In tough markets with high competition it can be tempting to focus investment on marketing spend and maintaining distribution, instead of spending on experimentation. But carving out a portion of investment dedicated to ongoing innovation is vital if you want to stay relevant.
Why innovate when purse strings are tight?
Quite simply, no business can afford to stand still. Whether it’s the threat of competitors entering the market or changing customer expectations, most executives recognise that inaction is a direct route to obsolescence.
Research in our latest white paper, 8 reasons why your business is failing at innovation – and how to fix it, found that 60% of businesses believe that their companies will become irrelevant if they don’t innovate, while 49% feel their offers will lose their appeal within two years of launch unless they do something to keep them fresh. Less than a quarter of respondents (24%) felt that their current products and services would be attractive to customers after four years.
How to innovate
According to our survey, there doesn’t appear to be a clear path for companies seeking to innovate. The market doesn’t favour any one strategy strongly over another. Around 40% of respondents marked all the available options as ‘critical’ – embedding new technology, developing new products, having a global strategy, entering new markets, cultivating a culture of innovation, working with other organisations and developing new work practices). A further third thought any of these strategies was at least ‘very important’.
Embedding new technology was the most productive strategy by a slim margin. Certainly, in an atmosphere of rapid digital innovation, technology is playing a starring role. However, onboarding technology can be risky. It’s a capital expense when resources are tight and, as much competition now comes from the cutting edge/agile edge of the market, there is no guarantee of success.
Third parties are more than simple suppliers
Working with third parties is a much sounder strategy. So, it’s strange that of the seven options available to survey respondents, ‘Working with other organisations’ was revealed as the lowest priority (but again, by only a small margin).
It is possible that brands consider third-party technology providers as suppliers of tools rather than strategic partners, but this couldn’t be further than the truth. With deep knowledge of the bleeding edge technology development sector, third parties are best placed to see the next innovations – and competitors – to emerge over the horizon. Agile and knowledgeable teams can advise on restructuring data for both compliance and efficiency, as well as finding ways to ‘plug in’ the latest advances with minimal disruption.
Agility will come to define innovation
Innovations in banking and financial institutions are, for the most part, iterative. Following the ground-breaking changes wrought by Open Banking, in the near term, the market will see fewer ‘new’ products and smaller changes based on improving customer experience. Companies that invest in capabilities that can continually adapt to change will prove more impactful than those spending on the big splash.
Innovation will come in the form of more seamless integration across customer platforms and devices; data will flow freely and securely between key banking figures; advances in security without damaging experience will be keenly sought. Ultimately, responsiveness to subtle and frequent movements in customer expectations will prove to be far more innovative than a ‘one and done’ wholesale change.