Innovation in the banking industry must improve the payment and consumption experience

In the banking industry, innovation may be anywhere, in any function, in any Business Unit and in any country. But, there’s one area where innovation plays a critical role.

I/ Amazon’s one click purchasing innovation

Amazon knows their client’s banking information: when a client decides to purchase a given product, all the client needs to do is click on the “one click” button in order to complete the purchase. So buying the product is easy: it’s very easy to do business with Amazon.

This is a kind of innovation that enhances the customer experience. Today, given the success of its “one click” innovation, Amazon sells its “one click” service to third-party Amazon market place resellers. A significant portion of Amazon marketplace resellers choose the Amazon one click service because it helps to simplify payment experience. This leads to incremental sales.

II/ Apple’s App store is based on payment innovation

There is another example of how innovation can help to simplify the purchasing and consumption experience: Apple’s App Store. Credit card information is registered when customers create their profile. Then, as customers go through Apple’s App Store to buy a new app, music, books, or movies, all they need to do is press on “buy”. And, in doing so they can buy whatever products they have chosen to purchase in one single step.

In fact, this purchasing experience is so simple, so intuitive, that children have sometimes purchased products on their parents’ account without having permission. But, this is really another subject, that of the relationship between parents and their children.

III/ Failing to bring innovation to payment is detrimental to the consumer experience

Finally, I’ll use the example of Amazon and Apple in order to draw a comparison with large retailers. For example, la Fnac, a large cultural retailer in France, is well-known for having a sometimes painful purchasing experience.

• Typically, consumers walk into the Fnac, they must identify the floor where the product they are looking for is available.
• Then, they must go to another floor in order to pay for the product.
• Arriving at the purchasing floor, consumers often discover a long line of people waiting in line in order to complete the purchase, their credit card in hand.

This purchasing experience is very different from that of Amazon Apple.

IV/ Improving the consumer’s purchasing and consumption experience

Simplifying the purchasing moment so that consumers may enjoy the consumption moments to its full extent is critical. However, many times, consumers find a product they want to buy but may not have the financial capacity to buy it. Working hand-in-hand with a number of retailers in order to facilitate financial credit is important. Banks may bring to retailers their knowledge of the client’s financial history while retailers bring to banks the possibility of making more credit deals. This usually leads to increased sales for the retailer and increase credit demands for banks. This is at the heart of the kind of innovation that banks are trying to realize. This is business to business to consumer innovation applied to the payment moment.

Overall, banks are trying to simplify the consumption experience whether it’s:

• before choosing the product
• during the consumer’s choice of one product over another
• purchasing the chosen product.

This kind of innovation can help deliver more value for retailers and for banks.

Further readings on innovation in the banking industry:

• For a presentation of innovation in payment, please refer to this website
• For a network focused on innovation in payment, please refer to baypay, here

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