Open innovation, the process of encouraging ideation across all stakeholders to drive enterprise innovation, is gaining traction in a diverse range of business applications - from automotive design to drug discovery. Two banks that are harnessing the power
of Open Innovation to drive organization change were featured in the most recent edition of the Efma-Infosys Innovation in Retail Banking study.
One bank, Noor Islamic in Dubai, is taking the process of idea generation right to the average banking customer. The other, Spanish bank BBVA, set up a US$ 100 million venture fund in Silicon Valley to catch disruptive financial models and technologies as
soon as they germinate.
Islamic bank Noor Islamic launched a major 'Bank of the Future' initiative in 2012 as part of which the public was invited to participate in a competition called 'Shape Your Bank'. The idea was to get customers involved in the process of idea generation
to improve their banking experience. In keeping with the shared risk-reward concept of Open Innovation, Noor Islamic also incentivized winners with iPads and a bounty of $20,000 for the grand winner. One of the winning concepts to emerge from the initiative
was the concept of a family card that would enable the main card holder to monitor and manage finances of the entire family.
BBVA's venture capital initiative formalizes the bank's strategy of investing in start-ups and funds with the potential to disrupt the financial services industry. Through BBVA Ventures, the bank has already invested in SaveUp, a concept that leverages gaming
technologies to encourage savings, debt reduction and financial education, and in Ribbit Capital, a fund targeted at radical financial businesses worldwide. By taking the venture capital route, BBVA expects to build capabilities that will enable it to better
anticipate challenges and opportunities as well as to create a quick access point for emerging trends and disruptive innovations.
In the over-regulated realm of financial services, Open Innovation has always been seen as a bit of a slow starter. But the approaches of both BBVA and Noor Islamic prove that a well-defined focus can bring to banking the same benefits that other industries
are reaping by shifting the boundaries of innovation.