Although a much younger company than most banks, Google offers a great example of how to keep innovation flowing. They actually empower their staff to help the company innovate and develop. One of the reasons Google is tremendously successful is because
of “20% time,” which allows people 20% of their day to work on their own projects. Some of Google’s most widely used products including Gmail and Google News have come out of that time. Think about it: it’s a virtuous circle. Getting 20% time is a benefit
for employees, which attracts more applicants who appreciate the 20% time, which allows Google to be more selective with who they hire, which gives them better staff, which allows them to innovate even more through 20% time. Additionally, Google management
buys into it and their enthusiasm permeates the company.
Now think about if you did that in a bank…
John Reed from the Citibank days of Citi, was a huge believer in innovation. He had setup an entire advanced development group (ADG) within Citibank that was constantly looking at technology and figuring out how to develop new products and services for customers
to differentiate the company. The group was known for having some of the best and brightest in the bank and a lot of Citibank’s award winning online banking platform came from that group. Reed left shortly after the Citigroup merger, and predictably, the ADG
was soon disbanded. Ironically, now the stock is nearly at pre-merger prices and Citi is known more for its US$XXB in credit exposure than the fact that they were the first bank to deploy an ATM in 1939. Innovation in banking is key and ADG was Citibank’s
Too often, IT departments are hamstrung by micromanagement. They could take a lesson from Google as well. If you hire people that you can trust who are good at their jobs and then empower them, they’ll perform.
Give them the tools they need to achieve them but then get out of the way. Set goals and targets at the beginning of the quarter and measure them at the end.
Of course all of this is a bit optimistic. Banks these days gets a lot more scrutiny than Google ever has in terms of costs and it’ll likely be awhile before any of that changes. However, with a little more flexibility, empowerment and the recognition of
the importance of it, real innovation in banking can happen.
It did for Citi.