Recently, I conducted a series of indepth interviews with 28 leaders responsible for the biggest digital innovation projects involving payments and fintech, ranging from three of the largest four North American banks, global payments providers, insurers and investment sector firms, to mid-market and small credit unions. The study was commissioned by global digital solutions provider CI&T, a leader in lean digital transformation, and Comrade, the strategy and design firm which has pioneered design thinking for financial services clients. Comrade was acquired by CI&T last summer.
I asked the following three questions:
1) Describe the stages for your biggest innovation projects, in your own words
2) How long do such projects take, from unapproved idea to full customer availability?
3) What best practices can you share?
The answers were surprising. Project durations vary widely, but the answer is ’24 months’. Projects completed in less than a year are achieved by either the largest or smallest financial institutions, yet with reasons and implications that are in position to those experienced at the largest firms. Select top banks get big innovation projects to market faster with Lean methods as derived from Toyota’s Manufacturing principles (something the study describes in detail, and note that Design Thinking, together with Lean and Agile provides a path to speed at scale), and get to dictate most of the full outcomes. The smallest FIs essentially don’t choose the outcomes–and rather choose a vendor they believe to be best-positioned to deliver the most innovative outcomes possible now and in the future–and give up freedom of specific choice in order to meet budgetary and timings requirements. Among the vast rest, some projects are still taking anywhere from five years to infinity (in the latter case, cited by a few hangdog interviewees who have largely given up hope that their current employer can ever be competitive).
Zelle: A top innovation roadmap priority
The upcoming P2P payments bank partnership has been the focus of many innovation resources for bankers, who view it as a must-do for competitive parity and ownership of the customer wallet. Some referenced this capability as an opportunity to put their newly Agile methods to the test, with one stating that the effort is on track to be completed within nine months. Zelle is now a top priority on innovation roadmaps.
Rewards proposals always get the fast-track
Some types of innovations will have an uphill battle, no matter what. A digital and technology executive at a top global card brand, referring to how any potential new innovation not related to rewards has a harder road to get approval, resignedly put it this way,
“For card issuers, a dollar spent on our premium-level cardmembers is a known equation with regard to ROI. To put investment in other areas that have a longer or not-so-clear return, funding is not so automatic.”
Forget mobile first – Go mobile only
Developing primarily for online? Take it from a top competitor and skip a full step ahead. One $1T bank is not even developing or prototyping in ‘mobile first’ anymore, having already gone to the ‘mobile only’ approach that allows them to deliberately leave their new mobile products’ online versions as an afterthought. It’s hard to be the best at embracing the future if you’re still stuck in the past, and indeed one of this bank’s top competitors said “we’ll be lucky if our online users even holds flat this year”.
Bringing all together
Surprisingly, the innovation practices within the 28 companies represented by this project’s interviews have more differences than commonalities— even though the software industry is generally characterized by having a relatively high degree of commonality in how new ideas come to market. For FIs who increasingly compete against tech-sector companies, this must change, with a full embrace of Lean approaches as the overall approach. 26 Senior executives must change first, conducting an unflinching assessment to ensure that ideas are often coming from those who are also empowered to bring them to reality. To help them move adroitly from approval into reality, executives must then work to create a blueprint for cross-functional teams that will be assigned to new ideas. In today’s world, this team must not overlook any potential contributors, even those from risk or security. The broad, cross-functional, “ideas everywhere” approach will also aid in maximum creativity and talent retention, as will the more rapid time-to-market and embrace of new technology development environments. Product roadmaps must be balanced with innovations of direct or indirect value to the end-user and market as well as changes that are simply required to meet operational, compliance or technology platform requirements.
Please read the full study here and feel free to leave your comments. I hope to do an updated study on innovation practices in the future, and your reaction will help me make it better.