Building something to solve a big problem is hard. Big problems tend to have dimensions in common like inertia, complexity and fear, writes Andrew Watkins-Ball, CEO and founder of JUMO.
Simple answers are challenging to find if you look at how everyone else perceives the challenge. The answers lie in the truth about how your customers feel. There is amazing potential if you can take that knowledge and combine it with what you believe is possible.
Products that are designed from positive and authentic emotions will be loved by customers. Inversely, products which are driven by greed have a limited lifespan. Customers will feel it in their experience of the product. The result, ultimately, is unhealthy social contracts (in terms of a fair exchange of value between customers and providers) and lower returns for investors.
True information businesses have fundamentally changed social contracts by pushing value back towards the customer. That customer value equation is the biggest driver of the new generation of information businesses that are optimising for scale.
Your customer must love your product or you don’t get the adoption you need to build a big business against sustainable demand. They must feel that you care and they must feel that the product comes from an authentic objective. A great example is Wikipedia. You can feel the social objective of the product.
That’s where a lot of traditional businesses are falling over; customers can tell when you don’t care. People are capable of picking up on the most intricate product details to put a picture together about emotional objectives. If you are optimizing for profit your customers will feel it.
Financial services suffer terribly in this regard and short term, profit-oriented businesses have always been unpopular but are now becoming socially and politically maligned. A financial product is a social contract, and as with all social issues, attitudes change over time about what is an appropriate balance of value. Technology allows us to capture and process more information to lower risk and create efficiencies that should dramatically lower cost. That should shift the balance of value towards the customer.
I am impressed by the extent to which many banks are proactively trying to address this equation. Many of our bank partners have demonstrated a huge appetite to make use of new predictive capabilities that will increase efficiency and boost customer value. Their common challenge has been the scarcity of technical capacity to be able to implement new product methodologies at sufficiently large scale and speed to move the needle. This may mean taking a longer-term view on profitability at a customer level but that will surely lead to healthier social contracts and greater profit sustainability.
It also means that people who were excluded could now have the opportunity to participate, because a long-term view of returns and lower unit costs from technological efficiencies has opened the door to a step change in financial inclusion. But only because of customers getting something they feel good about. A solution based on behavioural data can also grow with that customer in real-time as their needs evolve.
It seems to me that in this new world of social contract democratisation, the sustainability of financial product returns may prove to be correlated with positive, emotive product design. Wouldn’t it be incredible if the fairest sharing of value leads to the greatest sustainability?
It feels right to me.