New Product Development in Financial Industries

Abstract

Abstract: It is not suitable to apply characteristics used in service industries such as intangibility, simultaneity, heterogeneity, or perishability when analyzing financial products. When considering the property of media, financial products are intangible, although durable. Therefore, financial products are designed beforehand, and knowledge of development research is applicable. Further, in financial development, lead-time reduction and communication are even more critical than tangible products.Keywords: financial products, property of media, new development1. IntroductionWhen analyzing financial products, it is not suitable to apply characteristics used by previous research in describing service industries, such as intangibility, simultaneity, heterogeneity, or perishability. This paper presents product classifications based on property of media. From this point of view, financial media is intangible, but also durable. Therefore, development approach used in manufacturing industries is applicable to financial development because these products can be designed before presenting them to customers.There are primarily two types of products in the finance industry. First is insurance or deposits, where a customer enters into an agreement at a certain point in time. The agreement is strictly adhered to, and at a stipulated point in time the investment bears returns. In other words, this is a where is completed at the time of contract The is essentially designed as a to give future purchasing power according to certain conditions, or as a of conditional future cash wherein, the content of the agreement is set at the time that the contract is signed. This is a sales contract product.By contrast, an example of the second type of is a mutual fund. These are different from the sales contract products wherein the design is not determined at the time of the contract. Rather, the performance depends on future execution, namely determining detailed design, modifications, and operation. The design process is incomplete at the time of contract execution. Rather, the design process is the product. In other words, the design is not a firm promise of future cash flow, but a promise to deliver fullest effort to increase future cash flow. We call this an execution contractor product. The in this case involves redesign activities that aim to improve cash flow.Previous research has often analyzed financial products as being part of a service-based industry. However, we find many differences when comparing financial products with customer service models in the service industry. To further deliberate on this difference, we will first examine concepts from the media perspective. We will then interpret the development process, that is, taking financial products to its materialization stage.2. A Typology of Products Based on Property of MediaProducts are artifacts that hold value to a customer, whether in the manufacturing industry or service industry. They are designed in advance, and communicated to customers via the media.Automobiles, for example, are designed based on the designs and functions created by developers. Those designs are then implemented to steel, glass, and other materials, after which the is delivered to the customer.In the case of a restaurant, the food, of course, is most important. However, aspects such as the attitude of the staff and other components of customer service are equally important elements. In the hospitality sector, the staff's behavior and speech are directly communicated to customers as visual and auditory information.General differences of the service industry vis-a-vis the manufacturing industry include, 1) the lack of physical media-intangibility, 2) production and consumption occurring at the same time-simultaneity, 3) evaluation differing based on individual consumer reception-heterogeneity, and 4) products not being stored as inventory-perishability (Johne & Storey, 1998; Jong & Vermeulen, 2003; Vermeulen, 2004). …