Over the past 17 years of low interest rates, money has been effectively free or worth very little to banks. Deposits have generated little profit and depositors received little benefit. As banks shifted their attention to products still generating revenue, digital-only banks with cheap capital rushed in with innovative customer centric solutions and changed consumers’ thinking about banking, payments, and money management.
Now, the steep rise in interest rates is once again changing the game. Almost all financial institutions are at least somewhat worried about the impact of rising interest rates and subsequent impact of inflation on their customers. Examples of the potential impact:
- Higher rates can be favorable for banks due to interest-related income but can also be offset by consumers who can no longer afford to borrow.
- Fintechs that work in the consumer lending space could see their borrowers begin to default on loans.
- The rising interest environment could also fuel significant change in the competitive landscape as fintechs become ripe to be acquired by banks eager to advance their digital offerings or bigger banking technology providers looking for bargains.
Amidst this changing landscape, leading financial services companies recognize the need to evolve and see rising interest rates as a catalyst for product innovation. Financial services companies most likely to succeed over the next year and beyond will be those that invest in designing products that deliver a total customer value proposition and focus on helping customers solve their problems.
Financial services companies most likely to succeed over the next year and beyond will be those that invest in designing products that deliver a total customer value proposition and focus on helping customers solve their problems.”
Design products and offerings that address current consumer needs.
Fast-tracking innovation is key to staying competitive especially during macro-economic events such as today’s rising interest rates environment which has wide-ranging impact from profitability to customer loyalty. The best innovations:
- Start with consumer insights.
- Use flexible processes that tap into consumers across all phases of the innovation spectrum.
- Integrate data science and behavioral approaches to provide rapid concept development, iteration, and validation.
- Are designed to be agile and flexible: virtual or in-person or a combination of both.
- Drive transformational thinking for both the near-term and disruptive innovation goals.
Innovation Sprint™ guides teams toward high-value growth insights.
We’ve designed a modular approach to guide and support our clients’ innovation efforts. InnovationSprint™ is set up to meet you wherever you are in your innovation journey and provide you with the right insights, at the right time, to move you towards a successful launch.
Whether you’re embarking on an innovation initiative for the first time or well down the pathway of idea generation and development, bringing the customer voice into the process will significantly enhance your potential for success.
Financial services companies that embrace this type of innovation-minded approach will be positioned to thrive alongside their customers in this environment and well into the future. Please contact us if you’d like to learn more about how InnovationSprint™ can support your goals.
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