Over time, existing financial products need to evolve. That could be to respond to changing market conditions or to update fees or interest rates. At the moment, it takes banks too long to make changes to their products. Even something as simple as changing the age at which a customer becomes eligible for a product can take months. That is because changing products, as is the case with creating them, requires banks to secure a budget and a team of engineers. All of which means banks risk losing their competitive edge. As one respondent noted: “Changing products is time-consuming and expensive. We need IT involvement. We can’t react to the market quickly.”
Another challenge banks face is that their product catalogues are too bulky. Banks often have thousands of financial products, many of which are almost identical but with slight variations. Some of those legacy products might only have a few customers using them, but it is not always easy to retire legacy products because those customers might not agree to switch to a replacement. That means banks typically own sprawling product lists where there may only be minor differences in features, but all are treated separately, making it difficult to navigate and manage.
“We have too many products that are basically the same. Some are forgotten about or not looked after. This causes us regulatory problems and fines,” a respondent said.
The end goal for banks is to have fewer products in their product catalog, making it easier to manage. To get to that stage, banks should be using the right core banking platform to help them migrate select customer accounts, merge products and retire old product lines. Next gen core banking platforms enable banks to simplify their product portfolio: instead of having thousands of products with minor variations that are treated as individual products, banks can have one master product that has different versions attached that can be switched on and off as needed.
This type of technology can also make product changes much faster by enabling product managers themselves to edit products in a simple and easy way, with all changes tracked and auditable to maintain regulatory compliance.
The Customer Benefit
Being able to make changes rapidly means products are always up-to-date, ensuring customers are not left stranded on outdated versions. And with a more simplified product portfolio, customers are not burdened by excessive choice, making it easier for them to find products that are more suited to their needs.
“Our customers want help solving problems. We need to design better products to tell them something they don’t know, so they can make better financial decisions,” a respondent noted.
In this scenario, banks are able to bring new ideas or product changes to market quickly, ensuring customers have access to better, more mature products that are tailored for their individual circumstances and that deliver on their broader need - helping them manage their money more effectively.
This article is an extract from our whitepaper "Supercharging your product lifecycle". To read on, please download the full whitepaper via the button below.