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Dare to be Different

According to the IBM Institute for Business Value, retail banks need to differentiate themselves from competitors by embracing innovation. In a recent report, Dare to be Different: Why Banking Innovation Matters Now, the Institute highlights five different business areas where banks can achieve differentiation:

1. Retail Payments

Contactless – Radio Frequency Identification or Smart Cards to increase speed and convenience
Mobile – Enabling payments via mobile phones or other mobile devices
Biometrics – Biometric solutions to increase speed and security, lower fees
Online Payments – Reducing the high unit cost of processing payments online

2. Mortgages

Personalization – Mortgages with reward points, the ability to occasionally skip payments
Automation – Software to shorten loan approval and cycle times
Outsourcing – Using outside providers for non-core activities
Bundling – Bundled accounts that offset the impact of mortgage interest

3. Customer Experience

Loyalty Programs – Creating personal programs to reward customers
Enhanced Branches – Non-traditional branches to form relationships and engage community
Customer Relationship Management – Using CRM software to create personalized messages
Product Integration – Linking products such as accounts, credit cards, loans and insurance

4. Under-banked Customers

Credit Extension – Using non-traditional measures, such as rent and utility payment history, to develop credit scores
Portable Banks – Mobile ATMs or marketing teams to provide service for hard-to-reach people
Money Remittance – Helping customers, especially immigrants, send money internationally
Microfinance – Offering small business loans to impoverished people around the world

5. Adjacent Spaces

Healthcare – Partner with healthcare providers, manage plans and process related payments
Electronic Payment Processing – Electronic invoice or electronic bill presentment and payment

How would you classify these according to the innovation types introduced in the previous post? Are some easier to duplicate than others? Which ones offer the greatest chance at truly uncommon innovation?

Posted by Nelson T. on November 22, 2006 9:12 PM

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