Innovation Currency: Banking on the Wisdom of the Crowd
As the banking sector undergoes continual reform, its leaders are bracing themselves for job cuts they suspect will occur over the next three years. Stakeholders will most likely be taking an introspective look at existing challenges, and trying to find new customer propositions that will improve digital banking and reinvent the customer experience.
Empowering the Front-Line
It is likely that most of this innovation will be led top-down, but there’s an interesting tension here: the difference between what leadership “thinks” will work, versus what the frontline staff see and hear directly from their customers. Frontline workers — the cashiers and customer service representatives — are likely to see issues that managers might prefer to ignore and that senior management aren’t aware of.
The big problem is the separation of decision makers from those who know what really needs to happen.
As Matteo Cassina at Saxo Bank writes in the Financial Times, banks will need to continue adapting their business models to cope with litigation risk, regulation, rising technology complexity and costs. Cassina mentions Joseph Schumpeter’s ‘creative destruction’ term — coined in the 1940s to denote the destruction of the old by the creation of the new — which is certainly something that rings true for today’s banks.
But if those who know what needs to change aren’t empowered to make those changes, how can this creative destruction take place? And if middle management is all about keeping things on an even keel (which could result in stopping change), the chance that anything significantly different will happen is quite low.
Embracing the Crowd
The answer, really, is that executives should be more courageous and willing to take risks. They need to include all levels of employees in the innovation process; by doing so, they may discover multiple ideas that could bring about profound revenue opportunities. They need to consider carefully how middle managers are rewarded, so that processes are not just about maintaining the status quo, but allowing the entire staff time to dream up new ideas.
In other words, it’s the power of the crowd, facilitated by technology, that can help make innovation happen at scale across an entire organization.
But even more than that, it is about the power of an executive to give permission for those who actually know what’s wrong to make useful stuff happen. The challenge is that branch managers are rated based on short queue times, and they may feel that granting their cashiers fifteen minutes a day to interact with innovation software may inhibit that. Once we overcome this cultural problem, we can begin working towards truly innovative ideas in the banking sector.