The words payment and innovation dont always go together, nor should they.
A compelling user experience can often be found built from necessity with simple functionality. While new products and services that are all singing and all dancing can be fun, if they dont have a target audience that want to use them, whats the point? The implication isn't that innovation doesnt drive adoption, the point here is that innovation without a purpose wont drive sustained adoption and can ultimately have the opposite effect.
Adoption isnt driven by alchemy, you cant turn a product no one wants into gold just because its built on the latest technology and does something a bit different. While payment service providers that upgrade the technology platforms their products and services are built on have a distinct advantage over those on disparate legacy systems, with a higher capacity for innovation and a quicker time-to-market, this doesnt guarantee success. Ultimately, problem solvers will always be more successful than the problem seekers. In the financial industry, long term sustained success is driven by need, not by fads.
With the rise in popularity of new, innovative, non-traditional financial service providers in the payments business, bank issuers are under pressure to provide a more compelling customer experience if they want to maintain and grow their market share. To sustain their competitive positioning, traditional financial institutions (FIs) are breaking away from their conservative personas and jumping on the innovation band wagon, driving alternative payments, mobile banking and emergency cash initiatives, to name just a few.
However, innovation is a double-edged sword and if plans for new exciting products and channels arent rolled out properly it can be to the detriment of the institution and even drive customers to switch banks. To successfully roll out a new product or service, financial institutions must first identify a need by listening to their customers. There is no advantage to rolling out a new product just because they can or desperately trying to find a problem for new technology to solve. The simple rule to follow is that if it isnt useful, the novelty will quickly wear off, as will use.
At the same time, keeping up with the Jones is another problem area when it comes to innovation. Rolling out quick-fix products just to say they are available will not drive loyalty or revenue in the long run. Plug and play solutions that arent integrated as part of a comprehensive omni-channel management strategy will not deliver a streamlined and positive customer experience. Mobile banking apps are a prime example. A report by Xtreme Labs found that one in six customers who switch banks cite a poor mobile experience as their motivation to take their accounts elsewhere, with bugs and poor design topping the list of complaints.
Bethan Cowper is head of international marketing for Compass Plus.