Here are my simple notes as background for tomorrows panel at the conference.
- Banks have lost focus on the customer
- People are seeking better alternatives for financial services
- Internet as a driving force, is largely ignored by Banks
Thinking and listening this morning validates my concerns for Banks. I heard today about a person I know who is a Banker and a blogger, and who shall remain nameless. That person’s blogging became know to a senior person in that Bank, and the result is that they have been asked to curtail external activities for some time, ie no conferences, and also to remove the identity of the Bank from their blog.
This confounds, me yet, does not surprise me. Innovation at a Bank is stifled. A blog is merely a conversation, something that occurs at the club, the golf course, and the restaurant. But because a person is conversing with the outside world in a blog, the clampers come down.
The thought that somehow industry leadership or market share is at risk because of a conversation on a blog is precisely the opposite of reality.
Innovation happens at the edges.
In this networked world one never knows where ideas will flourish, or how they will start. More importantly possibly is how those ideas will nurture as might a garden. A garden needs time, thought and effort, and blogs offer that capability to ideas.
Back to my panel notes above; “Banks have lost focus on the customer”. Banks are so conscious of their image, market share, and profitability yet these are things the Bank cannot directly control. All of those concepts rely on people, customers, to choose the Bank, add services, and use cheapest channels respectively. With that in mind, how can a Bank learn about what customers need and want, if they are not talking to customers?
Bankwatch 
Another good topic Colin. I think, at least from the bankers I deal with you missed one big issue to them. Regulatory pressure.
Bankers tell me they are SO afraid of trying anything because 1) they don’t truly understand the technology 2) They have no idea how to ensure the security/privacy issues can be limited enough to ensure not getting railroaded by their regulatory examiners.
That’s what I’m seeing in my talks but there is no doubt that innovation in banking is stifled but I think FUD play a HUGE part of that.
Agree re regulation, however there are examples of Banks using regulation to their advantage, just few and far between. Example … Wells Fargo offered their spending analysis service, that was an amalgamation of checking and credit card spending. My speculation is that Wells had to gather that data anyway, for AML and HomeLand Security reporting, so why not reuse for customer benefit.
My clients, however, are at the community bank level (under $1B in assets) and they don’t have the resources to even ‘try’ is their opinions. They spend so much time keeping their heads above water that they are stuck in the rut and frankly I think it’s an excuse. If it were a focus, even if it was in small steps, small innovations could be achieved.
FRUSTRATED! 😉
Good topic.
Another issue is that banks are spending much of their IT budgets to keep their core systems running.
This doesn’t leave much room for innovation.
A major contributor to innovation is cultural: it’s very much driven by a bottom-up approach, requiring a tacit acknowledgment that good ideas can come from anywhere in the organization. Another factor is risk. With innovation comes a level of risk that banks are quite averse to. Both of these factors are probably just the tip of the iceberg for why banks are not innovating fast enough, but they are factors that are most ingrained culturally in banks and large organizations in general.
Fantastic responses everyone. I think this post touches a nerve. So factors are:
– customer focus
– regulation
– lack of resources
– lack of budget
– existing system maintenance
– culture
I will use in the panel at the conference today, so thanks all.
I find that more and more banks are aware of their lack of innovative power due to the factors mentioned above.
The need for innovation is however understood and drives several banks to start their own sort of incubator in which they start developing innovative ideas. Innovative activities are then placed outside the bank itself.