In a recently released white paper exploring financial institution (FI) innovation, I highlight the importance of agility for credit unions and community banks to achieve market relevance.
In the paper, “Reimagined Banking in the Age of the Consumer,” I take a closer look at innovation — which I believe is the force capable of breaking FIs’ dangerous inertia resulting from years of success.
Indeed, innovation is the key to our evolutionary quest for financial market relevance. Too many leaders, however, struggle to adequately harness this force. My goal for this white paper is to inspire FI teams to think in new ways. Within the paper, I share examples (from both in and outside the financial industry) to inspire FI leaders to better leverage innovative strategies.
Below is an excerpt from the paper that highlights the role of innovation in helping credit unions and community banks thrive in today’s “survival of the fittest” business climate:
Bolstered by years of success, the repeat business of loyal customers and a somewhat stagnant regulatory environment, financial institutions have long resisted any change to their collective state of motion. Yet a strong force promises to break this dangerous inertia — innovation…
A powerful deterrent to innovation in many industries, and especially financial services, is a base misunderstanding of the concept. Many executives confuse innovation with its much loftier sister concept — invention. The pressure of creating something entirely new, something no one has thought of since the beginning of time, naturally keeps leaders from becoming disruptors. It keeps them from innovating for the future…
Thankfully, invention is not required for the evolution of financial institutions. Innovation, the reimagining of existing solutions to solve problems, is the real achievable answer…
Financial leaders must work to identify gaps in today’s solutions to then produce a better alternative. Consider the ATM. Created to provide a means for accessing cash 24×7, the ATM solved a problem for consumers unable to do their banking during normal business hours. Of course, the ATM was hardly the end of innovation in cash access. It was merely the first in a long line of solutions designed to meet the demands of a burgeoning self-service banking movement. New innovations in ATM, mobile and branch capabilities have continued to evolve as demand for speed and convenience increases.
The photography industry offers a cautionary tale. In 1996, Kodak was enjoying great market relevance. So successful was their company, leaders barely registered the fact they had missed a major fork-in-the-road opportunity 20 years earlier when one of their own engineers developed digital photography. At the time, they did not see the huge opportunity, only the threat.
Little did they know at the time digital photography would just about put them out of business (and one can only imagine the tossing and turning Facebook’s $1 billion purchase of Instagram created for Kodak executives). Although Kodak had become very skilled at the business of photography, the future of photography was a glaring omission from its strategic business plan.
Today’s financial institutions can learn from these cautionary tales and apply the lessons learned to their own roadmaps for sustained relevancy.
To download the white paper “Reimagined Banking in the Age of the Consumer,” visit www.themembersgroup.com/innovation.
Watch for my next blog, which will focus on the value of open innovation.