What Banks and Apple don’t have in common: an Innovation epic


It’s easy to understand why, while we all understand innovating is necessary in theory, we struggle to execute it in practice. Across the board, irrespective of the size of the company or the industry they are in, we all believe in the famed “innovate or die” adage in the same way that we instinctively know that moving forward in lieu of standing still is necessary, but we still struggle with the imperative.

The better business as usual is, the harder it is to comprehend we ought to “mess with it”. Naturally, no one wants to destroy a good run, so changing anything of a seemingly successful status quo is counterintuitive.

Business history is littered with examples of companies which had leaders slow to comprehend they need to embrace and dictate progress and swift change, and without going through the obligatory Kodak examples, most of those companies are no longer around so innovation has made its way on the top of every agenda a few years back.

In banking, we talk a lot about innovation but arguably, we action vey little. More worryingly for us PPPs (PracticingProgressPushers (pending-TM), the chatter around innovation has diminished over the last 2 years and sadly, it isn’t because so much has been done it’s no longer terribly urgent.

There’s a fascinating collective fatigue that has set in around the term in the industry. It’s undoubtedly bad news but it’s nonetheless worth investigating how it has set in, as it would explain many other herd behaviours we witness in the field -amongst which, where the panic about PSD2 and OpenBanking vanished-.

One theory could be, that the explanation lies with the tightly-knit community around financial services which is in a constant digital dialogue on social media.

While this community is comprised of bankers, consultants, technology makers, journalists, users and -rarely- people from other industries too and it was formed around a common interest in FinTech and its cure-all promise a few years ago, the total amount of people involved in this online conversation today is probably no larger than a few tens of thousands world wide and it’s nucleus is no larger than a few thousands of people. (This is of course based on personal observation as no real stats exist, and I would welcome the debate on the numbers so please leave comments below.)

Heavily empirical as the hypothesis is, it would suggest that, given the reduced numbers involved in the discourse, theme fatigue is understandable. It gets tiring pushing the same boulder up the hill. Should this be true it would redefine what we postulate to be influence today and while individual effects on the industry are hard to come by no matter what the influencer lists will have you believe, collective imprints of the entire community do make a difference in what gets pushed at the top of the agenda in various boardrooms.

This theory would account for the lack of industry pressure to innovate. What about another type of external pressure? The consumer.

In the past few years it seems the consumer has given up as well. As if peak dissatisfaction has passed. A few years back, users of the newly born online and mobile banks were extremely vocal when the experience let them down. These days? Not so much. It is as if, the more time passes, the wider the gap between what we are offered in digital from other service providers to what our banks give us in terms of both speed, usability and enjoyment and the less willing we are to demand that gap be filled.

So in the absence of industry pressure and consumer pressure, it almost makes sense that banks seem to have hang their Innovator’s hat with the closing down of the last Innovation Labs.

Except it doesn’t make sense at all.

External pressure shouldn’t have been an impetus to begin with, but instead, as is the case in every other industry, banks ought to feel tremendous internal pressure to come up with new things to serve and delight their consumer.

Last week we had the yearly Apple show. Whether they brought anything revolutionary to the table or not or indeed, whether they are under any obligation to do so simply because they have set up an expectation, is debatable, but what can not be disputed is the existence of that event. Their yearly goal post.

The reason many of us in the Financial Services industry used to be madly in love with Finovate, is because it provided such a goal post for our industry. Yearly innovation. 99% of it was coming from FinTech companies and not incumbent banks,  which meant there was only an indirect effect – as seeing innovative ideas and features shown on the Finovate stage took years to trickle down to consumers in washed-out incarnations in digital banking offerings, but an effect nonetheless. It kept the FinTech companies honest in terms of always innovating and their work in turn, kept banks in good supply of large backlogs. Yearly goal posts.

Finovate is no longer that and with it, yet another innovation source and imperative has left banking so what goal post do they have? When do they unveil to the consumer what they owe them? Why don’t they have a yearly show to parade what they’ve been doing? Who are they accountable to outside of boardrooms and dry shareholder annual reports?

Undoubtedly there are good reasons and explanations as to why the enthusiasm for digital newness has quieted down in banking in the last few years: a lot is brewing and in the works; business models had to be re-examined and that’s no easy feat and, chief among them, most big banks are “closed for refurbishment” –  their backend systems were in no shape to carry all this digital experience magic and are being either replaced or covered up with other layers and a few very smart ones are also orchestrating cultural transformation behind those closed doors and that is a sine qua non condition to progress.

With that said, these objective reasons are nothing but excuses when in 2018, the consumer gets near-mind-readingly-helpful-level-AI in one app and the same lack of clarity as to what they can really afford to spend as they did in 2011, once they fire up their mobile bank.

Here are some user stories for the Innovation Epic – let’s stick them back on the backlog and prioritise them hard:

“As a consultant I want to stop being a demagogue, and give up using wooden language and business jargon bingo and instead be real and helpful so that I help banks progress”

“As an industry practitioner involved in the FinTech conversation I want to push the innovation agenda again with all my might so that we can all see real digital magic as the consumer deserves happen and bridge the gap between the offerings of technology giants and banks”

“As an innovative bank, I want to build delightful MoneyMoments instead of banking products so that my consumers can lead a better financial life”

“As a consumer of digital banking I want to have as simple, useful, satisfying, awesome experiences every time I interact with my bank as when I order something online so that I stay with them”

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