For many digital banking teams, it's an increasingly difficult question to answer.
Competition from challengers and customers' sky high expectations have created a digital arms race. But despite ever expanding technology budgets — studies suggest some banks spend more than Amazon and Google on tech — 62% of digital deployments fail to meet expectations.
More often than not, by the time a bank's latest digital 'innovation' hits the market, someone else will have already done it, and done it better. Which means all the time, effort, and money they've invested will have gone to waste.
So how can banks break the cycle of development, release, and inevitable disappointment, and start creating digital features that are market-beating, not dead-on-arrival?
Why digital banking teams fail at innovation
Digital deployments fall short of expectations for many complex, interconnected reasons. But, in my experience, the root cause is often a lack of visibility.
Where, in other industries, knowledge-sharing is common practice — retailers, for instance, use shared data to improve their user journeys and increase conversions — companies in the banking space jealously guard their secrets. And this creates a vicious cycle.
With limited or no visibility into competitors' offerings, it's impossible to benchmark what you're doing and establish if it follows best practice. Or if it's even feasible.
As a result, many digital banking teams spend huge amounts of time and effort figuring out solutions to technical problems that others have already addressed, instead of focusing on the big picture: improving and enhancing their customers' digital experiences.
More to the point, with no way of knowing what's already been done, it's easy to fall into the trap of believing you've created something ground-breaking.
Except, once you release your new feature, functionality, or user journey, it turns out it's obsolete, customers are underwhelmed, and you have to go back to the drawing board.
Reclaiming the edge: how to ensure your new digital banking feature is as innovative as you claim it is
So what does it take to make sure you release a digital feature that is truly innovative, instead of something that was relevant four years ago?
In my view, the missing ingredient is knowledge.
Instead of starting from scratch whenever they're designing a new feature or user journey, digital banking teams — and any other teams involved in the project — should have tools that give them access to up-to-date and accurate data they can use to understand how others have tackled the same challenges. And they should have a process in place to keep abreast with developments.
Embedding a smart, comprehensive competitive analysis tool into the design and development process has three critical benefits.
Firstly, it greatly speeds up your go-to-market time. Instead of going through a trial-and-error phase, you can move ahead more quickly by adopting tried-and-tested techniques.
Secondly, it lowers development and opportunity costs, because you're building on what has been proven to be successful, instead of relying on outdated information and guesswork.
As a plus, continuous access to the latest data and implemented trends also allows you to build a strong business case and more easily overcome objections from decision-makers and compliance teams.
Thirdly, it gives you the freedom to shift your focus from problem-solving to innovation.
Learning how the market’s leaders have done things isn't about copying what they got right. More importantly, it's about creating opportunities for you to fix their mistakes and identify gaps, which is what allows you to gain a competitive edge.
If you want to innovate, knowledge is power
Banks are understandably reluctant to release data about the financial cost of failed digital deployments. But when you factor in infrastructural expenses, salaries, consultants' fees, and hours worked, tens of thousands of Euro isn't an unrealistic estimate.
And that's excluding opportunity cost. In this day and age, banks that don't get digital right risk losing market share, revenue, and credibility.
The good news is that you don't have to be doomed to doing things this way.
With the right competitive analysis tools at your disposal, you can start making smarter use of your resources and stay ahead of the game, instead of spending money, time, and effort trying to fix problems that have already been solved.
At Scientia, we’ve built a first-of-its-kind competitive analysis tool that shows you exactly how others have tackled your same challenges, so you can build on tried and tested solutions instead of spending precious time and resources trying to figure things out from scratch.
Alexandros is the CEO of FinTech Insights, the ai-powered competitive analysis platform for digital banking leaders. FinTech Insights has helped some of the largest banks and financial institutions in the world with digital transformation projects. The platform exhaustively analyses 500K+ legacy banks' and fintechs' user journeys and lets you experience them just as a customer would, so you can find out exactly how your competitors have addressed common challenges, build on their success, and learn from their mistakes.