Banking Review

Is innovating at your bank like climbing Everest?

The head of innovation with a large local bank once told me his job was like climbing Everest without oxygen. Innovation takes effort, an ability to play politics, and an almost unhealthy level of tenacity.

Last month I was disheartened to hear Westpac GM David Backley talk of the ongoing challenge of driving Enterprise 2.0 projects inside the bank. Too often in banking an innovative leader departs, and with her the innovative projects she was driving.

With bankers distracted by the global financial crisis, what will be the next disruptive innovation in Australian banking?

In the paraphrased words of Harvard Business School Professor Clayton Christensen:
“A ‘Disruptive Innovation’ is a successfully exploited product, service or business model that significantly transforms the demands and needs of a mainstream market and disrupts its former key players.”

Call me naïve, but I’m not ready to write off innovation in banking due to tough times. I’m currently sensing two broad themes emerging from the banking sector – get back to basics or pursue competitive advantage.

For those of you going down the back to basics path, you can stop reading now. But if you’re looking for competitive advantage, you know you will be forced to innovate.

Direct channel brands are one example of disruptive innovation. It’s an overused case study, but where would online banking be if it weren’t for the emergence of ING Direct? This week I’ll be debating the future for direct brands with some leading bankers in the space at Online Banking Review’s Direct Banking Strategy conference.

On Tuesday I’ll be putting my case for upcoming disruptive innovation to the mutual sector – covering peer to peer lending (a potential disruptor for credit unions), social saving and payments innovation.

And on the 24th of March I’ll be asking some payments industry heavy hitters just what is holding back innovation in their sector.

I hope these sessions are more than just a talkfest – some serious action is going to be required to help banks navigate the year ahead, and respond to the disrputive innovation that is likely to come from outside the sector.

I’ll be spreading all the news from these events via our @bankingreview Twitter feed and as usual in the upcoming newsletters and print editions.