Making It Just Digital is not Enough...

 

There have been better times for banks. Besides the current threat of Covid-19, many banks have been struggling since the financial crisis in 2008, when one of their main pillars of income broke away. As no money can be earned with low and even negative interest rates. Formerly shining institutions were forced to rethink their income sources. And if that were not enough, a highly competitive environment with agile fintechs and the ever-present digital transformation made the job no less easier.

 

One key performance indicator of a bank’s business is its return on equity. As a research paper of leading European banks shows, this indicator averaged on an already relatively low level of 7.2 percent in 2018. . Increased regulatory frameworks (Basel IV) and the aggravated economic downturn in the light of Covid-19 will put even more pressure on already existing profit gaps.

 

In the hope to find a way out of this situation, incumbent banks have started to come up with their own digital services to retain their customers and business. But the digital banking market has become extremely competitive – and sometimes even flooded, as the example of Vivid Money demonstrates. Vivid Money, a new Russian market entrant in Western Europe, will focus its expansion to only a few countries in Western Europe and stay away of the UK market due to already strong competition amongst established digital banking providers there.

 

Growth architects and business strategists for financial services have been investing heavily into research to understand the needs related to their (existing) services. The resulting innovations were primarily incremental. Current savings accounts that have been on the market for decades were made digital and the user experience improvement has become a daily task in the industry. Despite these efforts, financial services providers still struggle to stay ahead of the crowd and hold a unique position for a longer period of time.

 

From our point of view, these efforts fall short. The uniqueness of any of those services gets lost as soon as everyone works on the same terms and within the same contexts.
To be really successful, banks have to create a unique value offering: the next big thing that truly excites customers.

 

A value offering can be a service, a product, a digital platform or a combination of those in a business model. In fact, a value offering is a solution to a customers’ need. It can only be created and successfully launched based on a clear understanding of customers and their specific needs. How do companies gain and build on this clear understanding?

 

Jobs-to-be-Done (JTBD) is a customer-centric, data-driven strategy and innovation methodology that supports companies in defining a unique value offering. JTBD ties customer-defined metrics to tasks that need to be solved – in other words: jobs that need to get done. When you look at a market through a Jobs-to-be-Done theory lens, everything looks different. The unit of analysis is no longer the customer or the product; it’s the core functional “job” that the customer is trying to get done.

 

What is the job that people want to get done when it comes to finance? You may argue that there are many different tasks and objectives that are all related to finance. Doing purchases on a daily basis, financing education for kids, providing financial coverage for times of retirement, just to mention some examples. Let us apply a more generic and strategic perspective on these different “jobs”: What if we come up with the conclusion that whatever application we look at, at the end it is always one higher-level job that people are ultimately trying to get done: People want to manage their personal finances. That is true for any kind of application or context (or call it “use case”) as described above. And: there are many people out there that have problems with getting this job done, as this video demonstrates.

 

Any existing job-to-be-done can be structured into the same logic components according to the so-called universal job map concept (learn more about the Universal Job Map in the HBR Article from Tony Ulwick). A job map structures a job-to-be-done according to what needs to be achieved in an ideal situation. It is a model that is valid over a long period of time and independent of existing or future solutions that support that “ideal” job map.

 

The ideal job map of the job-to-be-done “Manage personal finances” could look like this:

 

When we look at the financial services industry from this higher-level job perspective, we can easily see that there are currently many products and services out on the market that already address one or another aspect of that job-to-be-done. From the perspective of a customer, this means that they have to put together all that pieces of the puzzle on their own to get the job “Manage personal finances” done.

 

The ultimate business vision and the purpose of a financial services company should be to help people get the whole job of “managing personal finance” done on a single solution platform – and to get this job done better and cheaper than today’s existing solutions.

 

“Nice idea”, you may think, “but how to put this into reality?”. So, here is how to put this thinking into your financial services growth strategy plan:

 

 

What do you think about this framework to create the next big thing in financial services industry? We’d love to exchange viewpoints! Give us a call or participate our  JTBD VIRTUAL MASTER CLASS BASIC in September.

 

For more insights, read our blog article on how to Escape the Commodity Trap in Financial Services industry.