This Is The 3-Step Innovation Process Australia's Biggest Bank Uses To Stay Ahead

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The Commonwealth Bank is well known in Australia for its online banking solutions.

The bank breaks the traditional clunky banking mould with its clean designs that make the tedious process much easier. Under CIO Michael Harte, who has just announced he is leaving the bank for Barclays, the bank has developed a reputation for high-quality consumer-facing innovations.

Business Insider spoke to CBA’s head of go-to-market solutions, Tiziana Bianco, at CeBIT in Sydney this week about how the bank comes up with new tech solutions.

Bianco said the bank operates on the idea of “disrupt or be disrupted”. To disrupt the banking sector CBA looks at developing tech solutions that are easy to use, engaging and provide a rich experience.

“Innovation for innovation’s sake is not our philosophy,” she said.

“We really look to solve real problems to make sure an unmet need is something that we can help fix.”

Here’s how they do it – there are applications here for all sorts of companies.

1. Observe, don’t ask

Watching consumer behaviour is how CBA starts its innovation process.

“We went around for the very first six months we wanted to create a new terminal, for decades the terminal that accepts your payment has been the same,” Bianco said. “By and large it’s been a dumb piece of device that sits on a counter and accepts payment.”

Bianco said the team didn’t know what the answer was, how they could make the credit card machine better or what the consumer needed.

“The idea is we knew there needed something new in the market, we didn’t assume what was needed. We watched for a while,” she said. “We observed all kinds of merchants.”

One thing the team noticed when it was in Tiffanys was the clerk continued to put the terminal away under the desk after every transaction. Asking the sales rep why she kept inefficiently putting it away she told CBA it’s probably because the terminal was the ugliest thing in the jewellery shop.

Bianco said without observing behaviour in the field the bank wouldn’t have known that making the terminal “pretty” was important.

2. Extreme, not average

Looking at extreme behaviour is more important than looking at “the average”, Bianco explained.

“Everyone knows the average but extremes is where you get the good insights,” she said.

“When people create products and services they tend to say ‘what would the average consumer want?’ ‘What would the average target market of this age group look for?’ Whilst that’s all well and good you also want to understand the extremes.

“We observed people that only used cash and never use cards, we observed individuals who had multiple cards and couldn’t wait to maximise the number of points on cards and never use cash.”

The team also looks at extreme stores from convenience stores where there’s not necessarily a consumer relationship, its about quick purchases, to the other end of the spectrum in bridal stores where it is a once in a lifetime purchase.

Taking the bridal store example, buying a wedding dress in one case three different family members were contributing. The awkwardness of the split transaction resulted in CBA creating its “Split the Bill” app which can also now be used in restaurants.

“The payment process needed to be seamless,” Bianco said.

3. Iterate, don’t perfect

Launching beta products is important to stay current, Bianco said.

“We’re constantly in beta mode,” she said. “That’s really about making sure that you’re constantly testing what it is that you’re creating.”

CBA develops in 10 per cent chunks before testing, Bianco said.

A lot of the company’s innovations can take quite some time before they get to market.

“If we don’t iterate as we go along things can be obsolete by the time we actually launch them,” she said.

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