What is the best way to approach the development of a new product or service?
Pradeep Raman is the founder of Burrow
What is the best way to approach the development of a new product or service? This question has plagued new and existing businesses of all shapes and sizes, however, for the mortgage industry it is a question which has clearly gone unanswered for too long.
The sector has long-been resistant to change, and this can be seen clearly in its slow uptake of technology – a disruptor which to so many other industries has proven transformative.
A strategy that revolves around rapid prototyping and customer-feedback may hold the answer. In his book, The Lean Startup, Eric Reis explains how an experimental approach is essential when embarking on a new project to maximise its potential value.
This is about innovating by involving customers throughout the product design process. Part of the reason the strategy works so effectively is by acknowledging the common disconnect that often exists between what companies are bringing to the market and what is needed.
In other words, misunderstanding the real demands and pushing ideas and designs onto customers who would benefit more from something different.
In addition, incremental improvements rarely provide the breakthroughs necessary for rapid growth.
Using an ambitious but experimental approach to product or service development has aided many tech companies in building products that are transformative and therefore adopted quickly, but at the same time mitigate potential risk.
Reis’s tried and tested approach has been shown to work for many organisations, including in the fast-evolving fintech sector where businesses such as Monzo, TransferWise and others have managed to disrupt the UK banking scene with relative success.
These challengers have seen exponential growth, having lured many customers away from traditional high street providers.
Their key differentiating factor? The use of an experimental approach and data driven decision making aimed at uncovering what customers really want.
It turns out, quite simply, that if you listen to what customers want and design a product around those needs, many will flock to it – telling customers what they should and could have simply does not cut it in the information age.
Monzo used the latest technology and a clear preference for customer feedback to set itself apart from the rest, allowing it to make significant strides in a crowded market.
Through this approach, it led the charge towards the next stage in personal banking and this disruption is something that the mortgage sector should learn from.
An experimental approach would transform the mortgage market
The UK’s mortgage market is vast and incorporates over a hundred different lenders and thousands of advice businesses, each using bespoke systems and third-party tech solutions to interact with their customers and suppliers.
This intricate network of systems and third parties can, unfortunately, often act as a barrier to innovation.
That is because it can be difficult to implement a new, universally accepted, product or service – one that appeals to a wide range of customers, rather than just one or a few.
This presents a challenge, but the experimental approach could help to break down these barriers to ensure that innovation in the mortgage market continues at pace because new products and services are simpler to adopt and too good to pass on.
To bring my point to life, think about how customer retention currently works in the sector. Attracting repeat business is essential for advisers to maintain their pipeline and ensure customers remain on the most competitive rates.
However, how these firms go about customer relationship management varies greatly between businesses.
Some use an end-to-end platform, while others continue to work out of metal filing cabinets, or basic excel spreadsheets.
The net result according to some surveys is that 25% of mortgage customers are on SVRs, over-paying for their mortgages.
Burrow, part of DPR Group, is currently working on solving this problem using deep personalisation, highly visual and branded communications, process automation and an e-commerce-like approach to retention.
This way we aim to provide large scale improvements to how our intermediary community does retention. But instead of simply building off our own ideas, we created a collaboration group, internally called “Project Rapport” to involve brokers in our product development process.
We invited a handful of keen and progressive brokerages including 3Sixty Financial Solutions, Finance Advice Group, 313 Financial, Rose Capital Partners and SRC Financial Services to work with us by telling us about their ideal solutions, commenting on our ideas and wireframes.
Giving brokers a voice and a seat at the product development table, has garnered positive results and we hope this method will provide an antidote to innovation which is slowed by a fear of change or lack of customer engagement.
We want to make something that makes a difference to the many, not the few. Involving brokers in the product development process is an industry first.
Keeping the mortgage market at the forefront
With the ability to implement new products and services more seamlessly, the benefits of an experimental approach becomes clear.
As it relates to technology and the mortgage market, this would of course mean faster adoption, which can only be positive for customers and our businesses. Up until this point the mortgage sector has lagged behind others, but that does not always need to be the way.
Using an experimental approach also means new offerings reach customers in a more meaningful way, because they are fit for purpose, since the customer’s voice is represented throughout the product development process.
It is important the mortgage industry learns to implement such an approach to avoid falling behind. The coronavirus crisis has proven the need for digital transformation and with many customers now very happy with a digital-first approach, we must accelerate high-value innovations to make the mortgage journey simpler, more accurate, and efficient.
