I recently read an article posted on PYMNTS.com about innovation that caught my attention. The article was an excerpt of a new study conducted by PYMNTS.com about financial institutions’ readiness for innovation. You can read the article here.
Some 200 bank executives were interviewed. Here are a couple of stats from the article:
- 78% of respondents say they struggle to innovate.
- Only 22% of respondents said they had access to effective core payment processing and IT infrastructure.
The study went on to say that having effective IT and core systems was a key factor in whether a financial institution would be innovative. I am not trying to bash the PYMNTS.com study, but I do find this insight curious. Perhaps it’s the other way around: FIs that have a CSuite looking to be innovative would find the appropriate IT and core systems suitable to fuel that innovation. It is so easy for a bank CEO, who is very unlikely to have come up through operations or technology, to look to others, even 3rd party fintech firms to provide the innovation leadership. If their current core or payment systems don’t provide the features and benefits that their current and future customers need, well then it’s the failure of my IT and core systems.
Bankers are nothing if not wedded to tradition. I find that very few financial institutions want to give anything more than lip-service to the idea that how financial services are consumed by tomorrow’s customers will be radically different than today. Profits are up, things are looking good, so why rock the boat? Just keep banking like it’s March of 1998
Enterprise-wide innovation cannot be left up to others. The FI CSuite must take up the mantle of igniting innovation across the whole organization. IT and core systems may need upgrading, and if so, should be addressed as a part of an overall assessment of technological needs, focusing on how younger customers (e.g. Gen Z’s) would likely consume financial services. Don’t let technology vendors drive your innovation. You innovate and then seek out the vendors whose focus on innovation matches yours.