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Schools and Banks: What's Common?

As a father of a 6 year old and someone who has a keen interest in alternate models of education, I’ve been fascinated by some of the talks by Sir Ken Robinson on creativity and education reforms. Some of his observations about the current schooling system have a strong parallel in the way the banking system was and is being governed.

Structure & Focus: The features of both formal education and the banking system are rooted in the manufacturing principles of industrialism. This model is based on linearity, conformity and batching. A bank also follows a similar manufacturing model where the focus is on getting the customer, grouping people based on their wealth, offering them all the bank’s services and realizing profit through fee, interest and loans, whereas ideally, the focus should be on understanding customer needs and customizing the offer based on that. This has now become even more important with the rise of the digital consumer who is increasingly becoming choosy, comparing every offer online before deciding where to put his money. Banks need to move from the manufacturing model to a relationship model, creating an environment in which the customer feels that he is getting greater value from his “relationship” with you.

Uniqueness: A lot of people go through their education without discovering their natural abilities. Majority of schools have their curriculum structured in a way that they offer everything under the sun but still certain disciplines (read math, language, science) get priority while certain others get marginalized (read sports, arts, music); students are judged based on grades through standardized testing. In the same way, most banks try to be everything to everyone. There is no clear strategy to understand how they are perceived by their customers or for that matter, to evolve a differentiated positioning within a crowded, competitive and commoditized market. How can a bank be seen as unique? How can they do the same things differently?  An example that comes to mind is The Co-operative Bank, UK that has positioned itself as an ‘ethical bank’ and this philosophy is built into the DNA of the bank in every aspect of the business that they operate in. They refuse to invest in companies that do not conform to their ethical standards and have turned away loans worth £1 billion in this process. They regularly update this policy to reflect their customer’s latest views on issues that are important to them like human rights, sustainability to name a few. The point is that they want to stand for something in the minds of their consumers and having a clear strategy like this helps to build a connection. A bank that can connect with the consumer at an emotional or rational level has a much better chance of gaining customer trust and loyalty in the long run.

Creativity & Innovation: Sir Ken contends that schools must accord creativity the same importance as literacy. We don’t teach our children to think differently or for that matter think…We stigmatize mistakes. And if we are not prepared to be wrong, we’ll never come up with something original. In fact he goes on to say that “As a result we are educating people out of their creativity”.  The same is true with banks, where I would equate creativity with innovation. True business model innovations in the banking industry have been few and far between. This is not due to a dearth of ideas but rather the absence of a structured approach to build an innovation culture within the organization. As someone said - if you make innovation someone's specific job then it becomes someone else's job. How can banks reward ideas? Could it be by having a structured mechanism for not just collecting ideas from the employee pool but also turning some of them into reality? Though I must admit that of late, many banks seem to have innovation at the back of their minds, and have dedicated budgets to turn their plans into reality. Bankinter in Spain recently did a systematic process of distilling over 600 ideas from across the employee pool, customers and other stakeholders to 3 big ideas that were selected for implementation. Similarly, many banks in Turkey have innovation projects as part of their annual strategic initiatives. Mobile banking and payments are two areas where a lot of work is happening from an innovation perspective. And now there’s also a new category in most banking awards called ‘Most Innovative Bank’.

Holistic Learning:  One of the things that many schools still  lack is a holistic view of education. Real education happens by observing people and things and looking at different approaches of doing the same things. This refreshment occurs in many ways - by crossing borders and boundaries, thinking differently and taking advantage of the interaction of disciplines by applying ideas from one into another. In the same way, I believe banks can learn much from others in the retail, telecom and service industries.  Somebody articulated this beautifully – “Why can’t banks manage queues as efficiently as McDonald's? Why can’t there be a “standing-up” check-in for account opening as in 5 star hotels to speed up the process? If casinos can manage millions of dollars of cash without documents, surely banks can take a leaf from the gaming industry to go paperless.” If players in other sectors like retail and telecom can enter the banking field, then it’s important that banks too adopt and apply the best practices from these industries and beat them in their own game.

There have been some sparks in both these sectors in the recent times with some schools taking a student centric approach and some banks clearly articulating their ‘niche’ and connecting with consumers on their terms. But there is still a lot of work that needs to be done to break the internal inertia towards such change.

Education needs to play an important role in freeing the spirit of human imagination. A quote I read goes like this - “Education needs a complete transformation - from the cocoon a butterfly should emerge and not a faster caterpillar.” Similarly, banks should break free of the ‘patch up’ mindset that they are cocooned within to take a holistic look at their business model, innovation agenda and the way in which they connect with their customers…‘genuinely’.


Comments: (2)

A Finextra member
A Finextra member 11 January, 2011, 16:56Be the first to give this comment the thumbs up 0 likes

Interesting comparison. Especially the comment "As a result we are educating people out of their creativity". This could certainly be applied in many cases to working life as well albeit I'd rephrase it this way: "As a result we are educating people out of their passion". This is stronger as creativity comes out of passion but passion leads to many other things such as customer excellence, something, as we know, banks are in dire need off.


Navin Rammohan
Navin Rammohan - Infosys Technologies Ltd. - Bangalore 12 January, 2011, 04:53Be the first to give this comment the thumbs up 0 likes

Thanks Erick. Completely agree that passion is something which has a big role to play in whatever endevaour one takes. Passionate people naturally sound genuine and that shows trust which is another thing which banks need to focus on.  

Navin Rammohan

Navin Rammohan

Principal Manager - Marketing

Infosys Technologies Ltd.

Member since

22 Jul 2004



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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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