Innovation is what can drive-up deposits in the U.S
Early innovators in this space can steal a march over their rivals. Deposit products in the U.S. compare poorly versus those in Asia or Europe, both in terms of options and convenience. Restrictive eligibility criteria disrupt the continuity of accounts, forcing customers to close and re-open new ones whenever there is a change in their civil or professional status. At the same time, U.S. customers pay among the highest charges worldwide – those who prefer branch banking could end up shelling out over US $250 every year in fees! Surely, banks that quickly innovate on their deposit products and surrounding services, without compromising convenience and safety, stand to gain significant long-term business.
While individual banks may drive their innovation agenda from different perspectives of product, service, process or business, their final objective is the same – which is, to arrive at an optimal combination of product and channel for every customer segment. However, it would be wise to not lose sight of customer specificity entailing offerings that envelope the life cycle events of a customer from childhood through adult-hood, extending to explore the family and household relationship, as well. Thus, no approach works in isolation – for instance, product innovation must necessarily take up process or service improvement in tandem.
Process innovation within other industries such as retail, manufacturing or telecom could inspire banks to similarly improve their distribution, supply chain or pricing activities. Likewise, service-led innovation can optimize banks’ channel infrastructure even to the extent of mapping a desirable channel of use for every type of customer, product or transaction.
Once the benefits of innovation start to flow in, banks can pass them on to their customers by way of lowered charges or improved deposit interest rates.
And of course, they must strengthen their human infrastructure, re-skilling and redeploying where necessary, to ensure that the innovation agenda is properly implemented on the ground.
It’s a simple enough plan….but the difficulty lies in bringing in the discipline to drive its implementation, consistently and with commitment.
