Investment in digital technology is a trend right across industry but in Financial Services it is seen as the solution to the challenge of doing business in the 21st century. Digital Teams in retail banks which were none existent 5 years ago now number into the hundreds as banks strive to deliver solutions connected to creaking infrastructure.

The challenge of innovation is to deliver compelling solutions that make a real difference to people’s lives. The philosophy of adding additional features to a product to make it more desirable is prevalent in the FS industry with a view that a mobile banking solution with 50 features is better than one with 15. But is this true,  or are banks missing the point when it comes to where and how to focus their investment?

Over the last 30 years banks have endeavoured to migrate account management activity away from the branch network – introducing ATMs, telephone banking,  online and most recently mobile solutions. However these new channels have not always delivered the cost saving in other channels which was hoped for.  In effect customers read their statement, use telephone banking, go online & now use the mobile app. As well as being difficult to connect to, legacy infrastructure has caused another trend. That of basing new solutions on the old ones – think about debit card processing, it is basically the same as cheque processing but with a plastic card instead of a piece of paper. Online statements tend to merely be digital representations of paper statements (with the detrimental effect of not being acceptable for identity purposes). This focus on digitising elements of a process rather than re-imagining the whole process risks delivering solutions which customers won’t use as they cannot see the benefit.

Other industries look at this challenge differently – take google, Apple & facebook – all have embarked on re-imagining their core services rather than just ‘adding features’ examples include google inbox, apple music & facebook messenger. Why have they chosen this route and risked the inevitable backlash from a public who don’t like change. Because they realise that needs have changed and the solutions needed complete overhauls – it is about building something better.

I believe that banks can also be successful by adopting this approach. Identify a customer need as a place to start and figure out how to improve it in its entirety. Digital elements could well be a part of the solution but not be the starting point. Digitisation of banking should not be an exercise in who can spend the most, have the largest team or add the most features. If the aim is to reduce cost that will require behaviour shifts and that happens when you design something to be better for the end user not just cheaper for the provider.