Having just watched 72 demos at FinovateEurope, I can confirm that digital financial innovation is alive and kicking. Over the last couple of days, I have seen a number of inspiring solutions to deal with some of the most difficult problems facing financial services today. The main themes at Finovate this year included simplifying and lowering the cost of payments, improving authentication and customer onboarding, using data to generate new value for personal and business bank customers, and making bankers more productive and efficient through, for example, artificial intelligence technology.
Digital executives at financial firms are taking note – the audience was packed with executives from Europe’s main banks. And rightly so. To be innovative, banking executives need ideas, data, technology, software development skills, design experience, and change management support. Often, they can't source these components internally in a timely and cost-effective manner. Partners such as innovation agencies, systems integrators, startups, adjacent firms, and even competitors can help them add capabilities quickly. This is prompting the rise of ecosystems of value – a key feature of digital business transformation. By utilizing partners' digital assets, ecosystem participants are able to hone their products and services fast and furiously — in essence, out-innovating the competition.
Still, building and being a part of an ecosystem is difficult. It exposes you to different systems, cultures, and potential conflicts of interest. As such, it requires meticulous planning. Selecting a startup to work with at an event like Finovate is just the beginning. Next, you may have to overcome different working cultures, attitudes to risk, and expectations. One banking executive told me that in order to reconcile the chaotic world of startups with the regimented structures of a bank he needed to hire a “bridge” – someone who could speak the languages of both. Being a part of an ecosystem requires many such adjustments.
You can read more advice on how to anticipate problems that cause innovation partnerships to fail in my new report. This is just one report in our new digital financial innovation research series, to which many of you have kindly contributed – so thank you and I look forward to receiving your comments!