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Embracing innovation is all in the mindset

Banks and financial institutions continue to look at ways to square the circle when it comes to the digital delivery of financial services and enabling a true customer experience in the new digital world.

A number of institutions – Credit Suisse, Goldman Sachs, Barclays, UBS, Santander, JPMorgan and HSBC to name a few – have carved out dedicated investment funds to provide capital to fin-tech start-ups or have set up innovation labs to nurture technology development.

 This intent by large incumbents is sound and the knock-on effect of such moves is manifold. Embracing innovation in this way helps financial institutions rapidly respond to challenges posed by new entrants to markets and can have the positive impact of shaking up legacy services, products and processes which, in some cases, can help change the culture of the host organization. Additionally fin-tech funds and innovation labs can generate new sources of income and open the door to adjacent markets and business enhancing partnerships.

Experience to date, however, has been mixed and the majority of institutions engaged in these efforts are still only in the early stages. Furthermore, the generation of ideas and initial investment are the ‘easy’ bit. More difficult is the filtering, nurturing and adoption of innovative technology. This requires strong support from the top of the organisation and a willingness to sometimes ruffle feathers to get projects off-the-ground and drive them forward. Coupled with this is the need for ongoing governance and support as well as the understanding and acceptance that there will be innovation failures as well as successes, and that learning’s from these failures can be extremely valuable for future innovation.

If executed successfully both innovation labs and fin-tech investments should continue to be key components of a successful innovation agenda. This in turn needs to become a core management process for incumbent financial services institutions if they are going to transform successfully to meet the challenges and opportunities of the digital economy.

We look forward to exploring these topics in more detail at our upcoming Financial Services Forum on June 23 and 24 in London.

 

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