The competitive landscape is being redrawn, as the banks of all sizes are offering standard vanilla products. This competition is further fuelled by the new entrants, especially the non-banking entities leveraging disruptive technologies in their lending products.
To remain competitive and successfully navigate the market conditions, Banks need to develop lending products with differentiated features that go beyond standard vanilla products. Innovation is the new normal and this new normal environment favours banks which can conceptualise, develop, test and quickly introduce lending products that are user-friendly.
With smarter and faster product innovation Banks can establish and maintain a vital competitive edge by identifying and adapting to developing new products and also quickly bringing them to the market to meet demand.
Banks that spot these opportunities to develop the right products and move quickly from concept to market can become leaders in this new competitive landscape. Right-fit lending products can improve customer acquisition and retention rates multiplying competitive advantage even in crowded marketplace. End result would be in top-line growth.
Differentiated lending products aligned to the market are key
Banks no longer have the luxury of long lead times and slow, cautious product rollouts. They can streamline some of the product management functions to accelerate the pace of product innovation, there are numerous challenges especially from the underlying technological solutions. Banks can standardize and centralize their product development lifecycle providing complete insights into customer needs, market drivers, internal operational governance and more importantly modular approach with a high level of configurability in its technological solutions. This will accelerate product innovation with improved time to market timelines.
However, banks seeking to accelerate the pace of product innovation face challenges. Many banks are utilising out-dated legacy systems with minimal flexibility and configurability that inhibit innovation and also limit the bank’s ability to quickly deploy and update applications that support new and existing products.
Traditionally, software solutions have tightly coupled product definitions, its business rules and validations and also the processing model and validations resulting minimal flexibility and configurability to the banks. Due to this, any new product requires complete new product setup or at times amending the underlying software code.
Decoupling the Lending Products from process is key
In order to overcome these challenges, banks and technological solution providers need to delink the product definitions from product validations, and product packaging from product processing to adopt the componentized factory approach. The factory approach offers the highest level of configurability, as it helps to slightly tweak only the required component from the entire lifecycle, instead of completely redesigning the products and further enabling them to re-use existing models.
This approach proves effective when the banks intend to roll-out a new product just in time to meet changing market needs such as an emergency loan product with slight variation immediately after unforeseen trauma or disaster. A modular and componentized solution can offer required features (product rules or validation or processing flow or processing validation) and capabilities enabling banks to copy the existing product and perform spot tweaking only where its required. Factory based approach can quickly configure the specific component and roll-out the product in no time.
Adopting Platform based Business Application should be central to the overall FinTech Transformation Strategy
Banks need to have a centralized Product Lifecycle with sound operating model. Powered with agile technology platform that captures all insights required for product development provides an ability to reuse the components to achieve product innovation smartly, effectively and quickly.