What makes a bank innovative?


The rise of fintech, changing consumer behavior and new technology are just some of the trends that puts innovation in the spotlight for banks these days. Even incumbents that were once considered the least susceptible to change are investing in innovation. But what makes a bank innovative?

Recently, Center for Service Innovation at NHH – Norwegian School of Economics published the Norwegian Innovation Index where Skandiabanken was ranked as #2 across all industries, and in a league of our own in the financial services industry. According to the survey, the perceived ability to innovate is derived out of how the customer experience several factors such as innovation in core business/service, service delivery, customer relationship, service environment and emotional connection to the companies surveyed.

After attempting to innovate from within in various companies in a decade now, it is an honor to receive the amount of trust in our ability to innovate given to us by our customers in this survey in a time where every bank out there is competing to be the most innovative.

The industry is no longer relying on barriers of entry to keep challengers out and pioneers like BBVA are paving the way by both investing and acquiring fintech startups like Simple, Holvi and Atom Bank, as well as opening up their infrastructure through their API Marketplace. ICICI Bank in India is also leading by example in the innovation department and are now hosting their second season of their «appathon». The mobile app development initiative offers access of over 250 diverse APIs from both ICICI Bank, IBM Bluemix, VISA and National Payments Council og India to the participants. The programme aims to create the next generation of banking applications on mobile and web space by attracting developers, technology companies, start-ups, technopreneurs and students across the globe.

Technology is the primary driving force when it comes to innovation in banks, but it is often what you don’t see that drives innovation in the banking sector. It is said that banking used to be somewhere you go, now it is something you do. In my ideal future, banking is something that just happens. To achieve this, it is not sufficient to merely implement robotic process automation on processes designed for shoveling paper-based forms around an office. Furthermore, there must be willingness to innovate at the core in order to make innovation efforts actually count.

Whether a bank is looking to explore open banking, blockchain, artificial intelligence or create a digital ecosystem, banks looking to innovate must look for real life applications rather than the next big technology hype.

Banks are there to serve their customers, and in the eyes of the customer, it does not matter how many hackathons you arrange or how deeply engaged you are in exploring the potential applications of blockchain technology. At the end of the day, the perceived level of innovation will be measured on how a bank may simplify and reduce friction in everyday banking services and focus on everyday innovation on the customer’s terms.

While everyone is competing to claim how much they are a technology company these days with even Pizza Hut claiming to be a technology company that happens to deliver pizzas, Skandiabanken was conceived as a technology company, and this reflects how we work with digital business development. Without this as an inherent trait in our culture, we would never launch a beta version of our online/mobile bank to allow our customers to test new features before they are finished, and based on customer feedback, only the features that prove useful will ever be finished.

Looking at the defining mantra of the next generation of challenger banks across the world it is to remove all hidden fees and provide simplicity and transparency to their customers.  For digital innovation in banking, the key is to understand the needs of your customers, fix their problems, make it simple and be open and transparent in everything you do.

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