As I look back on innovation over the last few years, I have not seen a truly innovative in product offering from banks. Is it that banks have lost the innovation streak? Perhaps banking has hit a plateau in product innovation?
I certainly agree technology innovation has changed the way banking is conducted from customers and banks own perspectives. Here, I do not give credit to banks; pardon me for saying so. It is the technology wave that is engulfing everything around us. Banks, too, were drawn in. They had to innovate in technology, or cede market share to more tech-savvy competitors.
The innovation list reads: internet banking, direct banking, mobile banking, online bill payments. All these are a consequence of technology. This technology transition will always have the “in folks” — adapters and their critics. The “in folks” are those who started banking in the tech era; Gen Y as they are fondly called.The adapters are Gen X-ers who learn and like the nuances of tech banking .The critics are those who have no option, but to learn tech banking with discomfort. Given the option, they will slide back to the classic model.
On the products, innovation has not been as distinct as in technology. Deposit products are the same old checking,savings and CDs. The rest are a mix and match. Lending products are no different. I now understand why customers are not clicking their heels when it comes to customer satisfaction.
I throw open the floor to the forum of members to prove me wrong. I want to be proved wrong.
I think for now it has to be in the area of technology as the regulators throw up roadblocks to just about any product innovation that my bank clients try to come up with. No regulator wants to be on the hook for allowing their charge to invent the next CDO/CMO or the like. So they disallow anything that hasn’t been done before. I even have anecdotal stories of some of my bankers having to drop products and services that were not exactly earth shaking in their level of innovation, but also not quite main stream either, as the regulator just “Didn’t like it.” In at least one case, the service was almost 10 years old and the bank had never lost a dime on the lending product and they were forced to stop offering it.
In the area of technology I think remote capture and deposit, merchant card services with pass through of credit and other risk to some third party (not my favorite of the possibilities), and some others may be of interest. I think they should also do more more to bank the unbankable with services like Green Dot and other pre-paid cards etc. might be an option. I like this one as it is less prone to credit risk from the tougher credit clients. All fees, and little to no credit risk.
Tim