Why we innovate

To many people working in financial services today, the word “innovation” actually sounds a lot like “risk”— at best, a waste of time on things that been proven yet, and at worst, something that could put the company in harm’s way, not to mention raise the ire of bosses and regulators alike. It’s time to change that mindset.

The financial services industry has always been pretty inwardly focused, and the events of the past five years have only exacerbated that trend. The need to raise and preserve capital and liquidity, and the need to digest, interpret, and ensure compliance with the 20 million new words of rules created (so far) by Dodd Frank have been understandably important priorities… from the industry’s perspective, at least.

Customers really don’t care. Yes, they want their banks and credit unions to be safe and sound, but they want whatever it take to do that to be invisible to them. Other than when in of the depths of a financial crisis, consumers typically do not consider capital and liquidity levels as points of differentiation when choosing a bank. Even to large corporations and governments that do consider a financial institution’s strength and stability important criteria, those are still just stable stakes, not differentiators.

Twenty years ago mobile telephone companies’ marketing messages focused on who had fewer dropped calls and who had the clearest sound quality. Today it’s about who provides the best customer experience through the broadest and fastest network coverage and the best selection of feature-packed smartphones. They’ve gone from marketing pin drops to screen shots.