Patterns of new service development processes in banking

The purpose of this paper is to map the existing patterns in the development of services innovations in financial institutions.

The data come from a dedicated survey of banks located in Luxembourg. Executives and innovation managers reported on banks’ innovation processes for the period of 2010-2012.

The study unveils four patterns of new service development (NSD) processes. The problem-driven pattern starts with problem definition and represents a bank’s response to an issue. The proactivity-driven pattern commences with idea generation to explore a variety of alternatives. The market-driven pattern emphasises a profit rationale and starts with a business analysis. The strategy-driven pattern frames idea generation within the scope of business goals and starts with the development of a service concept. Most banks keep a balance between being open and closed to cooperation with external partners in the innovation process. Service concept development is the stage most open to the cooperation for innovation, while introduction to a market is the opposite.

The national context and small sample size are the limitations of this study. Promising research avenues include the extension of findings to other settings and understanding of the effects of NSD patterns.

Banks adopt different approaches to the innovation process in order to pursue their innovation goals. Practitioners may use this knowledge in order to re-think the way they innovate.

The unveiled mapping of NSD processes contributes to the understanding of the innovation in financial services. The findings will be valuable for innovation managers, scholars, and students.