PA financial services expert, Mark Griep, has had a byline published in Banking Review discussing the lack of innovation in the financial services sector.
Drawing on PA’s Innovation research, which surveyed 100 senior managers in the financial sector, Mark highlights how the banking and insurance industries do not have a strong focus on radical innovation.
Mark sayes: “Most large banks carry a legacy of older IT systems and databases that makes it difficult to be responsive to new opportunities. According to our research, managers in the financial sector are too hesitant to look outside the borders of their own sector. The results of the study show 32% of the managers mostly get inspired by innovation projects within their own sector.
“Moreover, only 35% of respondents support risky but high potential innovations. This percentage is relatively low compared to innovation leaders of other sectors, where the average is 57%. Despite the risk-averse behaviour in financial services, there have been some successful innovations. A few large banks have used digital techniques to expand their services and offer them on digital devices.”
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Mark says that there are three lessons banks could learn from these innovation leaders:
Be inspired by other branches and sectors – embrace the principle of co-creation and involve clients early in the process of generating and developing innovative product ideas.
Develop a ‘digital-first’ policy – although difficult to introduce due to legacy systems, various banks and insurance companies have managed to successfully innovate by using digital applications.
Concentrate on what is feasible, not on a major breakthrough – radical innovation should not be a goal on itself. Incremental innovation could result in major improvements. Focusing too much on radical innovation could have the opposite effect.
Mark concludes: “The innovation policy of the financial sector has mostly been reactive. Getting inspired by other sectors will enable large firms to make a change and introduce innovation into their sector.”