Case Study Product Innovation at Bank of America
BANKING STRATEGIES
Case Study: Product Innovation at Bank of America
By Cindy Murray
What financial institutions can learn from inventions and innovations in other industries.
owhere is innovation more essential to survival than in the banking industry. In the payments domain, for example, nonbank competitors less constrained by bank regulations and therefore more agile are changing the banking industry’s grip on the public perception of banks as the only trusted brand for holding and moving money. However, innovation is challenging for banks. Many products, like payments, are a commodity. A vast number of products and a complex infrastructure require continual upgrades to keep apace with technology advancements and comply with evolving regulations and security requirements. This article describes how Bank of America fosters a culture of innovation. Pivotal to an innovative culture is the direct engagement of clients in the innovation process. We highlight some of the ways that Bank of America achieves this. But first we’ll look at the role of innovation process in building brand loyalty.
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Build Brand Equity Through Progressive Transformation
Change can occur by redefining a problem or redefining a solution. According to Robert Sternberg, a leading creativity expert,1 creativity is the ability to redefine a problem. Innovation can be viewed as the ability to redefine a solution. Successful innovation is a process over time—one that typically happens in increments rather than leaps. Rarely is a single innovation a game changer. In banking, 90 percent of innovation focuses on core competencies (that is, business-as-usual innovation), seven percent on game-changing innovation
MAY–JUNE 2009
within core competencies and only three percent on leaps that significantly shift the client experience. Outside of banking, an evolutionary approach to innovation is also the rule, not the exception. Continual improvements throughout a product’s life cycle build brand
Case Study: Product Innovation at Bank of America
By Cindy Murray
What financial institutions can learn from inventions and innovations in other industries.
owhere is innovation more essential to survival than in the banking industry. In the payments domain, for example, nonbank competitors less constrained by bank regulations and therefore more agile are changing the banking industry’s grip on the public perception of banks as the only trusted brand for holding and moving money. However, innovation is challenging for banks. Many products, like payments, are a commodity. A vast number of products and a complex infrastructure require continual upgrades to keep apace with technology advancements and comply with evolving regulations and security requirements. This article describes how Bank of America fosters a culture of innovation. Pivotal to an innovative culture is the direct engagement of clients in the innovation process. We highlight some of the ways that Bank of America achieves this. But first we’ll look at the role of innovation process in building brand loyalty.
N
Build Brand Equity Through Progressive Transformation
Change can occur by redefining a problem or redefining a solution. According to Robert Sternberg, a leading creativity expert,1 creativity is the ability to redefine a problem. Innovation can be viewed as the ability to redefine a solution. Successful innovation is a process over time—one that typically happens in increments rather than leaps. Rarely is a single innovation a game changer. In banking, 90 percent of innovation focuses on core competencies (that is, business-as-usual innovation), seven percent on game-changing innovation
MAY–JUNE 2009
within core competencies and only three percent on leaps that significantly shift the client experience. Outside of banking, an evolutionary approach to innovation is also the rule, not the exception. Continual improvements throughout a product’s life cycle build brand