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If you innovate, I will follow

Sometimes I get into a rant, and I got into a bit of one at Finovate.

It was during the lunchtime session, and a banker said to me that they liked all the presentations during the morning but wouldn’t be doing anything about it.

“Why not”, I asked.

“Oh, because these guys are all showing experimentation”, he responded. “And my bank won’t invest in experimentation. They want proven systems and results, and will only follow something that is shown to be viable and works.”

This is so often the comment made by bankers I talk to, that it’s the prevalent attitude within the industry.

For example, many years ago someone told me the parable of the swine in the bible and compared it to bankers.

What was that story?

Oh yes, the pigs were filled with unclean spirits and thousands of them ran as a herd into the river and drowned.

The banker was relating that to his industry, and saying it’s how banks behave.

They follow each other mind-numbingly into good or bad waters without care, as long as they all follow together.

Another banker told me a similar story about banks being like sheep, and another about bankers being lemmings.

The theme is always the same: we don’t want to lead, we want to follow.

But innovation is never created by following.

Innovation is created by leading.

If an innovation was proven and could be followed, then it’s not an innovation.

Innovation is about creating disruption to business models that are compelling.

And that’s why retail banking is not about innovation (investment banking is different).

The reason retail banks follow is that there is no need for speed, no need for change, no need to be compelling.


Because the industry is cosseted and protected by licences that make it hard for new entrants to compete.

And when a new entrant does start to compete and take off … then the banks can follow and replicate their business model pretty easily and wipe them out.

That’s why there is little new entry into banking, and mainstream retail banking has hardly seen any new entrants in over a century.

That’s why there was such a big hoo-haa over Metro Bank’s opening in the UK but, take note, Metro Bank is created by a banker.

It’s backed by bankers, and by someone who successfully sold a bank.

So real new entry into banking, with innovation and different industry thinking, is really hard.

This is why so few bankers attended Finovate and, of the ones who did, most were just there to observe and not to act.

The real activists were therefore the fintech community, the venture capitalists, the disruptors and the industry agitators … in other words, those who will innovate because they want things to change.

Meantime, for the bankers who did attend, I dedicate a song to you.

It’s an old one but, for those who attended Finovate, you’ll know that 1980s cheesy music is the mantra. Here’s the banking industry’s song:

For all bankers, their mantra seems to be: “If you innovate, innovate; innovate, innovate … I will follow.”

Seems to have worked so far …


About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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  • David Hodgkinson

    Chris – I heartily agree with this sentiment and heard you briefly talk about it after the lunch break at Finovate!
    As part of my work I get challenged to bring innovative proposals to banks but 99% of the time when I do they say – “show me another bank that has made money with this”. Failing that they might consider a successful model from another industry such as Telcos or Retail.
    The appetite for real innovation seems sadly lacking.

  • This is unfortunatly so true! It seems that banks still earn enoguh money so that they feel it ist not a need to look for new opportunities.
    And afterwards they wondered about new unforseen competitors.
    Kind Regards
    Hansjörg Leichsenring

  • Interesting thoughts and responses and having been a banker for manay a year I am not going to put the case against!
    But senior executive within banks do often encourage their premier business divisions and management to put forward cases that drive significant revenue from new ideas. They argue/plead for innovative ideas and claim they will fund them.
    Yet they do not emerge so why is this?
    Several immediate thoughts;
    There is no scope to develop and evalue a raw idea. It is not in anyone’s job description.
    Doing the day job is the priority!
    There is no cross-business recognition/structure that innovative ideas need input from seveal sources to mould and craft them before business cases are even put togther
    There is no seed-corn money set aside to evalue a raw idea. It fails at the first hurdle.
    Time is not allocated, acceptance of its value is dubious.
    The list goes on yet banks have structures and whole teams titled Ideas and Insights. Innovation, New Product Delivery and so on.
    The fact is that too many define and ‘manage’ innovation as a thought process and activity independent of improving and challenging that you currently do.
    Sometimes the best ideas come from the people least expected to be the source of them.
    Harnessing and developing these this is a way to go but then this all gets grouped into ‘working smarter’ so again it fails.
    Unfortunately the end result is a continuation of what exists today but don’t give up hope please.

  • David Hodgkinson

    Gary – back in the day (2005/6), RBS appointed a Chief Innovation Officer if I remember correctly. Not much happened from that and as far as I’m aware the role no longer exists.

  • Fritz Thomas Klein

    Read the entire story as described: In banking, it is so simple to copy any innovation that is proven as a success by a competitor. So it is economically perfectly sound for banks with existing market share to wait and see and only act (fast) when an innovation is proven.

  • At the Card and Payments Awards 2011 yesterday, Earthport won the award for Best Alternative Payments Programme for its Earthport Direct service. Representatives of several of the SMEs which have been using Earthport Direct for some time, bankers through whose accounts the service operates, and banks which are using Earthport’s services on white-label basis, were Earthport’s guests at the event.

  • Most managers are choosen for their skills akin to those of a warehouse keeper, not for being thoughtleaders. There is so much talk about innovation, yet still “excellent things are rare” especially when innovation primarily remains a marketing effort. Of course i’d like to see more ‘socially responsible’ behaviour, but who is to decide what that is? Politicians? Money is *the* universal trade commodity, woven into the infrastructural fabric of commerce and society. Beyond currency differences and other means of valuation, it means dealing within an oligopolic market segment, at least within it’s own region. And within that regional market it is quite simple to differentiate using one of several known leverage points.
    Disturbing the force is not in a bank’s best interest, eventhough with todays information processing technologies, we can effectivelly go a level beyond currency and even make this world a little better, but cui bono?

  • Alicia

    “When it comes to the future, there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened.”
    John M. Richardson, Jr.

  • Wow…what a depressing exchange. I take a contrarian view. Check out these FI’s.
    NorthShore CU http://www.nscu.com
    Umpqua Bank http://www.umpquabank.com
    Washington Federal Savings http://www.washingtonfederal.com
    Columbia CU http://www.columbiacu.org
    Coast 360 FCU http://www.coast360fcu.com
    While their innovative efforts may not be captured from their web sites they all “take risks”, “innovate”, and mix up the new with the old.