Stop Failing at Transformation & Deliver Small Innovations
Banks are failing at digital transformation. Small innovations throughout the bank can improve customer experience, introduce new technologies, and create new opportunities to disrupt and compete.
Photo by David Vives on Unsplash
“Digital banking transformation” It’s a familiar refrain you’ve heard for much of the last few years in fintech and banking circles. Compared to big ideas and big solutions of an enterprise digital banking transformation strategy, the idea of small innovations sounds, well, small, unimportant and inconsequential.
Banks, financial institutions of all kinds and sizes, ever in search of ways to catch up to, differentiate from, disrupt all the disruptors, challengers, new entrants and competitors
should must pay closer attention to small innovations. And all kinds of feel good messages are not the reason why.
Financial institutions must pay attention to small innovations because they are failing at digital banking transformation.
What’s the big deal about small innovations? Small innovations can accomplish a lot. For example:
Small innovations fix problems that are closest to your customers. A few examples include reducing friction in account opening, digitizing document collection for loan and mortgage processes. Credit unions can remove friction between prospective members and new members by removing the 10 clicks required to get to the membership requirements to join your credit union.
Small innovations prove to your business and IT staff that your institution can implement change. This accomplishment can shift attitudes towards transformation from skepticism towards optimism and acceptance.
Small innovations prove to your customers or members that your institution can listen – and more importantly – respond to their needs. Don’t just talk about being responsive, be responsive in tangible ways.
Small innovations boost morale. This is especially crucial right now, when people are resigning from their jobs and finding new ones that better meet their needs.
Small innovations let you introduce new technologies and capabilities in manageable quantities. Total transformation of development methodologies take time. By introducing technologies in small innovative changes, IT and business teams can get used to that change.
Small innovations let you bring in new ideas that don’t disrupt the entire
Small innovations mean the consequence of failure of some of those innovations isn’t that big.
Small innovations mean you can pivot from failure to success or just dump an idea that doesn’t work.
Small innovations can enable you to disrupt a commodity product or service that costs you money, like bill pay.
Small innovations can uncover more opportunities for innovation.
A personal story. A couple of years ago, I hired a contractor to finish part of my basement. Part of that job was to install cabinets along a wall next to the basement stairs. When he pulled off the sheetrock on that wall, he discovered that the stairs were held up by 7 bags of concrete. The basement project immediately changed. Of course, I gave him the go-ahead to install the proper supports.
His work on the staircase led him to look at the stairs themselves. He removed the old carpeting and discovered that many of the treads were worn through and the supports under the treads were wobbly, broken, or missing. Of course, I gave him the go-ahead to replace those treads.
As he worked on the staircase, he also noticed that the staircase moved. It turned out that this movement of the staircase caused a noise that I noticed whenever I went down the stairs but did not know where it came from. I got used to it. The house is almost 100 years old, and I didn’t see any water along with the noise so I chalked it up to age. Again, I gave him the go-ahead to ensure his fixes meant the staircase no longer moved.
Because the staircase was held up only by bags of concrete and was moving and had treads that were almost worn through, I now knew that each trip up and down the staircase was a potentially dangerous activity. The staircase could have collapsed at any time.
The story has a happy ending. Yes, the basement project cost me more money and I now have a new cabinet. But the new wall meets a 100-year-old staircase that is now properly supported and has many new treads.
The lesson? Had my contractor only installed a new wall and cabinetry, my basement would have looked nicer and given me much better functionality. But, I would have been unaware of the dangerous problems on and underneath the staircase.
Luckily, my contractor didn’t approach this small project with blinders on. He was on the look out for any and all problems around the project. Problems, that turned out that could have had bigger consequences than my having more storage in my basement. As the customer, I had no idea that there were problems lurking behind some sheetrock and carpeting. I relied on my contractor’s expertise to know how problems and solutions fit together.
This story points to the even larger importance of small innovations to a financial institution:
Financial institutions can use small innovations to identify larger, unseen problems that create obstacles to customer experiences with less friction, better relationships and increased profitability.
Financial institutions can use their enterprise digital strategy to weave these small innovations into a larger fabric of transformation – both within and without the institution.
What financial institutions need to do to implement more small innovations
Approach customer experience and other areas of innovation without blinders on. Your ability to say “yes” to seeing and identifying challenges or problems you haven’t seen before will increase the value of your small innovations.
Respond rapidly to customer-facing small innovations and respond just as rapidly when you discover that they aren’t quite right or downright fail your customers.
Map all small innovations to each other and to your institution’s digital banking strategy or mission. Measure how these small innovations impact your benchmarks related to profitability.
Admit it if you can’t do this by yourself and….
Bring in new eyes – whether they are new developers, analysts, #fintechs or consultancies who can help you create and deploy a small innovation.
How vendors can support small innovations:
Show how your solution can help your customers tie small innovations to their overall digital banking transformation initiative.
Demonstrate that your solution can – and better yet does - allows financial institutions to bring in new eyes – whether other vendors, fintechs or consultants – to drive more small innovations. This means proving your solution’s architecture is truly open and that the institution’s partnerships are not restricted to your partners but also includes their partners.
Great things are not done by impulse, but by a series of small things brought together
Vincent Van Gogh Quotes. (n.d.). BrainyQuote.com. Retrieved from BrainyQuote.com
Building transformation from small innovations isn’t novel concept. But it’s one that financial institutions must adopt while there’s still time to adapt.
Adopt an Agile Digital Banking Platform: How bankers must have an agile digital banking platform to support both global and local trends and requirements to help them identify new niche markets that will drive innovation, create new value and increase profitability. In this report I identified a set of capabilities that a digital banking platform must have that will help take banks into a competitive future and urges banks to select a digital banking partner who shares their innovation, vision and support for new value creation.
How Your Financial Institution Can Leverage Niche Markets for Next-Level Growth: The old rules that influenced how mid-sized financial institutions acquired technology and the tradeoffs they had to make no longer apply. Why? Because new thinking on old models brings new ways for banks and credit unions to deliver new products and services to new niche customer markets. I moderated a vibrant discussion about this & more with Jeffery Kendall, Chairman and CEO, Nymbus and Tim Hamilton, CEO of Praxent.
Think like a Challenger: How banks and credit unions can compete and win - I recently moderated this conversation on challenger banks with Bryan Clagett of Moven and Ted Brown of Digital Onboarding. And, yes, I talked about challenger banks for teenagers.
Digital banking transformation’s surprising secret for success in Entersekt’s ebook New Directions in Authentication
Yes, I worked with clients on these ebooks and webinars. They may ask you for information before you can download or watch them. If you’re interested in collaborating with me on similar or totally different types of projects, please contact me at firstname.lastname@example.org or schedule a short meeting.
Who writes PivotAssets?
I’m an independent analyst & consultant & a former Gartner analyst. I’ve worked in and covered the banking industry for over 2 decades. I write about
digital banking in this newsletter - not to confirm what you know (and you are plenty smart!) but to give you a fresh perspective & analysis on the transformation that is —and isn’t happening - in the industry.
I write this newsletter for people and companies who are trying to differentiate their banking software in an increasingly competitive market. That could be people who work at software companies currently developing banking software or people at vendors that want to move vertically into the banking market. It’s also for bankers and investors who want to know more about digital banking transformation strategies & the technologies that power them.
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