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Financial Services Innovation Isn’t Just About Digital Transformation

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by Lisa London

Vice President

It’s about identifying market segments that financial services companies are under-serving and focusing on the needs of the younger generation.

I was in a recent conversation with a panel of financial services companies, where the topic of digital transformation came up as a necessary change. However, the conversation quickly turned to an important discussion about how adoption of digitization is being driven by the younger generation who have many unmet needs. We discussed how new players in the market are challenging all financial services companies by acknowledging this generational shift, which is tilting the competitive playing field towards areas where FinTechs, super apps, and big tech platforms enjoy advantages.  

The ideal response to this shift, especially for the financial services sector, is to innovate in a systematic way by understanding your core target better than your competition does. If you truly understand your core and constantly look to activate against their needs, motivations, preferences, etc., that focus on customer-centricity will keep you relevant to them. Steve Ballmer, former CEO of Microsoft, summarizes this point of view quite succinctly:

We can believe that we know where the world should go. But unless we’re in touch with our customers, our model of the world can diverge from reality. There’s no substitute for innovation, of course, but innovation is no substitute for being in touch, either.”

The winners in today’s crowded financial services landscape will be those who put customer needs as the single most important requirement for product and services development. Here is a prime example of this in action: 

  • Chime became the fifth-largest bank in the United States in only 8 years by addressing the customer pain points that many banks regarded as unsolvable, like running out of money a few days before payday. Chime understood the “job to be done” in this situation and uniquely processes customers’ paychecks up to 2 days ahead of time.
  • The Chime app is one of the highest rated financial apps on both Apple and Android stores, with a rating of 4.7/5. 

Coincidence, or did they read Clay Christiansen’s groundbreaking book Competing Against Luck, which outlines the “jobs to be done” customer-centric approach to innovation? 

As financial services evolve from product-led to experience-led businesses and they seek to increase value and trust, their corporate culture will shift to embrace a truly customer-centric way of thinking and operating. The winners will always be those companies that better understand their core targets and innovate accordingly. 

Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.” —Steve Jobs

Reach out to learn more about our approach to customer-centricity.

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