Consumers need banking operations to be faster, secure and more efficient. Innovation, however takes time, planning and money. We caught up with Agapi Lida Glypti at Money2020 to ask her how banks actually work towards innovation. “For a very long time banks built themselves of the specialists, and this day and age is actually more of a challenge to our knowledge than it is to our balance sheet. We innovate by opening ourselves up to learning which is a painful yet valuable experience.”
Innovators need to constantly question themselves as to how things are done, how they can be done better, find new partners and explore new value. “Anyone who tells you that this process is painless,” explains Lida, “is lying to you.”
The problem with retail banking is banks forget what happens to the customer after opening up an account. After all, it’s tangible, visible money coming into the bank so what more would they want? Lida explains, “If you fail to understand what the full banking ecosystem is like and how everything connects up to everything everything else, how the money moves around the world, how products plug-in, what interdependencies on each component within the ecosystem is and without having a clear understanding on the infrastructure you are running and how something happening downstream will impact your business, driving any change will have a detrimental effect on any financial institution.” And that’s one long sentence not to be taken lightly. The Chief Innovation Officer of the bank knows what she is talking about.
The infrastructure and ecosystem that the bank is in, is extremely important to know about. In fact, Lida says that is where most of the investment needs to go, because that is where most of the action happens. “Seamless banking is a great concept to talk about however, seamless banking can only take place when you have a really robust infrastructure underneath where the money is matched and settled quickly and without error. And this is happening because a lot of investments are being made into this effort, but it’s pouring into this side, but not as much is going into investing and lending products.” That’s because these segments and products are still driven by subject matter experts, a really fancy way of saying that really smart people are working in isolation, literally on spreadsheets, away from the consolidated banking system. How can seamless happen with the integrated components are disparate?
“While from a security standpoint, it can be argued that this makes the bank more secure, but it also makes a real case that the whole institution is not necessarily as ready for automation as it needs to be. If you want a truly seamless banking experience, to ‘jazz up the pipes’ across the entire bank so to say, the transformation will need a lot of time, money and planning.”
As with any other running organization, building the infrastructure from scratch is far quicker and economical than to otherwise innovate a running enterprise. Most banks take two approaches: the first is where the bank does a grand overhaul of every process, product and department, which is tough considering you can’t easily shut down a running faucet. The second approach is where the bank will make tweaks to the system and while this may take longer, it will eventually get the job done. Which approach a bank takes towards innovation really depends on how much time, money and