Channel innovation - How to deliver your value

This category of innovation is concerned with the delivery of the product and services to the customer. The delivery channel can be physical or digital. Critical to remember in this innovation is that channels ebb and flow in popularity, so staying agile is always critical.

In developing countries, small business loans can be scarce, and those available may have obscenely high interest rates of 90% and higher annually. Needless to say, this can put small business owners in developing countries under the influence of what amounts to predatory loan rates. The goal of Kiva, and most microfinance, is to circumvent that predatory lending channel of finance altogether and allow small business in developing countries to thrive with reasonable loans. Kiva loans are facilitated through two models, partner and direct, that enable them to reach the greatest number of people around the world. For partner loans, borrowers apply to a local Field Partner, which manages the loan on the ground. For direct loans, borrowers can apply through the Kiva website.

Kiva is a perfect example of channel innovation, as it has developed new channels to reach an underserved market. It is now one of the most popular not-for-profit microfinance operations now and has funded $1.3 billion in loans to more than 3.1 million borrowers over the past 13 years.

In the wealth space, there is much debate as to whether robo-investment advice will ever reach the mainstream.  That said, according to Netwealth’s 2019 AdviceTech report 34.3% of advisers believe in the next 5 years it will have the greatest impact to advice.  Robo investment advice reflects a massive channel shift from traditional face-to-face advice to online advice, often only supported by phone-based operators. 

Recently Charles Schwabb introduced its Intelligent Advisory Service.  For a setup fee of $300 and then $30 per month a person has access to:

• A diversified portfolio based on goals made up of ETFs, which is automatically rebalanced
• Unlimited 1:1 guidance from a CERTIFIED FINANCIAL PLANNER™ professional
• Interactive planning tools (such as a college planning tool and what if scenario calculators).

And a person only needs $5,000 to setup an account with them.  This type of service has the hallmarks of a disruptive channel innovation.

Learn how advisers can use this innovation