Why financial brands should experiment to effectively innovate

by CJ Daniel-Nield, Co-Founder at digital product studio Planes


The financial sector is experiencing a surge in innovation through product. In fact, research we conducted among finance leaders found two-thirds (66%) strongly agree their organisations are innovating effectively right now.

These successful innovations in product have occurred in the finance sector over the last couple of years. Banks and other financial services have dialled up their digital offerings to compete with start-up challengers and changing customer expectations.

Effective innovation relies on good experimentation. So in a sector leading the way in innovation, what are banks doing right?

Experimentation is part of the product offering

Disrupter fintech brands like Monzo, Starling and Revolut have experimentation built into their company’s ethos. Monzo has regularly stated that ‘experimentation is at the heart of our product development philosophy’, and backed this up by running over 43 experiments in 2023.

With a product approach baked into challenger brands, how do legacy businesses like the Big Four keep up and run experiments with their millions of customers?

Barclays has tackled this by providing customers with the option to view beta features directly in its digital banking app. This allows Barclays to test new ideas with real customers, but only with their consent, mitigating the risk of releasing beta features that might need future iteration.

Incorporating beta launches into its product allows Barclays to easily run experiments in small and frequent settings. Ultimately, this iterative process leads to more effective innovation.

From experimentation to personalisation

Another area where experimentation is taking off is personalisation. Customers are increasingly expecting more personalised experiences, with 78% saying they would continue using their bank (as opposed to leaving it) if they received personalised support. This is particularly interesting given only 44% of banks are actually delivering it.

Across industries, Generative AI is being used to answer the demand for more personalised consumer interactions. Statistics show nearly 80% of banks are aware of the benefits of AI in banking meaning the gap between what consumers want and what brands are currently providing will most likely close soon.

It’s already begun happening. In March 2023, Visa began pairing data on lifestyle categories with customer behaviour data to help card issuers generate better-personalised recommendations for their customers.

It’s not just data that companies can start experimenting with to improve their customer experience. 2023 has been named the year of the chatbot in banking. By incorporating chatbots into banking apps, banks can provide 24/7 availability, personalised customer support, as well as suggest relevant services.

Chatbots are already being widely leveraged by companies like Bank of America, HSBC, Citi and Capital One to improve personalisation.

But experimenting with AI shouldn’t stop at chatbots. To keep ahead, businesses should seek to use  AI more widely to boost experimentation.

Synthetic data’s role in product testing

One element where AI is being put to good use is personalisation. Although banks are innovating successfully, experimentation and agility is harder when you have to work with regulatory requirements and compliance policies.

Synthetic data is the latest development helping banks stay ahead, experiment and not get held back by regulations.

Synthetic data is AI-generated information, used for testing and validating prototypes. The technology is a quick, cost-effective and customisable alternative to acquiring high-quality real-world data, which can be particularly challenging for banks that have regulatory and privacy requirements that their data must adhere to.

Businesses like Nationwide are using synthetic data to validate new product ideas and speed up experimentation. BIS used synthetic data to complete Project Aurora, a proof-of-concept project aimed at combating money laundering.

Like BIS, banks that want to stay ahead should consider using synthetic data to enhance their experimentation and get new ideas off the ground.

It’s clear there are still lots of opportunities for financial organisations to stay ahead of the curve and continue experimenting. But with technology changing fast, it’s no time for companies to rest on their laurels. Don’t stop at chatbots and don’t be held back by compliance.

Financial companies with a strong experimentation mindset and robust product processes are best placed to stay ahead of the competition.


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