Despite the crisis: counter-intuitive product development ideas banks should try right now

Unprecedented measures taken by government to contain the spread of coronavirus have triggered the worst social and economic crisis since 2009, jeopardizing the global financial system. It might seem like we have already hit the bottom, but the situation will likely become worse in the months to come.

If previous crises has taught us something, here it is: those who seize the opportunity and focus on their product even in the hardest conditions, come out of the crisis on top of the game. Good examples of this are WhatsApp, Venmo, Groupon and Slack, to name but a few.

Banks and financial service providers – the main arteria of the world’s economy – are on the frontline dealing with the critical consequences of the crisis for retail and business users. As everyone is doing their best to survive, any additional costs – let alone full scale research and development – seem suicidal. And yet, this is exactly what banks should be doing now. 

Here’s why – and how:

Exploring a new niche

Banks have worked for centuries to gain people’s trust – now that they have it, banks can leverage this confidence to help their clients and expand to new markets.

In addition to offering relief within their traditional competences – long-term business financing, interest-free loans and more – banks can take a bird’s-eye view on the market they’re serving and introduce new practical tools to tackle the needs of entrepreneurs. 

A great example from Russia (that has a surprisingly advanced fintech market): for the past 3-5 years the biggest players adopted the “more than banks” policy, aiming to assist their users beyond the usual services. 

Accounting software, legal assistance (e.g. automated documents compilation), ready-made services (e.g. check-out modules for online stores) – now businesses can go fully digital, optimize business processes and cut operations costs by using the tools by their trusted bank.

Now is also a great time for financial service providers to test out retail solutions in lifestyle. For instance, banks can leverage their apps to create channels for groceries delivery; help elderly people who have limited mobility with logistics and other processes. The majority of these test solutions can be implemented within a week, and can steadily evolve into a whole new service afterwards. 

These are only a couple of directions to explore. Now is generally a great time to analyze the potential new niches. The ultimate goal here is to enhance user experience, expand product line, diversify risks – and, of course, increase revenues in future. 

Developing a new product for when it’s all over

Right now, every big business is focused on structuring remote work processes. “Look at us, we are capable of working remotely”. While digital operations is vital for today, it is only the means – not the end goal.

Big financial companies who have enough capital to survive through this crisis with minimum losses should prioritize their clients and their products to serve them. Reorganizing business processes for remote mode is only a small step towards making it happen.

In everyday life, not limited by COVID-19 restrictions, even the best funded players tend to focus on day-to-day tasks instead of creating and developing something new. Now is the perfect opportunity to fill in these gaps.

Even if starting to develop a new banking product for SMEs seems counter-intuitive and wrong – it’s not. It isn’t as complex and expensive as many would imagine, and the competition is significantly lower. After any recession, the purchasing power doubles. People will be “hungry” for services, good products – and will be buying a lot more as soon as the crisis ends. 

Finally, going digital

We’ve heard this before, but the evidence couldn’t be clearer now: it is time to learn to provide high-quality service in a fully digital way. Whether it happens now or later, millions of bank branches all over the world will become useless at some point. 

For neobanks who are already on top of it, now is the perfect time in terms of outreach and product line expansion. For instance, online business loans is the field certainly worth exploring and investing in.

To sum up

Everyday we see fierce and fearless entrepreneurs who are having a very hard time – and still manage to come up with new products and solutions, reorganize their business models, pivot and to help people. If startup founders can do it, financial institutions can do even better. 

The opportunities are endless: the world has received a unique chance to step aside from traditional status quo, realize what has changed and what is going to happen, and try out something new. As a result, we can have thriving financial organizations and a better, stronger market.