Product development in a financial services organization is more difficult than it may appear.  Products are heavily regulated, require specific legal advice and often need specialized technical development.  Financial service providers also face the challenge of providing a service that consumers typically need, not something that is desirable to have.  With the advent of technology and the diversification of financial options currently available to consumers, financial services organizations must acquire a certain set of skills that aid the development and sustainability of their product development process.  Organizations that use an Ad-Hoc process for developing products are likely to suffer from poorly executed plans, low quality products, excessive use of resources and products that are perceived as unimpressive to consumers.  The level of success of a new product or service is contingent on the mastery of three cornerstones of performance.

1. High-Quality Development Process
2. New Service Strategy
3. Resource Commitment

Development Process

Product development begins with identifying clear objectives from which a new product strategy can be orchestrated.  Many organizations follow a New Product Development (NPD) process which includes the following stages:

• New Product Strategy
• Idea Generation
• Screening and Evaluation
• Business Analysis
• Design and Development
• Launching and delivering

Each stage of this process provides a framework which allows organizations to navigate the development and management of resources thoroughly and efficiently for new products.  Research shows that companies who successfully launch new products have a formal NPD process that they generally pass through the above stages.  A world-class process consists of key activities within each stage that drive the new product or service to market quickly and efficiently.

New Product Strategy

Prior to commencing an initiative to develop a new product an organization would ideally develop and communicate a strategy based around corporate objectives and values.  Organizational leaders should include specific roles that the new product or service will play in achieving the overall business goals of the organization.  New products may require a complete and detailed process to fully understand the complexities and implications of such processes, whereas others may only be changes to existing products and require little resources.  Businesses that have a well-articulated New Product Strategy (NPS) fare much better than those lacking in this aspect, and they have 32 percent higher NPD success rates, meet sales objectives 42 percent more often, and meet profits objectives 39 percent better (Cooper & Kleinschmidt, 1995).

Resources

The allocation of resources in many organizations is limited and controlled by senior management.  Resource plays a pivotal role in the product development process.  In order to the process to be successful, the product must have the support of the senior management for the use of resources.  The availability of people, time and money are instrumental to the process.

Do We Have What it Takes?

Do we have a clearly defined innovation strategy for new service development? What is it?

Do we have the resources in place to meet expectations (people, time and money)?

Do we have a high-quality development process?

Phase 1 – Ideation:

(No Financial Investment)

Identify a product point person.

Generate Ideas

• Brainstorming
• Focus Group
• Customer Surveys
• Competitive Analysis

Initial Screening

1. Strategic Alignment – Aligned with organizations strategy and vision?
2. Technical feasibility – Can it be introduced and reasonably completed with existing resources?
3. Competitive Rationale – Necessary from a defensive or strategic position?
4. Leverage – Does the product build on existing competencies?
5. Legal, ethical – Does the product meet legal and ethical requirements?
6. Value – Does it have the potential for profit or is it a strategic initiative?
7. Show stoppers – Absent of any showstoppers?

Preliminary Investigation

• Identify Technical Needs
• Identify Market Needs
• Business Assessment
• Vendor Assessment

Phase 2 – Desirability

(Financial Investment)

Rate 1-5

Company fit

• Strategic alignment
• Company capability

Product/Service advantage

• Uniqueness/differentiation
• Customer Appeal

Market attractiveness

• Market Potential
• Relative competitive strengths

Economics

• ROI/Profitability
• Risk

 

Detailed Investigation

1. User needs and wants
2. Economic value to customer
3. Competitor Analysis
4. Concept Testing
5. Technical Assessment
6. Vendor Assessment
7. Operations Logistics
8. Financial Analysis
9. Project Life Cycle
10. Department Coordination

Business Case

1. Product or Service definition and target audience
2. Project justification or economic benefit
3. Operational Accountability/Action Plan

 

Business Case

1. Executive Summary
   1. Description and value of project
   2. Goals and Objectives
   3. Critical Success Factors
   4. Major milestones and resource requirements
2. Business Case Details
   1. New Product Definition
      1. Description of new product
      2. Target market

• Features, functions and benefits

1. Positioning strategy

1. Strategic Alignment
   1. Strategic fit
   2. Impact on existing operations

• Impact of external factors

1. Market Assessment
   1. Market Opportunity
   2. Market trends

• Market share

1. Target market and segmentation
2. Demographics
3. Customer’ needs and wants

• Competitive environment and analysis
• SWOT analysis

1. New service positioning
2. Distribution strategy

1. Technical Assessment
   1. Technical foundation for project
2. Operational assessment
   1. Infrastructure
   2. Fulfillment

• Impact on existing operations

1. Skills and training

1. Financial projections
   1. New service costs
   2. Pricing

• Revenue, gross margins, net profits

1. Action Plan
   1. Schedule
   2. Resource needs

• Legal

1. Compliance
2. Marketing/Training
3. Technical Development

• Launch