The Need for Speed: A Leader’s Guide to Realizing Value from New Products and Partners

We often hear from banks that they consider themselves to be ‘fast followers’ in adopting new products and partnerships. The problem is that, too often, they’re only half right. You don’t have to be out on the bleeding edge, but being merely a ‘follower’ without being reasonably fast means you miss out on the growth part of the curve and the opportunity to create a competitive advantage.

The traditional approach of exhaustive up-front internal planning is no longer viable in a world where customer needs and technological capabilities change faster than most bankers change their shoes.

Worse, the well-intentioned focus on certain types of risk management only increases other kinds of risk— the risk of disruption from competitors, the risk of increased attrition by failing to meet those changing customer needs, and the risk of “solving problems nobody has with technology nobody wants”, as one industry observer put it.

?The solution isn't simply to move faster— it's to move smarter, with a reprioritized agenda and with a laser focus on customer needs. We use a process we call FIRE? (fast, iterative, responsive experiments) that combines the best parts of modern agile business methods into an effective and repeatable process that works in a highly regulated environment. Best of all, it gets results fast.

We have also been leveraging the successes and lessons learned from our members and portfolio companies to ‘start at 2nd base’ through structured Solution Sprints to focus on realizing value quickly and cheaply.

We can achieve speed by throwing resources at things, or getting faster at building and deploying, but there’s much lower hanging fruit. The biggest opportunity is spending your time on the things that drive value and eliminating things that don’t. Speed will increase just by taking these Actions and De-prioritizing these others

This guide outlines key steps leaders should take to accelerate value creation and realization from new products and partnerships.

Prioritize: Customer Jobs to Be Done

Banks tend to focus on very broad and general swaths of customers like “small businesses”, “Millennials”, “Emerging Affluent”, “Seniors”, etc., but developing a deeper understanding of what jobs customers are trying get done provides much more actionable insights to find unique and valuable value propositions.

Action Steps:

• Invest in deep customer research to understand the financial tasks customers are trying to accomplish.
• Use techniques like customer interviews, contextual inquiry, and customer journey mapping to uncover unmet needs. This is more than just asking customers what they want, they often have difficulty articulating it in actionable terms.
• Leverage insights generated by previous work from fintech partners and/or other banks and test your target customers.
• Prioritize innovations that directly address these jobs to be done.

De-prioritize:

• Lengthy market research and demographic reports that don't provide actionable insights into customer needs.
• Customer surveys. They can be great for improving shortcomings of existing products and services, but typically will not generate insights for new opportunities.

Embrace: Test and Learn

The answers are not in our conference rooms or in our spreadsheets. Agile isn't just for IT. Apply its principles anywhere that learning and rapid progress are critical and where the exact outcome is not always well-defined up front.

Action Steps:

• Develop low-fidelity prototypes and implement short feedback loops with real customers to test core concepts quickly.
• Set short sprints (1-2 weeks) with clear, customer-centric goals and milestones.
• Watch how customers interact with products in real-life situations and understand the entire process customers go through, not just their direct interaction with the product.
• Take advantage of pilots and proofs of concept with external partners to leverage existing research and experience.
• Use A/B testing to optimize based on actual user behavior.

De-prioritize:

• Perfecting products in isolation before customer exposure.
• Rigid, long-term project plans that don't allow for course corrections based on learning.

Implement: Staged Due Diligence

While due diligence is crucial in banking, it shouldn't stifle innovation. Take an agile risk management approach that scopes down the elements at risk in early stages of testing and scales the diligence and metrics accordingly. We can often test whether a customer perceives value from a product or feature before we need to connect to core systems, collect personally identifiable information, etc.

Action Steps:

• Develop a tiered due diligence process based on the risk level and stage of innovation.
• For early-stage concepts, focus on proof of concept and basic compliance checks.
• Scale up scrutiny as projects move closer to full implementation.

De-prioritize:

• Exhaustive technical and/or company due diligence until you have developed a strong hypothesis of customer value.

Cultivate: Productive Partnerships

These days every vendor and supplier proclaim to be a ‘valued partner’, but a true partnership involves some level of shared commitment and a willingness to give and take to create valuable outcomes.

Action Steps:

• Understand up front if the partnership goals are offensive or defensive.
• Defense is about staying in the game, and ‘good enough’ is probably good enough. Seek “Okayest in Class” and redeploy some resources to play offense.
• Offense is about winning the game, and that’s about creating a sustainable competitive advantage. Don’t underinvest here.
• Seek partners willing to share their past experiences and willing to continue to test and learn with you.
• Establish clear, short-term milestones for partnerships as leading indicators and adjust as you go.

De-prioritize:

• Partnerships that require extensive contractual negotiations before any value can be realized.
• Seeking extensive proof upfront of desired outcomes such as ROI, that’s the purpose of testing.

By aligning your innovation efforts with these principles, you'll move faster but also in the right direction—towards realizing customer value and a sustainable competitive advantage.

As the world flattens and traditional moats diminish, the only certainty is that we have to keep moving to meet and beat the competition.

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JP Nicols is cofounder and Managing Director of Alloy Labs where he helps financial services leaders create competitive advantage to drive new growth through industry-leading best practices,?tools, and frameworks.

He is a top-rated speaker and instructor on innovation, strategy, and leadership at leading graduate schools of banking, and cohost of the Breaking Banks Fintech Podcast , the #1 global fintech podcast.