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Accelerating innovation in Banks

Accelerating innovation in Banks

Accelerating innovation in Banks

In today’s highly complex, competitive environment with ever increasing regulation and innovation, only those Banks will survive who are embedding agility into their operating models so that they can serve their chosen market. Finance has to ensure that it is nimble footed as well so that it can be aligned to the organisational strategy, technology and regulation. 

 

Illuminati

A chunky business issue is selected (not too small, not too big) by a light governance of horizontal process owners. The right people (“We all know who these people are”) from all relevant disciplines (IT, Compliance, Finance Legal, IT, Data) are pulled out of BAU and physically co-located for one week to holistically solve the issue at hand, so that implementation can begin immediately after or a decision is reached that the problem is either complex, too big to fix or not worth fixing. The hierarchy agnostic team is then disbanded and the people return to their BAU roles. A new team is formed once another “right” problem has been identified. Standing change teams get reduced and continuous improvement becomes an agile concept integrated in the culture of Finance. This way of accelerating change and improving its effectiveness has been successfully implemented by one global investment bank.

 

Design Thinking

This problem solving approach promises increased innovation by focusing on users and their emotional needs, while experiencing products and services. It helps to solve complex problems by relying heavily on mass collaboration.

Design Thinking is successful when the silos of the organisation are deconstructed and people collaborate to deliver customer centric solutions. It involves identifying the problem the users are facing and creating empathy by looking at the problem from a customer pain perspective – understanding the cause of the pain before examining the process.

The problem is then ideated by using brainstorming techniques, creating agile prototypes and evolving by embedding a culture of continuous improvement.

Below are the key principles that can set an organisation on the Design Thinking journey.

Focus on human values Empathy for the people you are designing for and feedback from the users is fundamental to good design
Craft clarity Produce a coherent vision out of messy problems. Frame it in a way to inspire others and do fuel ideation. “Question the question” by exploring new ways of framing the problem accurately
Embrace experimentation Prototyping is not a simple way to validate your idea; it is an integral part of your innovation process. We build to think and learn
Work in a team To visualise and design a possible new product or service and assess the market, business and technical merits / demerits of the concept
Be mindful of process Know where you are in the design process, what methods to use in that stage and what your goals are
Radical collaboration Bring together innovators with varied backgrounds and viewpoints. Enable breakthrough insights and solutions to emerge from diversity
Bias toward action Design thinking is a misnomer; it is more about ‘doing and making’ over ‘thinking and meeting’
Show don’t tell  Communicate your vision of creating experiences in an impactful and meaningful using illustrative visuals


 

The Silicon Valley way

One of the leading technological innovators has optimally combined the financial clout and resources of a big organisation with the entrepreneurial culture of a small one.

Their transformational teams are organised by projects rather than through functions. The organisation has instituted the “two-pizza team” rule which is that the transformational teams should be small enough to be fed with two pizzas. 

They see the project to absolute completion. Reporting is done by exception - no progress reporting unless a milestone is missed. They prioritise launching a “minimum viable product” early over everything else. Though this has led the organisation to plenty of failures, it has also enabled them to learn as quickly as possible whether an idea that sounds good on paper is actually feasible in the real world. This allows them to focus on areas that really add value to its customers instead of spending years on products that do not serve the needs of real customers.

People in these agile teams come across disciplines and approach solutions holistically (Finance, Compliance, IT, Data, Operations).

 

Major process improvements methodologies

Banks have historically not been the place to look at for best practices in executing change in an accelerated way.

For large legacy functionalised Banks, an amalgamation of the Illuminati concept and Design Thinking tools and templates should be used to expedite change. Silicon Valley approaches are too extreme and cannot be embedded within legacy organisations driven by functional divides.

 
Design Effectiveness

It goes without saying that in order to effectively implement and accelerate change, there needs to be a paradigm shift in the way the organisation looks at it. This can only happen if the message from the top is clear and unequivocal. The leadership should themselves be agile and consistently demonstrate the willingness to learn from their past experiences.

For example in Finance, the role of Global Process Owners has become increasingly common. Their roles would need to evolve from being an accountant, who ensures the stability and robustness of the Finance function, to being a change accelerator who drives through the strategic agenda by utilising emerging technologies to support innovation e2e.

Click below for more perspectives on the transformative role of the Finance functions in banks.