As financial services organizations look to improve day to day operations and reduce costs, there are several methods to go about doing so: reduce complexity, remove silos, replace legacy systems, and so on. One area that does not gain much attention is in simplifying the product landscape.
For most banks, a significant number of products have been created over time, geared at different target markets and demographics. As these new products are added into the landscape, often the older products continue to remain functional and serve existing customers. This high number of service products leads to high maintenance efforts and also a longer time to market for any new sales product that is launched.
Instead, banks can look at reducing the number of redundant products by standardizing a service product that can then be customized for each target market and demographic. In fact, banks can often reduce their product catalogue by 50%-75%⃰⃰, while still being able to sell the same, if not more, sales products to their customers. This means that banks can use one service product that can support different variations for marketing and sales purpose.
The reduced number of service products will minimize efforts for the IT Department in the development of new products going forward. New sales products that offer the same functionality and use the same features or a subset of the features as existing products can easily be implemented because only marketing, pricing and the use of available existing features are actually changing. If new products offer new functionalities, the development effort can focus on these specifics while reusing large parts of the current functionalities or features of the product.
By using an established product rationalization approach, banks can gain understanding into their current product landscape and determine a path forward to a more simplified landscape. The first step in this process begins with an analysis of the current products – What are the products? What features do they have? What processes are involved?
Based on this analysis, the bank can start determining what features and capabilities should be included in the standard service product, and what will be customized for the various sales products. Additionally, to plan the route going forward and the product design, the bank can categorize their existing products as those to be merged, new target products, and those that should be deprecated in cases of discontinued products or having functionalities that are too complex to maintain.
Through a carefully planned analysis and detailed roadmap for moving forward, banks can benefit from reduced maintenance costs, a streamlined process for introducing new products, and the ability to easily modify existing service products to new target markets and demographics.
Contact Axxiome for further information about Product Rationalization.
*50%-75% reduction in products is based on Axxiome’s Product Rationalization engagement results