4 Steps to Kickstarting Innovation, the Sustainable Way
Despite its conservative reputation, the financial services industry is embracing digital innovation. In fact, a recent Gartner survey of financial services CIOs found that “becoming a digital business” was respondents’ top priority, outpacing other key goals such as improving profit and customer satisfaction. As consumers want more, better, faster and digital-native startups like Ally, Circle and Mint continue to innovate at a rapid pace, larger financial organizations are feeling particular pressure to become more nimble and modern.
Most financial services organizations recognize they need to modernize their digital strategy to remain (or become) market leaders, especially since consumers expect the agility of smaller fin-tech companies from larger organizations. As such, many have taken a merger/acquisition approach, partnering with or purchasing smaller fin-techs that focus on a specific vertical or function. However, this tactic doesn’t foster a culture that supports ongoing innovation. Rather, it simply keeps the status quo as new technologies are glommed on.
To create a culture of innovation capable of driving real, digital change in a sustainable way, financial services organizations should follow these four best practices:
- Establish a realistic timeline.
Most financial services organizations have an idea of what they want their digitally-transformed business to look like, but executing on this goal can be difficult. In fact, according to a recent study we conducted of middle and senior-level managers in the financial services industry, budget (42.1 percent), timeline (31.6 percent) and communication (26.3 percent) are the biggest digital transformation pain points. To overcome these hurdles, start by outlining a realistic timeline that clearly articulates the project goals, existing dependencies and budget. Ensure all stakeholders adhere to this plan, and monitor your timeline closely to see if any components are falling behind, causing confusion or going over budget, as catching derailments early is critical.
- Balance fear of the unknown with radical change.
For risk-averse organizations, the uncertainty that comes with digital innovation can be paralyzing. Only familiar, achievable projects feel comfortable, and more advanced, innovative projects tend to be deprioritized, eventually slipping into backlog purgatory. Conversely, some organizations struggle with being too eager to implement change. This can lead to a loss of focus on the core practices that keep a business running, so it’s imperative that organizations find a balance between embracing change and not innovating for innovation’s sake.
- Confront technical debt.
Technical debt (i.e. extra development work that piles up because teams use workarounds that are faster or easier to implement in the short run) is common in the financial services industry. For instance, when larger organizations continually bring on new technologies via mergers or acquisitions, they often find themselves with IT infrastructure that resembles a Frankenstein-like mash-up of smaller project pieces. Technical debt isn’t sustainable and can quickly become insurmountable, especially as new executives or tech talent contribute to IT messiness over time, so it behooves organizations to prioritize digging out of their technical debt sooner rather than later.
- Be patient and open-minded.
Digital transformation isn’t just about technology; it’s also about changing business processes and organizational structure. Given the large scope of digital transformation projects, it’s important to start small and work iteratively. Establish building blocks of change and make sure company leaders have permission to experiment, take risks and potentially fail. Also, don’t expect radical change overnight. Revamping entire workflows and modifying employee mentality is a massive undertaking, and it’s crucial to maintain a productive and happy workforce throughout all this upheaval.
To successfully drive digital change, start by identifying the areas of your business that would best benefit from a fresh influx of ideas. Promote continual communication across all company stakeholders by adhering to an agreed-upon timeline, and don’t fall victim to overwhelming levels of technical debt. Perhaps most importantly, recognize that digital transformation takes time and always innovate with intent. Rather than embracing digital trends simply because they appear popular, remember the specific business needs that inspired your digital transformation in the first place. Because when businesses innovate purposefully, they’re more likely to realize long-lasting change that impacts their bottom line.
About Matt Rossi
Matt Rossi is the Vice President of Technology at Janeiro Digital and is responsible for the Architecture, Engineering, and Quality Assurance disciplines within the company. His number one priority is ensuring that the team architects and delivers solutions that exceeds clients’ expectations. Over his career, Matt has been fortunate to be a part of multiple high performing teams and build significant hands-on expertise across a wide variety of technology stacks. He has a rich history of designing and implementing enterprise grade solutions at scale. Prior to joining Janeiro Digital, he was a Senior Technology Manager at Bank of America where he led several transformational initiatives.