Why your customers must be at the heart of your product development strategy.
By Prithweesh De
Engagement Manager
Every year, the UK financial sector sees the launch of a host of new products - from credit cards and savings accounts to fintech innovations like Buy Now, Pay Later (BNPL) services and digital wallets. But in an increasingly competitive and highly regulated market, I've seen first-hand how challenging it can be to develop and launch a successful financial product.
Regulatory scrutiny is at an all-time high, with the Financial Conduct Authority (FCA) enforcing stricter compliance under the Consumer Duty framework. At the same time, empowered consumers are more vocal about their dissatisfaction, leading to a surge in complaints. In Q3 2023/24 (October - December 2023), the Financial Ombudsman Service (FOS) received 47,868 new complaints about financial products and services - a 15.8% increase from the same quarter the previous year. Of these, 35% were upheld in favour of the consumer.
In my opinion, businesses must ensure that new product development (NPD) is not just innovative but also deeply rooted in customer needs. A failure to do so risks costly product missteps, reputational damage, and regulatory non-compliance. The key to success? Customer insights at every stage of development. Here’s how (in my experience) businesses can get it right:
1. Understand the Market Landscape
Before diving into product development, businesses must analyse existing products, identify successful offerings, and determine what makes them stand out. This competitive benchmarking helps shape a strategy that differentiates new products while addressing market gaps.
2. Define Your Target Audience
Who is your product for? What are their unmet needs? Understanding the specific problems your product aims to solve ensures that development efforts are aligned with real consumer pain points rather than assumptions.
3. Ideate on Product Concepts
With a clear view of customer needs, businesses can brainstorm product features and unique selling points that align with expectations. At this stage, it’s critical to factor in usability, accessibility, and the overall customer experience.
4. Test Concepts with Consumers
Early-stage validation is crucial. Engaging real customers for feedback on product concepts allows businesses to evaluate appeal, refine features, and adjust positioning before committing to full-scale development.
5. Build and Refine Prototypes
Once a concept is validated, developing prototypes enables businesses to test functionality, messaging, and design. Ensuring a seamless user experience with clear, accessible language can make the difference between adoption and abandonment.
6. Assess Market Demand
Before a full launch, testing different pricing models, feature sets, and messaging strategies provides valuable insights into customer preferences and market readiness. This step ensures that the product is positioned for success.
By embedding customer insights into every stage of product development, financial services and payment companies can mitigate risk, enhance user adoption, and drive long-term growth. My takeaway from years of helping develop products in the financial services sector? Consulting with your consumers is the difference between success and failure.
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 want to chat about how we can help you, get in touch.