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Innovation excellence: What banks can learn from top innovators in other industries

Shifting customer expectations and shrinking margins are forcing banks to look for new sources of competitive differentiation, efficiency and revenue.

Overview

The financial services sector is often characterised as weak on innovation—and banks are no exception. As a result of the industry’s short-term focus, siloed approach to operations and risk-averse culture, only two banks are listed among the world’s 50 most innovative companies. Accenture examines seven key characteristics shared by innovation leaders across industries and explains how banks can use these insights to industrialise their innovation capabilities to stand out from competitors, streamline operations and capture new markets.


Background
The global financial crisis of 2008 has changed the competitive landscape for banks. Customer attitudes and expectations are shifting, and increased transparency and commoditisation are shrinking margins. Organisations can no longer rely on products alone to differentiate themselves.

Restoring profitability will require banks to work more effectively (to unlock new sources of revenue) and more efficiently (to cut costs). Innovation is a proven path to differentiation and competitiveness, but nearly 70 percent of banking executives rate their organisation’s performance in various innovation categories as poor or merely adequate.

Analysis

What can banks learn from innovation leaders in other industries and how can they use this knowledge to industrialise their innovation capabilities and truly differentiate themselves?

Accenture research has identified seven key characteristics shared by innovation leaders across industries. To follow in their footsteps, banks must:

  1. customer centric
  2. Foster an innovative culture
  3. Embrace ideas from everywhere
  4. Manage innovation with structure and discipline
  5. Build prototyping and testing capabilities to improve speed to market
  6. Invest in and leverage leading technologies
  7. Manage the business of tomorrowBe  with the same discipline as the business of today

Recommendations

We have shown how leaders in other industries have increased profits and achieved considerable growth by focusing on innovation. Now is the time for the banking industry to do the same. Banks must take immediate steps to move innovation from the periphery of their organisations to the heart by:

  • Critically assessing current innovation capabilities and performance.

  • Developing an innovation roadmap, and supporting capabilities and processes.

  • Aligning the innovation agenda with the organisation’s broader strategy.

  • Eliciting the support of top-level management.

  • Creating opportunities and incentives for employees to be entrepreneurial.

Leading companies make innovation a CEO imperative and manage it with the same military-like discipline as M&A and other critical business processes. By following their example, banks can use innovation to streamline operations, capture new markets and set themselves apart in an increasingly competitive market.

For further information, please contact us.

Author

Paul Rehder is a partner in the Accenture Financial Services Strategy practice in Melbourne, Australia. He has collaborated closely with banking and insurance players worldwide to develop a strong understanding of retail banking, business banking, Islamic lending, and general and life bancassurance. Paul has an interest in architecture and operating model development, customer relationship management, competitor analysis and business transformation. Over the past decade, he has worked with financial services providers in Australia, Malaysia, Singapore and the United Kingdom.