Four steps of new product development for banks

The process of developing a new product for banks is crucial to the success of any banking service. Banks do not introduce a product without passing a minimum of these four steps or stages explained in this article. Banking products usually have a mix of the main types of savings, current, and loans accounts.

1. Evaluation and preparation

The first step or stage in the development of a new product is the evaluation and preparation of the idea that the bank intends to convert to a product. Here, the financial institution will organize staff to evaluate and prepare for the new product. It will also deploy other resources such as finance. The team will create a work plan and examine if the new product idea will fly.

2. Design and Development

After confirming the viability of the product, the next stage is design and development. Here, the bank’s team will work on the features of the product after evaluating what clients want as well as regulatory compliance. Therefore, creating a prototype of the service they want to sell to the market. When designing and developing a bank product the team must consider what clients want, how competitors administer similar products, and the entity core competence. 

For example, if a bank wants to provide a product for their customers that have a mixture of savings and loan features, they first need to consider if their customers need such a product, then examine what competitors are doing, as well as, making sure that their staff have the technical knowledge to administer the product.

3. Pilot testing

Now that a prototype is formed, the third step is to carry out pilot testing. This involves providing the product to a sample size of the target market. Doing so will help the product development team to understand how prospective customers will react to the new product. 

As a result, the team will know what improvements to be made on the features and processes of the bank’s product before the actual launch. It will also enable them to gather more information as to the market and strategies that will help them persuade customers into keying into the bank service.

4. Product launch 

The final stage in the product development process is the launch of the bank’s product. After the pilot testing phase and the verification of customers is done, the banking service is made available to the target market. Note that new product development does not end at the product launch. From time to time, it is necessary for the bank to continue improving on the product to meet customers needs.