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Published on 8th December 2014

Riding the Innovation Tsunami

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The growth of digital channels and the importance of social media are helping to drive a tsunami of innovation in financial services companies. But something is missing.

Take this quote from Barclays CEO Anthony Jenkins, “We are on the leading edge of a technology revolution. You can’t see it, but it’s coming; it’s coming hard, and it’s coming fast”.

In fact in the last few months Barclays have announced both the introduction of biometric finger scanning technology, and face-to-face video banking. These innovations should improve both customer experience and security… so are win-win for Barclays and its customers alike.

Face-to-face video banking in particular seemed to take a few commentators by surprise. It makes perfect sense, and is likely to become commonplace across the industry over the next few years. In this respect, Barclays are leading the industry, and should be congratulated.

The Challenge

The challenge, as all financial services companies know, isn’t injecting a bit of innovation here or sprinkling a bit of magic there.

What everyone struggles with is embedding innovation into a complex multichannel environment, constrained by organisational silos, competing executive priorities and balanced against a ‘must do’ regulatory programme portfolio.

Providing a consistently good customer experience across multiple customer channels is hard now. In the future, it will be even harder.

One Lloyds bank review on the Smart Money People platform really stands out. A Business Banking customer, who recounts his difficulty in getting in touch with Lloyds bank.

In his review, Pete started his customer journey via a broken web contact form, then went to Twitter, where after around 20 messages, a member of the business banking team, with no apparent knowledge of the Twitter conversation picked-up the phone. He calls this experience ‘the general mess of their communications.’ You can read the full Lloyds bank review by Pete here: http://smartmoneypeople.com/brand/lloydsbank-reviews

The use of Twitter for many financial services organisation is in itself innovative. Engaging customers through multiple channels is great! But in this case the customer experience was clearly disjointed, and via Twitter Pete received replies from three other banks offering to take his business instead!

At the basic level, the customer’s expectation was clearly not met, and multichannel engagement did not work.

The Future could be very bright!

The pace of innovation won’t slow down. In fact, there’s some amazing innovation not too far away that will truly delight customers. This should be great news!

Financial services firms will have to be better at implementing innovation, but also at performing all the core processes (e.g. making and receiving payments). After all, a beautifully designed app with performance issues isn’t likely to delight customers for too long!

The key to building sustainable advantage

The innovation tsunami is picking up power. All organisations will join the wave, as no one can afford to be left behind. Sure, some organisations will lead the charge, and others will do well to not fall too far behind.

However, looking across the industry, all financial services companies need to get better at communicating, managing customer expectations and being more open. This is probably the hardest nut of all to crack, but vital if sustainable competitive advantage is to be gained. We argue that it should also be central to the innovation agenda.

Customers want to love the brands they shop, eat, travel and bank with! Innovation in financial services isn’t enough. To truly build sustainable advantage, financial services organisations must lead the customer trust and transparency agenda.

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