Product Innovation in Financial Services: A Survey

This paper considers product innovation in insurance and other financial services, an area where actuaries have an important role. It considers the proposition that there is no unique formula for success and that what works well in one situation may not work well in another. It first examines the sources of ideas for new products and, in particular, the role played by consumers, which is generally regarded as weak. It then looks at how ideas are implemented, with particular importance attributed to cross-functional teams and the formality of the product development process. Then it considers how success is measured (with the indirect as well as direct benefits of a development) and the factors that may distinguish success from failure. The paper concludes that there is no unique formula for success, but that there are some shared characteristics of firms that are good innovators; it is comforting to find that there are guidelines that firms can follow to improve their chances of success.