Tip 1: Transform for greater reward, lesser risk
I believe that innovation will be one of the most solid pillars of banking strategy going forward. In fact, the recent retail banking survey conducted by EFMA, in Europe, ratified that innovation was central to both banking growth and efficiency. At the same time, inflexible IT systems and related bottlenecks were ranked among the top barriers, a natural conclusion when you consider that most banking innovation in recent years has been built over a strong technology foundation.
Most banks realize that they must inevitably transform their legacy systems if they are to survive. So what’s holding them back? Undoubtedly, the risk associated with such large-scale change weighs heavily on the decision. But what if banks could transform their business progressively, using a risk-managed approach that posed a much lower threat of disruption of business as usual? Let us say that rejuvenation of the product portfolio is top priority for a certain bank. In the first phase, the bank can orient its transformation agenda only towards the innovation of products and services by leveraging flexible IT architecture for designing, developing and distributing its various offerings.
Of course, banking is an intricate business where products, services, processes, channels and customers are all closely linked – hence, innovation of any one aspect will necessitate at least some change in the others. This means that a bank’s transformation cycle will invariably pass through several phases of which products, processes and customer experience innovations are a few.
However, is not this risk-managed transformation journey probably the optimal way that allows banking to arrive safely at every port of call?
I will be writing on more tips in my next posts…
@ James Gardner – I agree. However, it can work to the bank’s advantage to develop an innovation culture within the organization, by focusing on incremental innovation that forms a launch pad for bigger innovation. It could pave the path for banks to march onwards and progress from being followers to achieving leadership stature, without really ‘risking it all’ . There is merit in investing in and developing the innovation culture until it becomes a part of the organization DNA, as in 3M, Apple or Google. Once there, even incremental innovation can be ground-breaking from a utilization point of view, without the looming risk.
I completely agree with you on the need for the systematic process backup in any organization that wants to thrive on innovation. The innovation culture itself has to be planned and implemented in a much more organized way. There has to be optional/compulsory contribution by each and every employee in their respective work area on matters like how to improve productivity, efficiency, how to grow (organically or in-organically), new product launches, how to beat the competition etc. there has to be a reward and recognition mechanism to make sure that the contributions are properly recognized. In many cases, it has to be the KRA of specific roles and groups within the organization to ensure focus and commitment from a sustainable long-term perspective.