Customer Centric Innovation in Banking Sector

Customer Centric Innovation in Banking Sector

Sinemis Zengin (Marmara University, Turkey)
DOI: 10.4018/978-1-5225-7180-3.ch005
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Highly competitive business environments make innovation a key element for survival. Though there are many companies that have been market leaders, they failed. The main reason behind the failure is lack of innovation. This is why companies have to find new discoveries and strategies to survive. Even though innovation is generally defined as a creation of idea, it is more than an idea. It is a process that includes a series of steps that begin with imagination and result in the creation of something. Innovation provides solutions for requirements in a unique way. Before the imagination steps, companies have to understand deeply customers' needs or desires to define requirements of customers. In this chapter, the customer-centric innovation process explained in seven stages.
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Innovation seems as a key driving force of economy that may lead to the ruin of culture and nature by creating new knowledge, technologies and markets (Nooteboom and Stam, 2008). Innovation has a crucial role for all firms to survive, including banking sector. Banking sector is a high regulated and competitive marketplace that provides relatively same service, not more than the core banking service (Howcroft, and Lavis, 1986). When one bank develops a new product, it quickly spread in market and no longer provides advantage. Within the rise of start-ups and spreading of technology, banks have a new challenge, a risk of become an antique, beyond the risks natured to bank such as management of interest rate, liquidity vb. Becoming the innovator provides market advantage. However, one-time innovation isn’t sufficient for banks. Instead of one-time innovation programs, banks required sustainable innovation methodology (Muller and Valikangas, 2005).

Many years, innovation assumed as a scientific or technological invention as a result of systematic research. However, within empirical innovation term, observation accepted one of the approaches to understand daily life in innovation stages (Sundbo and Toivonen, 2011). (Kelley and Littman; 2005) states that successful innovation has three pillars; business model, platform and customer experience. (Atkinson and Ezell, 2012) defines innovation with 7”I”s; inspiration, intention, insight, incentives, institutions, investment, and information technology. Understanding and coverage the need of customers is the key element of the success to make available in the marketplace (Dover, 1987). According to (Kelley and Littman; 2005), customer engagement innovation is a deep understanding of customer and user and using of those insights to develop meaningful connections.

In this paper, customer centric innovation process explained in seven stages. The first step of the innovation process is discovery. And, customer interaction is the key component of the discovery stage. Second step is objective. Companies need to define their problems that work on. Third step is ideation. In the ideation stage, participant should come up with fresh ideas by thinking differently. Fourth step is prototyping of the idea. In this stage, it is important to make idea into physical object for testing. Fifth step is testing. Test stage includes customer usability and requirement testing on the customers really need the idea? Sixth step is validation. After the testing customer feedbacks companies need to validate their ideas depends on the feedbacks. Seven and final step is implementation. In the implementation stage, companies have to follow agile methodologies to create the idea just in time to catch leadership. Beyond the finding idea, implementation of the idea also play important role, companies must be quick. Innovation is not one time action. It needs systematic approach and speed. Additionally, another important factor for innovation is organization culture. Innovation is a complex process that requires cross-functional organization support to achieve success. There are new methodology that startup apply naturally to make their ideas come true. This paper aim is to define steps of the customer centric innovation based on design thinking approaches might be useful for companies.

Key Terms in this Chapter

Agile: Agile is a rapid and flexible software development approach includes collaboration of self-organizing, cross-functional team and customer.

Scrum: Scrum is an agile framework for software development.

Kanban: Kanban is an agile framework commonly using for manufacturing.

Design Thinking: Design thinking is a method to create innovative idea or to solve problem using customer insights and design methodology.

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