Banks and the paradox of innovation
We had an interesting challenge recently. A client in the banking sector asked us to help them get a perspective on how trends in retail banking were going to change things over the next few years.
As we started unpacking the question, we came to the quick realisation that the major forces shaping the space were essentially the exact same ones we’d explored with them 3 years ago. Something appeared amiss.
This went beyond suggesting a frustrating project and caused us instead to question the integrity of our original analysis. After all, is it really conceivable that a sector facing assault on all sides – from regulation, new competition, disruptive technology and consumers agitating for change - could continue on for three years, with seemingly little change?
When MG looks at a future market landscape, we try to do so holistically – developing distinctive views on how consumer behaviour, tech, competition and other forces with shape the space. We might apply some formal models of disruption, or outline some alternative scenarios – but however we get there we always end up with a robust & analytically-credible view of the major areas of opportunity and threat we anticipate. Our sources will be deep and wide – from the sublime (insights from behavioural psychology on how consumers choose to buy things) to the ridiculous (white paper from the major strat firms). Our approach relies heavily on being able to assimilate a vast array of insights, and distilling them down quickly.
Surely all of our sources couldn’t have got it wrong?
On further investigation of course, it turns out that life is more complicated than that. Plenty of evidence came to light that the changes we’d foreseen were making a real impact inside banks- and that NPD pipelines are full to the gunnels of the new services we’d anticipated. Equal clear was the painful reality than banks (for which read most major companies) struggle to get new stuff done quickly. Forget 10 day launches & MVP – most banks still don’t do agile, test & learn or JFDI.
This was reinforced today, when my colleague Trevor & I spent the day with the great & good at Finovate Europe. I, and many others, were astonished to find ourselves facing similar pitches to those we heard back in 2011. We shouldn’t have been. In 2011, start-ups were pitching the future and demo’ing live services that they were launching across the continent. Today it was established vendors, pitching those same concepts – whose time has now come – to big bank buyers.
A 2-year lag between the cutting edge and banks responding in earnest? Sadly, with a few exceptions (notably Barclays) that’s what it looks like. For sure this lead-time makes the lives of our foresight teams much easier – but the MG crew would be much happier leading rather than following.
Philip Clarke
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