Some of the world's biggest banks took to the stage at the second annual Finextra Future Money conference to show their innovation chops and dispel the notion that the industry is reaching a point of peak disruption.
With the rise of contactless technology, mobile apps, tokens and Bitcoin the way that society exchanges value is rapidly changing. More than 600 of Europe's top banks, VCs and startups discussed the coming revolution at the two-day conference in Canary Wharf.
Speaking from the challenger bank perspective, Anne Boden, CEO of Starling Bank, views the large legacy tech estates and the big maintenance spend of the more established banks as a constraint on innovation.
“A big retail bank in the UK will typically spend £1bn on operational running costs, meeting compliance obligations and so forth,” she told the audience: “Only £20-30m will go on things that are truly innovative."
“Banks are taking innovation seriously but it’s a very very difficult thing to do, within their constraints,” she concluded.
In response Lloyds Banking Group’s director of innovation and digital development, Marc Lien, said: “Banks aren’t tech firms - despite endless protestations to the contrary - but they can introduce proven, tested new money and service propositions.”
In October, Lloyds announced plans to pump an additional £1 billion into digital channels over the next three years, and in February opened the UK's first new digital banking graduate training scheme.
Earlier this month, the bank promised to create 20,000 "digital champions" by 2017, helping Brits to boost their tech skills.
This follows the lead of another of the big beasts in the shape of Barclays and its network of 'Digital Eagles'. Barclays has won plaudits for its commitment to innovation, launching its own accelerator programme and mimicking the startup culture internally to introduce a raft of mobile innovations based around its Pingit app.
Ian Ormerod, managing director of Barclays’ digital and design office, shared some of the development and startup innovation tips learned from the Pingit programme.
According to Ormerod it is essential for innovators - whether in a small team at a bank or at a startup - to have:
• Clarity of purpose.
• Co-locate: so that designers, innovators and business people sit together.
• Empower the team: “…and then leave them to get on with it,” he says, adding “that is hard for large organisations to do.”
• Enable the team: “Give them a red phone (to senior management) to remove obstacles."
• Introduce a cultural mindset shift: This is in order to be supportive of innovation.
Similar thinking is going on across the pond, as Wells Fargo's head of innovation and R&D Bipin Sahni was keen to demonstrate, brandishing an iBeacon device and talking up the potential of geo-location services in the delivery of loyalty rewards and discounts to consumers.
He also outlined how his firm aims to deploy "bio-pay" authentication and payment options, using "facial, voice and eye biometric recognition technology....We're doing tests in the lab at the moment."
Mariano Belinky, managing director of Santander Innoventures, meanwhile, represented the ranks of banks setting up their own specialist fintech funds.
He shared three key tips that he uses when assessing any new startup: “I always ask can we add value to the startup themselves; to the customer; and to the bank? Those are the three key questions.”