Case Study: Product Innovation at Bank of America
By Cindy Murray
What ﬁnancial institutions can learn from inventions and innovations in other industries.
owhere is innovation more essential to survival than in the banking industry. In the payments domain, for example, nonbank competitors less constrained by bank regulations and therefore more agile are changing the banking industry’s grip on the public perception of banks as the only trusted brand for holding and moving money. However, innovation is challenging for banks. Many products, like payments, are a commodity. A vast number of products and a complex infrastructure require continual upgrades to keep apace with technology advancements and comply with
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to the nearest dollar and transfers the extra change A deep understanding of how customers operate to the customer’s savings account. today—and why they do what they do—gives inNow, instead of check writers rounding up, the sight into how to improve the process; how to create bank does it for them—but in a way that builds their a step forward for the customer. savings. The solution also facilitates increased use of Further, by directly engaging customers in the indebit cards, thereby supporting retailers’ efforts to novation process, they become deeply committed discourage check payments. It was also a timely soluto, and invested in, a solution, which took advantage tion’s evolutionary path. of evolving consumer beThis makes innovation a havior toward increased primary differentiator, ancard usage. Change can occur by redeﬁning a other way of creating value Ethnographic research problem or redeﬁning a solution. for customers by enriching has also been key to improvtheir experience and reining our electronic banking forcing loyalty over time. platform, CashPro, over Staying close to the customer is one of the most importime. For example, we designed an enhancement based tant attributes of a successful innovation process. on a typical client work ﬂow for handling exceptions. By closely watching how 15 companies were posting their receivables, we identiﬁed a common practice