Sibos Amsterdam Innovation Keynote: The "Apple" of Banking
Will there ever been an "Apple" of Banking, a bank that is seen as being truly innovative and does not just think in terms of managing risk and regulatory compliance?Previous Siboses are littered with examples of banks chastising themselves for failing to think of so-called groundbreaking innovations in payments, like PayPal. The banks cried wolf - ‘ PayPal is stealing our business.’
This year at Sibos in Amsterdam the fact that the opening keynote was on innovation which by the way only featured one bank spokesperson, suggests that banks and SWIFT realise they need to do better at innovation. However, the only bank spokesperson on the panel Steve Ellis, executive vice president, Wholesale Banking Group, Wells Fargo, said banks give themselves too much of a hard time. After all being able to withdraw money from any ATM machine anywhere in the world or building a payments network that can transmit money anywhere in the world, is a noteworthy achievement, says Ellis, even if is not as attention grabbing as a PayPal or a Google.
"People look at banks as dinosaurs, because they are slow, but I don't think that is true," said Ellis. "It is amazing what we have done, but we don't get enough credit for it." But if banks continue to compare themselves with companies like Apple or Google, then they are never going to see be seen as innovative, and carrying around an iPad does not make one innovative. This year at Sibos the iPad is the must-have accessorry and by touching one bankers seem to be hoping that some innovation will rub off on them. Even SWIFT's CEO Lázaro Campos was furiously tapping away on one during the Innovation Keynote.
Will there ever be an Apple of the banking world? Ellis says Wells Fargo likes to think they could be that as they have a culture of innovation which does not require them to build a business case for everything they do. That essentially means they can innovate for innovation's sake without some credit risk committee breathing down their neck saying how much are you going to potentially make from this venture and what are the risks?
Ellis says Wells Fargo's CEO Mobile service was developed without a clear business case. "We just had a gut feeling that everyone was going to use cell phones." Fellow panellist Peter Hinssen, CEO, A-Cross Technology, said that every bank has an innovative guy sitting in their "basement" inventing things which are light years ahead of anyone else, a bit like one of Kodak's engineers who came up with the concept of a digital camera in the 1970s but was immediately shouted down by his company for developing something that could cannibalise its existing revenue stream. "You need to free [these people] and get them out," said Hinssen.
Yet the challenge for banks, as one audience participant pointed out, is that their bonus and pay structure is not geared towards rewarding innovation - it is more about playing it safe. Ellis said the secret to fostering innovation within a banking environment is "making yourself feel smaller", and it is not always about building the $1 billion jeep or the Big Idea. Often it is the "little ideas" that are more innovative.
Campos, SWIFT's CEO who was sitting in the audience, talked about how difficult it was for an organisation like SWIFT to become more innovative. He said it had taken them three years and they still weren't there and that it was relying on its member banks to help them. But there are only probably a handful of banks that we could say are truly innovative, and no matter how many of them carrying around an iPad at Sibos, it doesn't necessarily make their more hip and groovy or in touch with what consumers really want.
That became abundantly clear when the keynote culminated in the showing of a a film about the future of money, which featured no bankers in it, but instead young,creative entrepreneurs, who disillusioned with the debt and risk- based models of conventional banking had come up with innovative peer-to-peer lending mechanisms to help bridge the social divide between the banked and the unbanked.
When I looked around the room most of the audience were middle-aged bankers. Perhaps banks need to start employing younger people not with financing or economic's degrees but those that belong to "Generation Y" and have grown up with social networking and smart phone technologies and use these applications or devices to interact with their peers in creative and imaginative ways in cyberspace.
Date Posted:25th October 2010