Profitable Innovation in Financial Services

At a recent financial-services conference, the topic at hand was innovation. Many of the attendees expressed the common lament that, in financial services, innovation is extremely difficult. "What can we come up with that hasn't already been done?" was the prevailing sentiment.

Then BCG asked the following question: How many conference attendees had added a credit card to their wallets within the past year and were using it regularly?

Almost two-thirds of the people in the audience raised their hands. The reason they added a card, they said, was that a provider had come up with an offer that somehow appealed to their personal tastes and spending habits. Perhaps it was a matter of affiliation with a certain hotel or retail chain, a link to a university or sports team, or attractive loyalty benefits. Whatever the specifics, the card provider had created something perceived as new and valuable in a saturated market.

This small vignette illustrates a simple but critical point in financial services: even in highly evolved product areas, there are still myriad ways to innovate - and to generate value in the process. The problem is that few financial institutions approach innovation in a way that consistently turns new ideas into profits.

At The Boston Consulting Group, we believe that companies can take concrete steps to lift their innovation performance.

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