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Innovation in Financial Services

Innovation in Financial Services

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

Europe-wide research reveals demand for innovation

23 June 2009  |  3180 views  |  0

Despite the apparent batten down the hatches and ride out the storm attitude of many businesses during this downturn, our recent research shows that the business side of large retail banks across Europe is in fact demanding more innovation from its IT counterparts. Both sides seem to recognise that they don’t really understand what the other does, but they do recognise three key issues; competition, consolidation and cost-efficiencies, to which, in the UK, compliance can probably be added.

There are slight variations in the main banking countries: German respondents (54%) listed globalisation/internationalisation as an important issue, whilst the French named competition and mergers & acquisitions (38%). In Spain, M&A featured highly (46%), but the banks seemed much less troubled by the need for efficiency improvements or cost-reductions. Perhaps because, according to El Pais[1], they are already among the most efficient banks in the world.

In the UK, possibly the European country most affected by the banking crisis, consolidation (35%) and cost-efficiencies (21%) were seen as having most impact on the sector, conceivably as a result of the tremendous write-downs we’ve seen in the City?

So what can IT do? Step out of the back room and begin to offer, not just operational answers, but an innovative response to the banks’ challenges. The IT side of these banks has become misaligned with the business side. Indeed the IT sector itself recognises it is guilty of not engaging in strategic decisions and projecting an image of only being able to respond to tactical business issues.

It seems then that rather than merely being a service provider, IT needs to reposition itself as a consulting partner, to fully understand the business needs of the bank and offer different strategic solutions at different levels of budget and scope.

Retail financial institutions clearly realise that IT still has huge potential to shape the business and can help fight the challenge of the 3Cs of competition, consolidation and cost-efficiencies. Even in this difficult period banks must seize the opportunity to unlock the strategic potential of IT; to get the bank at full, innovative strength, ready for the recovery...when it comes.


[1] Calculated as cost/income ratio. Information from Esto es obsession con los costes, El Pais. 22 March 2009

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