The Way for Innovating Banks to Go – Tip 1: Transform for greater reward, lesser risk

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…