A service innovation is a service product or service process that is based on some technology or systematic method. In services however, the innovation does not necessarily relate to the novelty of the technology itself but the innovation often lies in the non-technological areas.

Why is service innovation important?
A service innovation changes the way customers are served to create value for customers and revenue for the company. Through a new service innovation, a company may increase its revenue due to existing customers spending more, improved positive company image, referrals, etc.

The availability of mobile applications and online experiences is increasingly important to customers. They want to access their accounts through mobile and connected devices and to pay for goods with a tap on their wearables.

Furthermore, over half of consumers would switch to a competitor if their digital experience does not live up to expectations – only 10 percent of those surveyed would remain loyal to their existing FIs, according to VMware.

Given the direction of travel in the industry, financial institutions (FIs) need to have a clear roadmap for technology and innovation. It is not enough to simply devise a digital strategy; instead, financial services firms need to have a business strategy focused on thriving in a fully digital world.