As Bob Dylan sang, “The times, they are a-changin” – and especially across financial services. At Wazoku, we know from our FS clients that disruptive innovation in the payments space has seen the race to win consumer confidence and mindshare for contactless payments in the UK and beyond speed up dramatically.
We have seen the launch of Apple Pay and Barclays bPay in the UK, and contactless payment schemes are undoubtedly going to continue to be a big focus, with non-financial service brands such as Apple, Samsung and Google investing in their own touch-to-pay services.
According to MarketsandMarkets, the global market will be worth $9.88billion by 2018. But with a growing number of trusted household tech names getting in on the act, how can financial institutions continue to successfully compete and continue to innovate for their own growth and competitive advantage?
Unlike these new disruptive entrants to finance, traditional banks and payment providers are held back by the friction between the legacy systems which underpin their core foundations and the introduction of innovative technologies. But continued consumer demand for speed and convenience means they must keep driving forwards, despite the fact that the development of truly disruptive payment innovation is often held back.
Often banks are choosing to adapt – sometimes successfully, collaborating directly with PayPal and Apple Pay – sometimes, indulgently – the tie in between Lyle and Scott and bPay (do we really need contactless cuffs?!). But the commonality between all of these adaptions is their reliance on external technology, which has already hit the mainstream marketplace. For banks and traditional payment providers to own the future of payments and drive genuine innovation, they need to invest directly, collaborate and think more strategically.
Visa Europe has recently taken steps towards this with a new partnership with art and design school Central Saint Martins to develop the future of wearable payments. But the popularity of such expensive, high-end wearable payment items will be limited, much like the Apple Watch.
Resources should be spread among futuristic, radical innovations and the rest of the innovation spectrum – from incremental changes to core bread-and-butter services, which can be made with low risk, low cost and in-line with legacy systems, to differentiated innovation around medium-risk, customer-focused developments around things like mobile payments. Differentiated innovations are often what drive continuous customer-focused competitive advantage. By developing a strategy across the entire spectrum, innovation can become more agile, sustainable and effective.
By embracing the innovation spectrum, innovation is no longer placed at the niche group in an organisation, tucked away in R&D or even with external consultants. Instead, involving the wider business and putting it at the centre of everyday working life, innovations can be uncovered, developed and implemented significantly faster.
There are thousands of experts at your disposal: your staff. Engaging in meaningful discussion around innovation should be step one. Aviva has been successfully doing this for a number of years to develop game-changing new services which serve genuine customer needs. After all, who else is best placed to tell you what your customers and the wider consumer wants than the very people who deal with them on a daily basis?