By Puneet Chhahira, Head–Product Management and Marketing, Infosys Finacle
Sustaining innovation
Popularised by Harvard Business School (HBS) Professor Clayton M. Christensen and his colleagues in innovation theory, the jobs-to-be-done (JTBD) framework states consumers buy products and services to “get jobs done”: Customers perform tasks, achieve goals, solve problems or improve their lives in some way; organisations should use this as a focal point for innovation and value creation.
Although this theory is nothing new and has been around for a while, its practical implications make it all the more relevant for today’s financial world.
Stiff competition: Neobanks and the like
Digitisation has dramatically reduced friction in banking, enabling banks to serve their customers economically and at scale. However, established financial institutions often struggle to stay ahead in this rapidly evolving digital landscape. Banks must contend with an onslaught of neobanks that offer tech-savvy customers convenience, modernity and on-the-go services, such as mobile banking, that eat away at their market shares.
Research estimates that in the United Kingdom alone, digital payments and neobanking have generated £119 billion worth of transactions in 2023—a 25-percent increase from the previous year. With user penetration expected to rise to 13.3 percent in the next five years, neobanking in Europe currently accounts for 30 percent of global revenue. The growing customer base for neobanks, such as Revolut, Wise (formerly TransferWise) and N26, is no surprise.
Hope is on the horizon
Banks in the UK and Europe seeking to meet the growing challenges from competitors and retain their leads must manage constant change and conflicting priorities.
Amid rising customer expectations for open-finance channels and personalised offerings, banks have moved toward an embedded-finance model to meet their demands. Such a model has helped in other areas, such as sustainable food production. FarmGuide, a start-up in India, embeds its offerings in the agriculture value chain and invests in analytics to enable farmers (its customers) to choose the best products and services for their needs.
While integrating services into relevant value chains clearly benefits banks, catering to evolving requirements can overwhelm them and leave them playing catch-up forever. But is there a single first-principle framework that can help banks navigate these seemingly uncharted waters?
Yes, there is, with the jobs-to-be-done framework.
E pluribus unum (out of many, one): Enter Christensen and the jobs-to-be-done framework
The linchpin of Christensen’s theory is that consumers don’t buy products or services per sē but instead use them to get their real jobs done. Retail-banking customers are not really looking to get credit cards or loans. They want to book holidays, send kids to college or improve their general standards of living: their real jobs.
For a business customer, the job to be done could be expanding the business, entering a new market, onboarding customers securely at scale and so on. Essentially, every customer looks to save, pay, borrow, invest or insure better. And banking is an integral part of each one’s journey, albeit in a secondary role.
So, instead of repeatedly marketing their credit cards, banks can offer innovative instant financing and other options so customers can finance unplanned expenses or purchases.
Knowing customers’ jobs to be done provides a stable anchor point. Products and technologies come and go, but those jobs remain. When financial institutions use jobs as pivot points, they can be confident that their purposes align with their customers’. Instead of chasing the next product or technology to hit the market, organisations can innovate to get their customers’ jobs done in the best ways possible.
When many demands swamp financial institutions, the jobs-to-be-done framework helps them make the right choices—or the jobs they should get done—to serve the jobs their customers want to be done. These choices will determine the path to innovation, differentiation and value creation.
Innovate, differentiate and create value: Jobs to be done in action
What job should you, as a financial-services provider, do? Start by identifying and refining your understanding of the customer jobs you want to serve.
After identifying where you stand today and your strategic goals, you can list your target jobs. Say you’re a retail bank focused on borrowing; as a bank, you must find ways to become the best provider for “borrowing jobs”—holiday, education, housing, etc.
Understand the job (real purpose) at a functional, social and emotional level: First, document specific jobs. Suppose your customer’s job, his or her real purpose, is to send a kid to college, and yours, as a bank, is to enable this. In that case, you should help your customer with all of the following:
- Find the college best suited for your customer;
- get details of the cost of college tuition and the financing options available;
- understand the available scholarships and their eligibility criteria and apply for them;
- make travel arrangements and
- set up a banking relationship in the new city or country.
As a bank, you must aim not only to provide an education loan but also to help the customer get the best education possible (the customer’s “real” job to be done) under the circumstances.
Design the various experiences involved: When you start to think this way, you quickly realise that providing the best experience is also part of your job as a bank. When designing this experience, you must consider whether you will use in-house experts to counsel customers or partner with external experts.
Integrate with the ecosystem to deliver: As a bank, you must build the right ecosystem and connections to enable your customers to achieve their real purposes. In the college-education example, your task as a bank is to find ways to integrate with university ecosystems to process education loans as soon as students choose their desired colleges. It would help if you considered integrating with the UK tax system for loan repayments once graduating students find work.
A constant muscle-building exercise
Adopting the jobs-to-be-done concept as a framework is an iterative process that no bank can get right in one go. Banks need to “build muscle” by constantly examining which jobs they are doing well and which ones they must do better. Professor Christensen suggested that organisations ask themselves the following questions:
- Current customers: Why do they buy your products?
- Non-customers: Why do they not buy your products?
- Former customers: Why do they no longer buy your products?
- Compensating behaviours: Inconvenient workarounds people use because no product fulfils their jobs to be done well enough.
Staving off competition from agile neobanks and other competitors may seem daunting for established financial institutions. But their growth will drive the fight for survival. And banks need to be prepared to meet the challenges that will come their way.
While the jobs-to-be-done theory may not be a panacea, the approach can give banks a stable anchor driven by first principles, helping them to stay relevant amid constant change. The framework can guide banks to align with customers’ needs rather than products and technologies, enabling businesses to compete with new-age players and outlive them.