Financial Services Innovation AFTER Reform
As the financial services industry gets ready for reform, many are thinking about what new rules, restrictions and barriers will be in the way of innovation.
There is a significant opportunity that only a select few actually see, when competitors are worried, distracted and trying to fight for what was.
Let’s face it; we are in an age where there is no more tolerance for confusion and complexity. Today’s consumer needs and wants transparency. But is it really that they want—to “see through” what their financial products are doing? Maybe. It’s more likely they just want to understand financial products in a way that is meaningful and provides context in their lives.
While government is not the first place many would turn to for the “next big innovation,” the intention to create a better system is certainly there.
Financially Insolvent Or Just Idea Bankrupt?
While the financial reform bill is attempting to stop future economic meltdowns due to failures and protect consumers from bad practices, the real issue is that the focus is and has been in the wrong place.
What we need is a breakthrough in understanding.
And what would that do for us? Well at the very least, it would help the public accept responsibility for at least part of the issue. In fact, a recent study at Maddock Douglas showed that 49 percent of consumers feel they are equally responsible as their insurance carriers in making sure that they understand insurance products. And 16 percent say they, the consumers, have primary responsibility! The answer lies somewhere in the space between education and inspiration.
Language As “White Space”
In the study mentioned above, it was evident that most consumers are baffled by the language used in financial services and insurance transactions. And it varies greatly in some cases by generation. In fact, in a recent qualitative panel, we could find very few under age 35 who were able to begin to define the term “annuity,” a common vehicle used in retirement planning. And there are many more terms and phrases that not only are misunderstood, but also create emotions like frustration, anxiety and boredom more than they do relief, satisfaction and confidence. How’s that feel?
Where Are The Opportunities?
Well, aside from the usual advertisements and materials, what about routine correspondence?
- Things like bills, letters, statements and other items that consumers need to read but sometimes do not.
- Or better yet, how about disclaimers? These are the words that everyone deliberately ignores but are supposed to be there to help. Imagine if they actually did?
- What about error messages online? You know, like “invalid entry.” Suppose it said something like “Sorry for my chip fart. Can you try that again?”
Would your customer laugh? Would they talk about it? Would they feel good? Would they be less likely to be angry at you for making a mistake? Would they understand?
Innovation is in the eye of the beholder. And the consumer is the one ready to be held.