The job to be done in the finance sector

Ten years ago banking and financial services were seen as the very best of British and they were justifiably proud of the innovation that they had introduced.  The credit crunch and decline of the innovative Northern Rock has led to a failure to focus on the job that banks need to do which could lead to real problems in the future.

bank-logo

To some extent this is no bad thing – a decade ago you could have papered over poor payment practices with an overdraft or extended overdraft, equipment could have been bought that you would have struggled to pay back without considerable growth and advisors encouraged businesses to take advantage of access to finance even if they did not need it.

The process is now more healthy – innovations in accounting software has meant it is easier to access financial information and highlight late payers.  Lending is also sub kect to sustainability criteria and there are now a plethora of other options that meets the needs of your business such as borrowing based on debit card receipts so your payment vary based on when it is most affordable and more flexible invoice finance so that a ham-fisted finance company do not get hold of your entire debtor book.

Providing fewer and better services should benefit customers and in some market segments the banking and financial services market is a considerable improvement on what it was, but the problem is that digitalisation destroys value and the closure of branches are impacting on banks in terms of their brand and more importantly the physical ability from those businesses who still rely on cash (restaurants, retailers etc) to operate effectively.

At best, high street banks are in a state of atrophy. But to survive in a digital world requires a strong brand but with the exception of First Direct, most banking brands have a negative Net Promoter Score and average CSI scores.  The recent problems of Tesco bank may lead to a belief amongst some consumers may head Red Adair’s sentiment that “if you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.”

But in a digital world banks may be competing with the convenience of an Amazon payment portal, the trust and value of grocers like Sainsburys Bank as well as numerous disruptive new firms which do not have the historic baggage or legislative scrutiny of the banking industry.  They may not completely take over the banking world but this is not the point as such companies could erode those profitable relationships that are needed.  Ultimately Tesco has 7 million accounts in the UK so it has grown quickly on the back of its brand.

Banks may be looking at innovative processes such as Blockchain, but the danger is that they focus on collaboration with other financial companies and not on how they can support the customer.  Providing these customers segments with what they want can support brand rehabilitation and create relationships that can be profitable in the future.  Afterall providing customers with what they need does not add value in the same way as providing them with what they want.

It can be done and there are a number of frameworks that can be used but there is a caveat that customers and employee must know who are the customers for such a product typified by the most effective of innovation tool around – the Jobs to be Done Framework.  In one area of the United States, a mortgage provider understood that their first time buyers did not want a mortgage, they wanted a home.  The area (Ipswich) had the oldest housing stock in the country and many properties needed upgrading so they created the 125% mortgage specifically for this customer type.  More and more providers took it on without explaining to staff what job it was to do and as a result the concept has a poor reputation in the UK.

If a bank and its staff do not understand the job to be done the bank misses the biggest service failure that dogs the industry – which is not to sell a product when it is needed.

 

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