In digital banking transformation, many organizations tend to hold out for perfection when launching a new process, product or service.
Yet grasping tightly to the ideal of perfection can be a barrier to creativity and growth when banks and credit unions are trying to introduce the next new idea. Beyond that, perfectionism can also interfere with factors that lie at the foundation of the most successful companies — innovation, efficient decision-making, and the ability to pivot and learn from mistakes.
Experimentation, iteration and continuous learning are actually parts of a more effective means of making ideas move forward. In fact, the industry’s consistent winners embrace progress over perfection. Experiencing mistakes can actually help you and your organization develop flexibility and resiliency, which are important during times of increasingly rapid change.
The Need for Speed in Banking Innovation
Striving for perfection often results in “paralysis by analysis” – a situation where overthinking and excessive planning impede progress. This can lead to protracted development timelines, with digital solutions falling behind customer expectations and market trends. Lengthy requirements, extensive piloting and prolonged testing cycles delay implementation. Meanwhile, customers miss out on the enhanced functionality that fintech firms and technology leaders bring to market daily.
If a bank or credit union spends more than a year reducing the time needed for digital account opening or streamlined account opening, nimbler competitors can seize market share through faster feature releases made possible by third-party solution providers.
Failure Strategy:
The real aim of 'fail fast, fail often' is to be iterative, learning what needs to be improved to achieve success.
Slow perfected rollouts also prevent organizations from iterative learning opportunities. Ongoing testing and continuous user feedback are valuable teachers. For instance, post-launch user testing for a new lending portal can uncover confusing navigation that leads to high abandonment.
In today’s market, such lags can result in lost business and lower satisfaction ratings. Fintech and tech providers iterate and release digital capabilities for niche segments at breakneck speeds. Their tailored solutions may lack broad features but gain traction through intuitive design and addressing unmet needs. Delaying retail banking apps until they can serve every scenario often means losing business to faster competitors.
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How Progress Over Perfection Works in Practice
Striving for perfection may seem admirable, but it often hampers adaptability and innovation. On the other hand, embracing continuous progress allows banks and credit unions to respond promptly to dynamic forces. By refining digital offerings over time based on real-world feedback and emerging trends, financial institutions can stay aligned with the evolving industry landscape.
A progress-oriented approach acknowledges that customers’ needs are ever-changing and embraces the necessity to evolve alongside them. The culture of the banking organization needs to embrace and normalize frequent incremental improvements over serialized big-bang releases. There are several tenets to this mindset:
- Release early, release often: Get working digital solutions out quickly and make constant measured upgrades informed by user feedback.
- Modular architectures: Composable solutions to allow changes to some functionalities without blocking others. This enables continuous evolution.
- Automation and testing: Employ test automation to catch bugs without compromising speed.
- Agile development methodologies: Promote iterative development and collaboration across cross-functional teams.
- Data-driven priorities: Analyze usage data and customer feedback to focus on enhancements that will maximize business impact.
- User-centric design philosophy: By involving customers in the development process, banks can make progress in real-time.
- Minimum viable products: Release streamlined “good enough” digital solutions meeting core user needs and add capabilities over time. This is also called the “MVP“ approach for short.
- Fail fast and course correct: Anticipate and accept some failures. Monitor closely to identify issues and make rapid targeted fixes.
Together these tactics reorient development from traditional mindsets of monolithic releases to an agile process of constant incremental enhancements made smarter by live user data.
Read more: Think Agile Is Only for Tech Companies? Think Again
Overcoming Obstacles to Iterative Innovation
The transition to a “progress over perfection” mindset in banking can encounter several obstacles that need to be overcome for successful implementation. These obstacles include cultural resistance, fear of risk and failure, a legacy short-term focus, external pressures from competition and regulations, and a lack of a well-defined process framework.
Even with these obstacles, financial institutions can employ several techniques to help overcome these obstacles and drive faster progress. Almost all of these shifts will require senior leadership support and commitment, empowering teams to focus on continuous delivery over perfect solutions right away. Organizations must build cross-functional teams that can drive faster iterations and ongoing learning, as well as architectures that support “composable solutions.”
Finally, the decentralization of decision-making can help accelerate prioritization and help focus on rapid releases, while cloud platforms can automate close-to-instant updates to existing digital capabilities.
Read more: How Innovation Itself Is Changing Inside U.S. Bank & Ally
The Benefits for Customers
The “progress over perfection” mentality for technological innovation gives customers access to new digital capabilities and enhancements at a much quicker pace compared to serialized big-bang releases. Incremental upgrades based on customer feedback allow apps and services to continuously improve in usability and value.
More frequent updates also allow faster refinement of personalization based on how different customer segments actually use and engage with banking tech. In a rapidly changing landscape, this adaptability is crucial. By constantly iterating based on real-time customer feedback, banks provide solutions that align with contextual customer expectations.
Additional benefits include the ability to roll out faster integrations with third-party apps and services through open application programming interfaces, or APIs. Steady improvements mean customers’ daily banking interactions and workflows become progressively more seamless and frictionless. Because changes are monitored post-deployment, issues can be identified earlier and rapidly fixed.
Finally, progressive delivery of new innovations puts direct customer data at the center of every phase of refinement and enhancement. Ultimately, the “progress over perfection” mindset places the customer at the heart of banking strategy. By focusing on continuous improvement, adapting to change, and incorporating customer feedback, institutions create a dynamic, customer-centric banking experience that delivers exceptional value.
Read more: Fear of Failure Hurts Innovation in Banking — What to Do About It
Examples of How Stressing Progress Over Perfection Pays Off
Chase Bank‘s mobile app is a prime example of a progress-driven success story. The app’s initial version offered basic functionality, and through iterative updates driven by user feedback, it evolved into a comprehensive digital banking solution. Chase updates its flagship mobile app weekly based on one-hour user testing sessions. This allows constant refinement guided by actual customer feedback, resulting in an evolving suite of digital services that align with changing user preferences and needs.
Companies like PayPal and Venmo initially focused on simple peer-to-peer payment capabilities. Over time, they progressed by adding features such as bill payments, fund transfers and merchant integrations. This gradual expansion based on user feedback and changing market demands not only secured their positions in the digital payment landscape but also demonstrated the value of an incremental approach in achieving progress.
Innovation at Capital One has long relied on a “test-and-learn” approach, where consumer ideas are tried in a small number of locations or with a small group of customers to predict impact. The focus is on how to learn as much as possible as quickly as possible. Staff pauses at every phase of the customer journey to learn how to make incremental improvements and use cutting-edge innovations to improve customers’ lives. This focus has democratized development of ideas, creativity and innovation.
Erica from Bank of America is the most advanced and first widely available virtual financial assistant, surpassing 1.5 billion interactions with customers since its introduction in June 2018. “Erica’s controlled AI has become a primary gateway to personalization, and it continues to evolve with our clients’ financial needs,” says David Tyrie, chief digital officer and chief marketing officer at Bank of America. This ongoing evolution allows Erica to continuously improve based on customer usage patterns. New capabilities are introduced regularly.
U.S. Bank casts a wide net for ideas, even sending its innovation team to the annual Consumer Electronics Show for raw material. The bank has learned the value of progress over perfection. “You take a little of this, a little of that, shake it up, and maybe you’re like, ‘Wow, that’s really cool,’” says Todder Moning, head of applied foresights. “Other times you do all that and you’re like, ‘Wow, that tastes horrible!’” More specifically, U.S. Bank Smart Assistant had a long road. “The bank had to do a lot of testing and learning and failing,” says Don Relyea, U.S. Bank’s chief innovation officer.
DBS Bank‘s digital transformation journey showcases a commitment to progress over perfection with “digibank,” its mobile-only banking platform. The focus with digibank is on simplicity and usability. Through iterative updates, the Singapore-based bank has added features like AI-powered financial planning, voice-powered banking, and real-time account management. This approach has enabled DBS to greadually improve the digital banking experience for its customers and be named the World’s Best Digital Bank and World’s Best Bank several times.
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