By Jevon Amoah (Consultant)
Despite spending billions per year on sweeping, top-down digital transformations, many traditional banks still lag behind fintechs in several key areas. Product release cycles are slow, digital experiences are clunky, and customer needs evolve faster than institutions can respond.
The result is a growing gap between customer expectations and quality of products, which fintech challengers are all too happy to fill. This disparity points to an innovation gap, one that threatens traditional banks’ relevance, but also presents a unique opportunity for the banks that approach it correctly.
Instead of relying solely on a complete overhaul of legacy infrastructure overnight (which is next-to-impossible for large legacy banks anyway) they can accelerate their progress by adopting an agile, insight-led approach; one that allows them to move quickly, test often and get closer to what their customers really want.
Digital transformation doesn’t need to be all-or-nothing. It doesn’t need to cost the earth and doesn’t need to take months or years. In fact, the most effective innovation often begins with solving one specific customer pain point. Research shows that generally, onboarding and issue resolution tend to be the biggest opportunities for improving customer banking experiences1, but here I stress the word ‘tend’. Banks can’t rely on assumptions; they must be cognizant of the most pressing concerns for their current and potential customers before embarking on a transformation journey.
So how can banks be sure they’re tackling the right problems first? The answer seems obvious; by grounding every decision in insights that reveal what customers value most and where expectations are headed.
“Data is the new oil”
Clive Humby’s quote is a familiar one, and for good reason. In its raw state, data is much like crude oil - an unstructured mass that needs careful refining before it can power anything of real value. Banks are sitting on oceans of it, but the real challenge (or rather opportunity) lies in refining it into something genuinely useful; insights that can guide decisions, inform experimentation, and ultimately drive innovation.
So, what kinds of insights matter most?
The heart of the internal treasure trove banks already possess. Usage data reveals where customers drop off; customer research explains why. Together, they uncover the pain points, unmet needs and key moments that shape digital journeys.
This played out recently when a client came to us concerned about elevated attrition levels on one of their key accounts. With this usage data as a starting point, we ran a tailored quantitative research phase to pinpoint the specific pain points behind these exits. The findings highlighted issues around the relevance and awareness of account benefits, as well as broader cost of living pressures and lack of use. Armed with these insights, the client was able to reshape their proposition and communication strategy to directly tackle what mattered most to customers.
Focusing only on existing customers risks missing the bigger picture. As standards evolve across the market, with growing demand for instant credit, frictionless onboarding and embedded financial tools, market insights help banks stay ahead of what customers will expect tomorrow.
For instance, we supported a leading global financial services provider aiming to deepen their understanding of the international loyalty landscape. Building on prior insights we uncovered in the US, we conducted extensive global research into leading loyalty programmes across the financial services, travel, luxury, and retail sectors. The research identified current and emerging trends, expectations around reward formats, and how leading brands utilise personalised marketing communications, particularly with their Gen-Z and Millennial customers. As a result, the client gained clarity on the best-in-class loyalty practices and key factors shaping future customer loyalty, enabling them to anticipate market shifts and ensure their loyalty proposition remained relevant and compelling.
Understanding your customers and being able to anticipate market trends is essential, but banks also need clarity on how they stack up against their competitors. Competitor insights directly show how peers are addressing customer needs, enabling banks to benchmark, identify gaps, and strategically differentiate themselves.
For example, we recently helped a prominent card issuer optimise their digital customer journey for consumer credit cards. By conducting moderated sessions with customers applying for cards from key competitors across multiple markets and mapping the entire process from application through early onboarding, we were able to uncover the specific pain points, moments of delight and innovative features shaping these digital journeys. These targeted insights gave the client a clear view of how they compared against their peers, enabling them to benchmark effectively, adopt proven best practices and reduce drop-offs by delivering a smoother, more engaging experience.
Together, these insights act as a compass for banks, ensuring they don’t waste time and resources building features no one needs or values. Customer insights reveal which pain points matter most today, whilst market insights anticipate the experiences customers will demand tomorrow. Combined with competitor insights, they guide smarter bets, faster experiments, and ultimately more meaningful innovation.
What sets fintechs apart isn’t just their speed, it’s how they work: starting from genuine customer insights and moving through fast, iterative cycles. Monzo Bank is a standout example of this approach. Early in the development of Monzo Flex, the team didn’t begin with a feature in mind. Instead, they began by speaking directly to customers, uncovering pay-later options as a significant unmet need. They then followed this up with wider market research through surveys, desk research and in-depth interviews to gain an extensive understanding of the existing short-term borrowing landscape and uncover the biggest pain points. From there, they could move confidently to develop a product that addresses true customer needs2.
But Monzo didn’t stop there. Over the course of a year, they ran 43 experiments across their platform, testing everything from help flows to automated recommendations3. Each of these experiments followed the same rapid, iterative approach: identify insights, design lightweight solutions, test with small groups, then learn and adapt before rolling out more broadly. As they put it, they could “draw a straight line from what we’ve learned from customers to the design and features of the product we’ve built.”4
So, how can banks emulate this in practice? The key is to move away from lengthy, linear development processes and towards an agile-led approach. Here is an example of how this can be done:
In all, closing the innovation gap doesn’t require banks to tear down legacy systems overnight or embark on multi-year, all-or-nothing transformation programmes. The real opportunity lies in embedding insights into every step of the product decision-making process, helping banks to uncover genuine customer pain points, track evolving market expectations, and learn from direct competitors. By combining this with an agile, test-and-learn approach, banks can innovate faster, more frequently, and deliver the kind of solution that enables them to thrive in an environment where customer expectations are always changing.
KAE help payment, financial services and business technology companies make confident commercial decisions by providing clear, contextualised and actionable insights about your customers, your competitors, and your markets. If you’d like to explore how you can use customer and market insights to accelerate your own digital innovation, please don’t hesitate to get in touch