While banks have legacy on their side, fintech firms and Big Tech corporations have started to eat into the market share of traditional players and are enforcing cultural evolution in order to remain in the innovation game.

Deutsche Bank’s Rick Striano highlighted that “the notion of innovation is a slightly slippery one in the environment I come from. They don’t pay banks to innovate and what clients really want to see is security, which is a different view to the consumer, who want brands that are cool.”

Macgregor Duncan, chief development officer at Westpac, agreed with this sentiment, but was a little more skeptical about how easy it is for large organisations such as financial institutions to act nimbly. “What’s important to understand about banks is that they are really factories operating at scale. Operating a safe and secure consumer service is commensurate with innovation but the challenge is working outside of the organisation to access innovative thinking and entrepreneurial spirit.”

Akiko Taguchi, head of open innovation at MetLife’s LumenLab provided a perspective from the insurance industry and said that a cultural divide between banks and startups makes it difficult to build a bridge between them. She continued to say that a love of stability also plays a part and as consumers are attached to their smartphone in this day and age, short attention spans also need to be considered because financial products may seem more difficult to understand.

This innovation vs. security conundrum was also explored by Duncan during the panel, who said that while banks are focused on solving issues with risk, they are also projecting the future in a linear fashion. However: “the future will not develop linearly.”

Duncan went on to say that partnering with those outside the organisation allows banks to be closer to customer pain points: “An entire generation are using a new payment product and banks have not responded to this change.”

Striano added that “innovation starts with changing mindsets and banks have to be as process-oriented as you can be”. Duncan riffed on this point and said that “incumbents could become a diminished version of what they are today. Westpac could become a much smaller bank, but I tend to think we will remain stable.”

In a later session, Citi and Feedzai presented how they have transformed traditional banking into a high-tech business and revealed the trends that financial institutions should be looking at to help them evolve into technology-focused businesses.

Citi’s Morgan McKenney and Feedzai’s Richard Harris explored their experience after announcing their partnership in 2016. McKenney said: “Most banks now know that they can’t build everything themselves and should harness technology to build products and services.”

She went on to refer to bank and fintech partnerships as a “ying and yang model” and said that more banks should leverage this fintech strength. Harris added that in the past, “innovation was used as a marketing ploy” and financial institutions would open their innovation labs just when were inviting clients to the office.

Today, they said, there is more of a focus on “cultural connectivity” and not just about the technology. “Both banks and fintechs need to buy into the vision,” Harris said.