What is Diversification

This chapter describes innovation and diversification policies (i + d) and analyzes the main drivers of innovation in financial institutions. In addition, recent examples of financial innovations and their effect on banking policies are discussed. Specifically, the Internet has been the key to enabling financial institutions to extend and optimize their business by improving the information and services they can offer to their customers and prospects. Due to innovations and changes, the banking sector now takes a new approach in the design of their offices (“bank branch 2.0”) and Websites as a way to innovate and diversify business. This chapter explains the innovative strategies of the Urban@ program at the Caja Rural of Granada (Granada, Spain). The history and consolidation of the program, the internal institutional response, and the competition within the banking sector are described and analyzed. In general, the main strategies and achievements of this initiative are: (1) active customer listening, resulting in increased confidence and commitment from the staff; (2) use of up-sale strategies (cross-selling, reduced dropout rates, increased membership advantages), which increase both customer loyalty and customer satisfaction; and 3) a modern, more positive perception of the entity among the general public.