovations offered by the bank are appropriate and give visible benefits by removing payments friction, increasing business, and making things intuitively easier.

This is not a dissimilar idea to the challenge that technology companies face.

Many technology companies offer amazing innovations, and yet 80% of them could be labelled solutions looking for a problem.

And maybe there’s the rub: before you roll out the next payments innovation, work out what the problem you’re solving is first and then articulate it clearly and check that it really is a problem for the customer.

 

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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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