By Mindy Hauptman, Managing Director, Consulting Services, Financial Health Network
Ready to tackle product innovations in order to improve your customers’ financial health? Financial Health Network Consulting Services is here to help. Request a consultation today.
Innovative products result in happy customers, and customer satisfaction drives business. According to CFI Group’s Bank Satisfaction Barometer, products and services are the most powerful driver of customer satisfaction, more powerful than rates and fees, branch staff, information and communication, online banking, mobile applications, and branch convenience. Product innovation is also fundamental to improving consumers’ financial health, especially for households that face volatile incomes, thin or damaged credit files, limited savings or unsustainable debt loads.
By thoroughly evaluating your products’ features, terms, fees, policies, and associated tools, you can identify where gaps exist. It is instructive to compare your products to common and best-in-class industry practices and to rate your portfolio relative to both incumbent and fintech competition, since customers are evaluating you against these options every day. Once you’ve identified these gaps, traditional research and product development activities can help you create a differentiated offering.
After working with numerous clients on product development projects over the the last two years, Financial Health Network has five tips you can use to improve your product analysis and innovation.
1.Common gaps span the financial health industry. While there is substantial variation across organizations, there are several common gaps in product portfolios today:
- ways to help customers compare the adequacy of their savings and insurance coverage to “healthy” benchmarks for their life circumstances
- methods to analyze spending, compare to one’s budget, and manage cash flow
- products and services to help customers plan ahead for large, irregular expenses
2. Customer preferences vary widely and drive usage decisions. In our experiences with clients, we typically find multiple consumer archetypes for whom different product solutions are appropriate, despite superficially similar needs. For example, consumers who frequently spend more than they earn may fall into several categories: over-spenders, volatile income earners or low wage earners. Even within archetypes, we typically find diverse preferences for product features and interactions with financial providers. To illustrate, some over-spenders are attracted to online, do-it-yourself tools, whereas others prefer personalized coaching and support systems. You may choose to develop offerings to satisfy some or all of these customer segments, depending on your customer make-up, capabilities, and strategic priorities.
3. Products can address multiple customer needs, and meeting those needs requires collaboration across the organization. For instance, debit cards are most immediately associated with spending. However, programs that round debit card transactions up to the nearest dollar and deposit the difference in a savings account address a customer savings need as well. Many financial health needs are best addressed by tools and advice that may fall outside of traditional product management. To capitalize on these opportunities, providers need to be ready and willing to collaborate across the organization, and include lines of business that wouldn’t normally be involved in product innovation, such as digital banking.
4. A robust business case is critical to gaining internal championship. As with any product development effort, assessing the size of the opportunity and the investment required is mandatory before bringing it to market. When developing the business case for products aimed at financial health, it is important to look beyond traditional factors and to evaluate their likely impact on users’ financial health. This not only reflects the product’s social benefit, but also enables a more robust business case, since the new product’s standalone profitability is only one component of its total return on investment. As the product facilitates improved financial health, its users’ overall profitability to your organization is likely to improve, and this should be factored into the investment decision. For more on the business case for financial health, check out our recently-released white paper.
5. Performance measurement must include consumer impact. As you build out the metrics which will define the product’s success, you should include customer impact metrics and measures of users’ overall relationship value, so that these benefits can be incorporated into the product’s performance evaluation.
Financial Health Network Consulting Services is here to help. Financial Health Network has a framework for financial health that includes eight indicators. For each indicator, we can enumerate a granular set of needs that financial products and services can address to help customers succeed. For example, to “spend less than income,” customers can benefit from products that:
- provide access to real-time, transparent account balance information
- analyze their spending and compare it to their budget, and
- provide discounts or rewards to help them spend less.
Products should be designed with these needs in mind.
Ready to tackle product innovations in order to improve your customers’ financial health? Request a consultation today.
By Financial Health Network on May 8, 2018.