The Innovation S-Curve

Gal's Insights

S-Curve is a curve describing the stages of development of any system. With its help, we can assess the level of maturity of the product and determine the dependence of various quantitative indicators on the time factor. S-Curve is applicable to any industry, including finance. But let's take a closer look.

Financial institutions can't immediately determine how successful an innovation will be. Certain conclusions can only be drawn over time since it's usually possible to estimate the result only in the long run. For example, people who are far from the financial sector may be suspicious of bold ideas, even if they are more convenient and bring other benefits to them. For example, at the very beginning of the development of online lending, people were afraid to borrow money online because they didn't fully understand how it all worked. It seemed too risky and incomprehensible, so at that stage, one could conclude that online lending was about to collapse. But in the long run, this form of borrowing proved to be successful and is gaining popularity to this day.

That's why it's important to understand where the product is on the S-Curve and not jump to conclusions. To do this, you need to know the main stages of the life cycle of a financial product. In total, there are 4 main stages, and each of them has its own characteristics. By knowing them, you can achieve the greatest efficiency in the industry. Let's look at the main stages of the life cycle of your financial product according to the S-Curve and the Bass model.

Era of Ferment

This stage is the one with which the S-Curve begins. It also characterizes the period when the financial product is still an innovation and is almost unknown on the market. Thus, this product doesn't have a clear design, as we can't yet say how borrowers will react to it. This era is characterized by high competition between various market players. Also, at this stage, financial institutions spend most of their resources doing market research.


The transition to this stage begins after you manage to overcome all the obstacles that have arisen on the way to the success of the product in the market. If your product can meet the demand of borrowers, it starts to take on a certain design. At this stage, the product moves toward full market acceptance.


At maturity, the product is already well known to customers and accepted by society. This means that it's approaching his physical limit. At this stage, companies spend resources on reducing the cost of the product and improving it.


This stage can become the beginning of a new product life cycle. Since the product has already reached maturity, the challenge for financial institutions is to bring something new to it. Thus, new innovations may emerge to meet the changing needs of borrowers and the market as a whole.

Final Thoughts

The S-Curve can be a good tool for analyzing your financial product and making adaptive decisions depending on the stage of its development. This model can be useful for financial institutions that want to improve their efficiency in the market. Knowing where your product is on the S-Curve will give you a better idea of what actions you need to make society accept it.