This interview is part of our Expert Interview Series
We have conducted a series of interviews to gather learnings and points of view from top management’s perspective on the state of innovation in banking. Those findings, among other analysis, predictions and upcoming business opportunities, are part of our “Financial Services 2021 Innovation Report” which will be released this summer.
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This interview is part of our Expert Interview Series
What does innovation mean to you? What would be your definition?
I like to say that innovation is finding new ways to solve old problems. Within the last few years, I would also say that it’s finding new ways to solve new problems. Things are evolving so fast that we need to constantly keep pace with customer problems and find new ways to anticipate them. We run the risk of spending too much time on trying to define innovation and less on trying to do it.
Today, everything moves really fast. In order to create something new, you must accept success, but you must also accept failure. Two connected dimensions must be considered, innovation and entrepreneurship. Entrepreneurs work on risk. Innovation works on risk as well. Nowadays, we operate with increasing speed and there is a dimension of risk by trying to get things done.
Is there a project that you have been involved in recently that you would consider a good example of innovation?
I just joined Cofidis Group and embraced a new role, so I will speak about my past experience in Cofidis Italy. The company is mature and solid, but has a start-up approach, focusing on solving old problems with new ideas. We have done some great projects. Historically, most companies that operate in our sector, have the tendency to simply transpose an offline solution into the digital world, without adapting it to the new context. In Italy, we started from scratch and tried to design something that is web-native. We worked on a lot of projects for the online transformation of credit and we managed several big partnerships in e-commerce.
We also developed several BNPL solutions through a smart POS. A smart POS is an Android-based technology, so it has no big limitations, besides imagination. These are good examples, because of the way we did it: we weren’t trying to adapt or force existing processes into new technology. We studied customer needs and used technology as an enabler. We tried to understand the ecosystem and create something that would fit smoothly into that ecosystem even if it meant adapting ourselves and our “ways of doing business”.
What should be the innovation focus of the financial service industry for the coming year? What are the most interesting areas?
‘Access.’ Access has many dimensions. Technological access, access to credit, online in general, in stores, instant access to the things that people need. How can the customer have access to credit online in a way that is as easy as any other products people have access to instantly?
Today, with PSD2 (maybe PSD3 tomorrow) and open banking we are more enabled to open the scope of what we can do, be more certain in our activities and improve access to responsible credit. This includes technology as well as responsibility.
How do you give access to credit? What tools do you have? How do you ensure that you will thrive in the market, even if the market changes, where the changes now mean digitalization?
With open banking, with PSD2 and with technology in general financial institutions can give the right credit to the right person at the right time. And that’s social responsibility.
What do you think are the most effective ways of understanding customer needs?
Keeping a continuous dialog. Consultancy firms can deliver great insights. Companies also need to cultivate their networks and maintain contact with customers by being open and creating ecosystems by which customers can ‘enter’ the enterprise to give feedback. We invest a lot in panels and labs. It’s not a good idea to bypass the customer. When we define our approach for the market and our digital strategy, it’s normal for us to challenge our ideas with clients, business partners and consultants. It’s important to find an ecosystem in which you can discuss the value and where you can talk not about products or projects, but about needs and how to address pain points.
At the Cofidis Group, our enterprise project is called “Experience First.” Customer, partner and social experience, really matters to us.
Are there any specific kind of innovation methodologies that you like to use?
We do agile, we do design thinking, we do hackathons. We are quite open, but we don’t have a standardized model. I also don’t believe in that, because we need to be open. We like to keep trying a diverse set of approaches rather than sticking to just one method. It can become a self-fulfilling prophecy. With just one model, we would force-fit everything to a single approach whether it fits or not. New frameworks are developed all the time. We keep an eye on things to see what new ways of problem-solving might be beneficial for us.
What are the biggest hurdles of innovation? What makes it fail?
It fails when you don’t have everyone on board with the same spirit. The first challenge is always a cultural challenge. When management tells teams to innovate but themselves do not champion innovation, all efforts will fail.
There is also the risk of failure by using a one-dimensional approach to innovation. For instance, if for a company innovation means technology and developing new tools but if these do not answer customer or partner needs, failure is certain.
Have you recently seen an innovation, by any company, that really caught your attention?
The classics. What Amazon, Spotify and Netflix are is always inspiring in what concerns the use of technology to respond to individual customer needs. For the financial sector, I do not have any specific examples that really stand out, but there are some specific players with interesting propositions.
Then you would not think of innovation within the closed boundaries in financial innovation, you would think of it as verticals without boundaries?
Yes and that is a positive challenge for big financial enterprises. What is happening today is that we see more and more players addressing a specific vertical of the business. I don’t see it as a threat because they are contributing to an ecosystem and are bringing new ways of doing business that can be interesting for everyone. Since we are generalistic, it is great to look at specifics, to keep an open mind and to remember the basics; data, personalization, seamlessness of processes: areas where we see our customer needs to be reflected.
What would be the one book or article that you would suggest everyone in innovation to read?
I would suggest Peter Drucker. There is also some emotion in it. It was my first exposure to innovation when I was in school. In this Facebook, Twitter world of ours, it’s easy to get overwhelmed by information. There are lots of sources and that’s a great thing, but sometimes you need to go back to the basics. Innovation is nowadays accelerated by technology, but that always existed. Responding to customer needs is how enterprises always thrived with the creation of value through something new. I think Peter Drucker was one of the first to really encapsulate reality with a theoretical approach. And it’s still useful.
Special thanks to Gilberto Sousa for joining us on this Interview
Innovation in Financial Services - subscribe to receive our 2021 report
We have recently surveyed 148 business leaders working in the financial services sector to find out all about the state of innovation in disruptive times.
Subscribe the receive the first copy of the report once it’s released (Q3 2021)
What will you learn about:
- Catalysts and drivers of pushing innovation initiatives in large financial institutions.
- The playgrounds that are most explored when considering innovation as a growth engine for the organization.
- Resources and tools that are most applied in financial services innovation projects.
- The biggest hurdles to jump and barriers to breakdown in achieving meaningful outcomes that the organisation is counting on.
Bonus content: The industries considered as most in danger of disruption, detailed survey results and methodology in the appendix.