The financial services industry in the 21st century has reached a crossroads: Innovation no longer serves as a nice option to obtain a competitive advantage. Now, survival depends on it. As banks across the globe strive to bring new products and processes to market, they face increasingly demanding consumers who live on the edge of the latest technologies—where e-commerce can fulfill their needs without a hitch in seconds.
The question boils down to this: How are banks rising to this challenge and so many others, from making a societal impact to developing their human capital?
The 2018 BAI Global Innovation Awards serve to share and showcase what leading financial services innovators worldwide are doing to deliver new value to customers and employees. The awards are not of the static brand; what these leaders have achieved — and how they did it—will be shared at BAI Beacon this October in the form of potent takeaways.
The innovations run the gamut from AI-enabled applications and new infrastructures to hyper-personalized ad campaigns. And if one characteristic unifies the finalists, it’s “curiosity and grit,” says Paul Steenkamp, founder of the Creative Leadership Collective and BAI Global Innovation Awards judge. Steenkamp is also the founder of I Am Jackfrost and has designed internal innovation programs for organizations; after judging many entrants he noted the finalists all demonstrated an “appetite for learning more about what their internal or external customers really need.”
Steenkamp stresses: “They’ve all produced evidence of impressive impact, which tells me that they’ve shown dogged determination whilst implementing. All companies that have scaled successfully have innovation in their DNA. It’s the bureaucracy that comes with the growth that typically overshadows and stifles their collective genius.”
All of the finalists in the 2018 BAI Global Innovation Awards are available on its website. A sampling of the innovations is below.
CaixaBank: App progress with concerts to boot
As the world’s banks continue to innovate for tech-savvy consumers, many of their efforts revolve around mobile. Sixty-seven percent of global consumers now use some sort of digital banking platform, according to a survey by Oracle. And beyond simple mobile functionality, they expect and anticipate full-fledged personalized banking solutions in the palms of their hands.
In February 2018, CaixaBank in Spain launched the CaixaBankNow app, which offers a 100 percent user-oriented experience that makes everything available at one glance, with one-click functionality. The app also incorporates Neo—the first IBM Artificial Intelligence-enabled bank app in Spain—which adds a virtual assistant function that improves customer experience. Neo uses more than 1,000 frequently asked questions and thousands of learned insights to more efficiently serve app users.
“One of our main objectives was to keep ourselves at the forefront of innovation,” says Benjamí Puigdevall, corporate director of Now Daily Banking and executive president of CaixaBank Digital Business.
But innovation must constitute more than one-off projects. It must be transparent and manifest itself each day as an integral aspect of the organization’s culture, says Puigdevall.
“Banks must acknowledge and commit to an innovative and creative approach: one that places the customer at the heart of the organization and is governed by the principles of simplicity and common sense,” Puigdevall says.
While consumers move more to digital banking capabilities, banks must continue to innovate in the physical space as well. McKinsey reports that branches or physical presences still build trust and relevance in local markets or among certain demographics. In December 2017, CaixaBank launched imaginCafe, a 1,200-square-meter multipurpose facility in Barcelona as an innovative touchpoint for imaginBank, the bank’s mobile-only brand targeted to young people. The imaginCafe runs a range of initiatives associated with music and technology and features gaming sessions, DJ sets, workshops, concerts and interactive training sessions.
“It’s already attracting significant visitor numbers, averaging 800 people per day, and the trend is upwards,” Puigdevall says. “All people can also enjoy it online and have access to exclusive digital content by logging on from wherever you are.”
Arion Bank’s accelerated accelerator
Financial service firms are also making efforts to bring innovative ideas to market faster. In 2016, Arion Bank in Iceland formed its Digital Future Accelerator to eliminate the disconnect between IT and business. Arion focused on efficiencies and developed a framework that mandated each innovation project take exactly 16 weeks. During that period, a cross-functional team of a dozen or more people temporarily leave their roles and work solely on the project. This creates a fully-focused team that can accomplish far more than part-timers.
“We started looking into new ways of doing things because if we were doing it process by process, it would take two to three years,” says Rakel Óttarsdóttir, Arion’s chief information officer. “We now do whatever we can in 16 weeks with whatever resources we have for the project.”
The Digital Future Accelerator delivered 14 projects in the first 17 months—with many more in the pipeline. The accelerator has changed the onboarding process, pushing it to a digital format option for nearly 75 percent of all new customers. A team also digitalized credit assessment and compressed the average credit assessment time from two weeks to three minutes.
Influenced by the so-called “Amazon effect,” the world’s consumers are raising their digital expectations for personalized, fast and constantly innovating service. Banks must also continually innovate to stay with the tide. The only way to survive is to innovate to meet the customers’ ever-changing demands, “because they’re changing all the time,” says Óttarsdóttir.
Innovation in the DNA
Other banks innovate in the marketing space through hyper-personalization. In the spring of 2018, Turkey’s DenizBank collaborated with a famous YouTuber to promote its Credit X product that offers loans for the iPhone X. More than 21,000 visitors viewed the Credit X ad, resulting in 6,500 applications equaling more than $2 million in loans in just two weeks. DenizBank is also experimenting with neuroscience techniques to learn more about the hidden feelings of customers to improve customer service. In a literal case of smart thinking, this includes EEG biometrics to measure activity in specific regional sections of the brain.
While innovation has often lagged in the life insurance industry, South African firm FNB Life has released a robo-tool that automates needs assessments and advice. This enables consultants to focus less on tedious calculations and more on meaningful conversations with customers.
And at USAA, innovation is considered part of the company DNA, not just in terms of emerging technologies but also when it comes to solving business problems for members and employees, says Rachel Biel, innovation director, USAA P&C Company. “It starts from the top down. Our board of directors, CEO and P&C president all expect us to innovate constantly. Every single employee at USAA is considered an innovator.”
USAA recently released its interactive voice response (IVR) to Digital Channel Shift to enable members to seamlessly transact from the IVR system to the mobile app, wherever the self-service digital experience is available.
Successful breakthroughs ultimately address the root cause of problems rather than the symptoms, Biel says. USAA invests more time upfront to ensure they’re solving the right problem.
“Having early buy-in and feedback is critical,” Biel says. “It doesn’t matter how exciting a solution is if the people that will use it don’t see the value.”
To learn more about the BAI Global Innovation Awards, visit BAIGlobalInnovations.com. Be sure to vote for your favorite innovation as part of BAI’s new People’s Choice Award. Learn more and vote today.
Craig Guillot is a business writer who specializes in retail and finance. His work has appeared in such publications as the Wall Street Journal, CNBC.com, Bankrate.com and Better Investing.
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