Home / Uncategorized / Citibank: a flawed innovation process? No, but a ruthless one

Citibank: a flawed innovation process? No, but a ruthless one

I just got a heads-up about an interesting project taking place
in Citibank called Darbie.

Being aware of the challenge of new start-ups like Simple
and Square, Citi are concerned that they might be disintermediated from the customer
relationship, as are most old guard banks.

But rather than ignoring this threat, Citi has taken it on
board and created a counter offer.

The project began through an internal innovation process
that began in 2007 when the bank realised that they had lost something. 

The bank knew they had advantages in scale and scope, but
they also used to have strength in innovation but had lost it.

That’s when the leadership team determined that they needed
to get it back and so they appointed Debby Hopkins as Chief Innovation Officer.

This led to starting a new operation in the bank called Citi
Ventures, an internal venture capital group, in 2008, just as global financial
markets were beginning to melt down.

It may sound like a bad idea to start a new venture just as the company is in meltdown but, as Steve Jobs said, in a
time of crisis you need to innovate your way out of it.

So Citi Ventures gathered 
ideas from all around the bank, empowering leaders and seeding the
entire enterprise with diverse people who served as innovation catalysts.

This focus led to early success.

New products and ventures gained credibility, while being further
piloted and refined.

Over time, Citi innovation leaders launched a range of growth projects across more and more of the enterprise.  

An example of such change was the launch of Smart Banking on
mobile, combined with touchscreens in branches.

You can see a bunch of videos explaining the background to
the project on the innosight website (these were their partners in creating the innovation process).

They also ran a competition internally to get the best idea
for a new bank product or service. The project gathered all the ideas across
the bank for the future of bank innovation and for this, Citi used Salt Pond Creative
to curate and inspire the ideation. 

Salt Pond has a few more videos on their website
about how the internal process gradually whittled down all the innovation views  into ten tangible projects.

Finally, the bank picked two winning ideas from these ten, and are taking
these to market.

The combined ideas are being developed in secret with the
bank’s marketing firm IDEO, who have placed an estimate on this new line of
business of at least $100 million in revenue increase per year.

What a result.

I could tell you a lot more about the process and project,
but I will not as I was sent a bunch of internal confidential documents by
someone disillusioned with the process.

Why would there be any disillusionment?

I guess because the competition was meant to only come up
with one idea.  There are two because one
of the judges wanted the team from his division to win, so they changed the
rules during voting time to allow two winners (normal internal politics, huh?).

The bank then went on to award the winners’ plaques, only to make the American staffer who came up with the winning idea redundant (normal internal politics, huh?).

This insight adds to my previous blog
about Citi’s internal behaviours, and can you innovate effectively if there is a fear of a
management backlash.

Just a thought and I’d be interested in any reaction from
Citi folks if I’ve got this all wrong.

 

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...

Check Also

The digital transformation journey

I find more and more people are starting to understand that digital is a transformation …

  • Kudos to Citi! Our own experience with them has been equally positive (although they differ from Amex in respect of their approach to innovations).

  • Brutal yes, but for a bank to have turned successful revenue from a structured innovation process is impressive. Just because of the sheer amount of organisational anti bodies that will kill it, never mind the natural risk averse, spreadsheet driven inertia.

  • Bizarre.. i’ve just wrapped up a nice business case for innovating innovation in the manufacturing industry and one of the key ingredients is about taking back office functions and putting them back in the field, in the front office, again. It is also positioned as an alternative to traditional marketing, which has a shockingly low success rate also in the manufacturing industry (roughly indistinguishable from random chance).
    Why don’t banks offer online valuation services?
    Advise-as-a-Service via customized event simulation running against the banks (hopefully huge) business intelligence system. That should make it possible to gauge just about anything.. It doesn’t need a Google to do that.