Here are some thought provoking and unconventional ways banking can learn from the pharmaceutical industry when it comes to innovation:
1. Banking “Clinical Trials” – A/B Testing on Real Customers
Pharmaceutical companies conduct rigorous clinical trials with randomised control groups before launching drugs. What if banks applied the same approach to financial products? Instead of relying on traditional market research, banks could run controlled financial experiments, offering different customer groups unique savings incentives, AI-powered investment strategies, or alternative credit models to determine which options perform best.
If banks conducted controlled financial experiments, they could gather real data on what works best for customers, allowing them to create more tailored products. This approach would likely lead to higher customer satisfaction with options that better meet their needs. It would also minimize the risk of launching ineffective products and foster innovation in the industry. Additionally, regulators may have more confidence in banks that are using data-driven methods to test and develop new products.
2. Patent-Like Financial Products – Exclusive Innovation for a Limited Time
Pharma companies thrive on patents, profiting from exclusive rights before generics hit the market. What if banks applied a similar model by creating limited-time “patented” financial products—exclusive, high-yield savings accounts or AI-driven investment algorithms available only to early adopters? For example, a high-interest savings account with a 6-month exclusive window could drive urgency and attract customers seeking unique offerings. This strategy could foster differentiation, increase customer engagement, and promote ongoing innovation in financial products.
A good example of this approach in action is Chase’s Sapphire Reserve credit card. When it first came out, Chase offered exclusive perks like a huge sign-up bonus, fancy travel benefits, and high rewards, but only for a limited time to early adopters. This created a sense of urgency and made it stand out from other cards. It worked so well that Chase kept adding new benefits to keep it fresh, similar to how companies keep improving patented products in pharma.
3. “Off-Label” Financial Products – Encouraging Alternative Uses
Many drugs are approved for one use but later find success in treating other conditions (e.g., Rogaine was originally a blood pressure medication). Banks could encourage customers to repurpose financial products in unexpected ways. For example, a credit card designed for travel rewards could later be marketed to freelancers who need cash flow, or a mortgage product could evolve into a flexible home-equity loan for investment opportunities. This approach could help banks tap into new customer segments, increase product usage, and drive additional revenue streams. It would also provide customers with more flexibility, allowing them to use products in ways that better align with their changing financial needs. Plus, this kind of innovation can strengthen customer loyalty by showing that the bank understands and adapts to their evolving circumstances.
4. Psychedelic Finance – Behavioural Science to Rewire Money Habits
Psychedelic drugs are being explored for their ability to rewire neurological pathways and treat mental health conditions like depression and PTSD. Could banks apply a similar approach to financial health by developing “rewiring” programs that use behavioural nudges, gamification, or even immersive VR experiences to change how people manage money? For example, an AI-driven “financial therapy” app could help users rewire impulsive spending habits or reshape savings behaviours, similar to how cognitive behavioural therapy helps individuals manage emotions and actions.
Banks could also use gamification to reward positive financial behaviours, making it more engaging and effective, or offer VR experiences that simulate real-world financial scenarios to help users practice decision-making skills. This could drive lasting changes in financial habits, improve financial literacy, and help customers feel more in control of their money.
5. “Subscription Banking” – Like Prescription Drug Models
Pharma companies have long used subscription models to provide ongoing access to medications, such as insulin for diabetics or antidepressants for those with mental health needs. What if banks adopted a similar approach to personal finance? Instead of traditional loans and credit cards, banks could offer financial subscriptions, creating a “Wealth-as-a-Service” model.
Customers would pay a fixed monthly fee to access continuous, optimised investment management, debt restructuring, or personalized financial coaching. This model would function like a steady dose of medicine for financial health, ensuring customers always have the support and guidance they need to maintain and grow their wealth, without worrying about one-time fees or fluctuating costs.
6. Financial Placebos – Can Psychological Tricks Improve Financial Behaviour?
Placebos in medicine have shown measurable effects even when the “treatment” isn’t real, largely because of the power of the mind in influencing physical outcomes. Banks could tap into this psychological power by introducing financial placebos—strategies designed to make people feel wealthier or more in control of their money, even if the actual financial situation doesn’t change. For instance, a savings account could create the illusion of a “lock” on funds, where users believe there’s a penalty for withdrawing early, triggering loss aversion and helping prevent unnecessary spending.
Another idea could be an AI tool that sends positive, encouraging messages reinforcing financial progress, even if the account balance hasn’t moved, playing into a customer’s sense of achievement and encouraging healthier financial behaviours. These psychological tricks could improve overall financial discipline, helping customers feel more secure and proactive in their financial decisions.
Closing Remarks
These examples push the boundaries of how banks could rethink their approach to innovation—borrowing from pharma’s boldness, willingness to experiment, and focus on long-term impact.
