BUSINESS MODEL INNOVATION: CAN ESTABLISHED FINANCIAL SERVICE PROVIDERS UTILIZE CONCEPTS OF START-UP COMPANIES?
Published: 28 Aug 2016
Abstract: Banks and insurance companies are facing increasing pressure due to harsh regulation, low interest margins, new technologies, aggressive incumbents, and changing customer preferences. Many of them not only have to overhaul their processes and information systems, but also their complete business model. But how can a financial service provider get to a new business model? What should the process of business model development look like? Usually, there is no such definitive process. However, an interesting starting point might be to utilize the concepts that are used by start-up companies. In particular, Design Thinking and Lean Start-up appear to be promising ideas. In this paper, we analyze whether and how these concepts can be used to develop a process for traditional financial service providers to renew their business models. The strategies used by start-up companies follow the approach of a consequent customer focus, so the process we develop shows the same characteristics. It offers a great opportunity for established banks and insurers to fight back against upcoming attackers and to cope with challenging conditions.
Keywords: business model innovation, design thinking, financial services, lean start-up, start-up strategies
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