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The ideal scenario in banking: A/B testing before rushing to market

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The Problem

Once a new financial product has been created it shouldn’t just be rushed to market for a full launch, there needs to be a period of testing and experimentation in a similar way to how tech companies trial new ideas. In this scenario, banks could experiment with ideas, test them out and see which ones produce positive results. As one respondent noted: “We would love to be able to run experiments like other businesses can.”

Banks have traditionally struggled with this concept, in large part because so much time, money and effort goes into the creation stage that once a product is approved there is an urgency to roll it out and just hope that it delivers the desired results.

What banks want is the ability to jam around with new ideas and then road-test them with a small sample of customers to gauge market response.

“We want to do A/B testing - pick a few hundred customers and see how the product behaves in reality, so we have no unintended consequences,” said another respondent.

That is important because in the past banks have tended to release new products en-masse only to discover customers don’t like the changes and are then forced to backtrack.

Another pain point linked to the limited ability for experimentation is the difficulty to run short term campaigns. In particular, banks struggle to transfer accounts from one product to another at the end of a campaign. If they could overcome that hurdle, then it would be possible to run multiple campaigns at the same time or split one product into two different products, for example if one set of customers may be more suited to a particular version of a product than another.

All of that would give banks the flexibility to run a limited-period campaign and then migrate accounts to a default product once the campaign has ended or only move customers based on specific criteria, such as having a minimum balance threshold or a certain transaction history, effectively dividing customers into cohorts.

The Solution

Adopting the right core banking platform can enable banks to quickly and easily experiment with product ideas and run A/B testing to see what works, tweaking products based on customer reactions until they have been honed for a full launch. This type of technology can also help banks unlock customer data that would otherwise be sitting unused in their systems, generating intelligence to support hyper-personalization and enabling banks to run tactical campaigns for short periods that are targeted at specific markets or cohorts.

The Customer Benefit

Testing products before general release means any flaws or wrinkles can be ironed out and any feedback can be incorporated into the final product, reducing the chances of customer dissatisfaction. This means when a product is rolled out at scale, customers are only seeing products that have already been tested in real-life scenarios and not based on assumptions. Baked-in intelligence also means customers will only see offers for financial products that are actually suitable for them.

This article is an extract from our whitepaper "Supercharging your product lifecycle". To read on, please download the full whitepaper via the button below.

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