The innovation challenge: balancing stability with speed

Banks have traditionally been closed entities, guarding their proprietary assets and frustrating Fintechs by focussing on scale and stability rather than innovation. The prevailing reaction to the emergence of Fintechs was to defend their businesses and their customer bases from the new pretenders, rather than leverage innovative ideas through collaborative ventures.

In more recent times, the balance has swung towards speed, i.e. the rapid development of apps and microservices that provide a better customer experience, whether they are developed by a bank or in collaboration with a third party. But what are the technical and cultural roadblocks within an industry like banking and can platforms and low-code potentially change the game?

In my experience, the two biggest barriers to collaboration are legacy systems and legacy thinking, with the first only being addressed when the second is eliminated.

Moving to The Cloud

Recognising that a new IT model is needed, banks are increasingly moving their operations to the cloud and adopting platform computing. This, coupled with third-party collaboration via open APIs, allows them to develop the products and services that customers increasingly wish to receive.

While there is now a clear path to platform computing via systems, legacy thinking still needs to be addressed. Open APIs enable business units to think differently about how they deliver services, but organizations need to realize that it is not purely an IT problem and 99% of innovation is happening outside of your company. Collaboration with partners in the wider ecosystem may be the way forward instead.

In the past, there was a tendency to avoid changes as they carried high risks and expense – there have been many recent examples of poor IT upgrades compromising consumers. With all this pressure, why should IT departments wish to rush implementations? Well, there is a new imperative and that is staying relevant in an age of accelerating technology and rapid innovation. Falling behind on technology may compromise the business altogether.

Emerging Best Practices

Is there a better and faster way? Can businesses work smarter not harder and find new ways to crack this puzzle? Emerging best practices include the adoption of Agile methods, embedding digital skills within business units. These practices introduce the notion of working on smaller pieces of work that return value quickly to the business units in an iterative way. Other ways to accelerate innovation include hosting hackathons and setting up innovation labs or collaborative sandboxes where employees operating at the customer front line can share ideas with developers.

An agile approach plays an important role in enabling developers to demonstrate value through a continuous delivery model, where features can be quickly developed and rolled out to customers. This helps to demonstrate transparently that an iterative approach in collaboration with partners is the way forward. It also opens the door for the business to come up with fresh ideas to try.

In fact, there’s increasing recognition that good ideas can come from anywhere: across the business, from partners, from suppliers, and from academia. Ensuring these ideas are captured is a key element of removing roadblocks, delivering change and remaining competitive.

Strong Governance

Harnessing innovation is vital but must always be managed within a controlled and well-managed process. For example, quality assurance and security need to be included in apps from the beginning of the development process, rather than tacked on at the end.

As technology gets smarter, governance models are themselves becoming more simplified and automated. But for now at least, app development is some way from being code free.

The opportunities presented for developers in this new age of innovation and creativity are immense. Whether working inside the IT department of a bank, for a Fintech start-up or even while learning to program at university, the only limit on turning ideas into reality is imagination and proactivity.