Interview: Innovation with Markus Höhne – Head of Corporate Development & Customer Solutions at Deutsche Kreditbank AG

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
We have conducted a series of interviews to gather learnings and points of view from top innovation experts on the state of innovation in leading organizations.
What does innovation mean to you?
In my view, innovation is a structured approach to finding solutions to new challenges. That has several aspects: (1) it should be something new (2) it needs to drive customer satisfaction whether that is convenience, superior design, comfort or ease of use, and (3) it should create meaningful business impact.
What forms could innovation take? Could it be a new business model, a venture, or can it also be a reorganization of a process?

Innovation starts at the culture level. Let me give you an example: At DKB we identify ourselves by a strong hands-on mentality. This mindset has been our heritage and helped us executing on bold ideas in the past, for example to become Germany’s first online direct bank. Today, we see that processes are of great importance to use that strength systematically. In fact, two years ago we designed a new strategy and innovation process. First, we conducted a great deal of analysis. We spoke with stakeholders and to the executive board to get the big picture. Also, we talked to customers and to employees, which we added to the analysis. We identified key topics and eventually defined a high-level strategic impact direction which we shared with various units in the bank asking: (1) how can we translate the strategic topics into the unit’s reality, (2) what pain points do we expect, (3) what are our strengths, (4) where can we still improve. Going through this process, we addressed the need for transparency through intense communication. Ultimately, we significantly changed our culture of collaboration.

If you look at the market of financial services, is there any innovation focus you see in the next 12 months? Is there any topic, where you believe, your industry should dive into?

What’s important is to identify what are the pain points of customers and what added value we can offer. An example is the lending business. On the one hand, you get a loan based on hard facts, such as credit scorings. On the other hand, it’s important to consider how easy it is to get the money into our customers’ hands and how good the user experience is during the process – in terms of quick approval, time to money, and automation. DKB recently launched a fully automated private loan, which is a great step towards user experience. But for me, the question regarding 2021 is deciding which loan products should become automated in a useful and convenient way. It’s about taking the best decisions to innovate our core business.

How do you approach the exploration of customer pain points? Do you have a process, a methodology? Also, what is the best way to determine when automation makes sense and when personal relationships are more important?
These are the questions we often go to companies like Frontira to seek help because we are still finding our way. What we have seen is how important it is to understand your problem before rushing in with solutions. We want to have clarity and a deep understanding among all involved project members about the business challenge ahead of us. Then, you need to talk to customers early to determine what is important for them. We conduct workshops with customers and non-customers to test topics, try things to get a feeling for what is relevant. Currently, we are growing our innovation expertise within DKB to optimize these processes. Thus, we conduct megatrend analyses to see where society is heading and develop alternative scenarios that we should prepare for. Talking about methodology, we first validate the problem, we design possible solution spaces, then go into development, then into delivery, and then again into the process of adjustment and improvement mode. We call this the 5D model.
What do you think are the successful ingredients for a company?
Actually, I have rarely experienced a lack of ideas in an organization. One of the success factors is having a structured approach to determine which ideas are feasible and which fit the company. The mindset of people is a substantial success factor. An important question regarding the mindset of the organization is to ensure that we are providing the resources needed to properly develop ideas on a conceptual and executional level. Also, we need to provide backing and support for intrapreneurs. A few years ago there was a trend to take innovation outside the parent company. The difficulty was integrating the innovation back into the organization. Many ideas failed with this approach because there was no clear bridge between the innovation unit and the larger organization.
What are the biggest hurdles that companies face when it comes to innovation?

The battle for resources and making decisions on where to allocate them. Startups do not have that problem.

They identify a single innovation focus and immerse themselves 100% in it.

Startups also seem to have much less to worry about.

Exactly. They continuously develop cool little features. As a large organization, you manage everything simultaneously while still keeping an eye on what should be developed, what do these products do, how many of our resources should we invest in these ‘smaller pieces of the business puzzle. The recognition for the need to invest in smaller innovations is something that has become apparent only recently. I think that often, expectations towards innovation are too big because we always think of innovation as something super powerful and we lose sight of smaller steps.

We agreed over ten years ago that for us innovation happens everywhere. But, we still face the challenge to innovate even on smaller initiatives because there’s always the question of where we should allocate key resources. It’s not always about budgets but also allocating know-how and competencies. Being able to prioritize is very important.

Is there any digital product that has caught your attention recently?
Clubhouse. The idea behind the platform fascinates me. It is a place where the audience can hear a variety of topics discussed by a very diverse group of people and participate at the same time. The way they created a new experience during the pandemic and scaled rapidly was impressive.
In Financial Services, is there any competitive product or service that made you a little envious that your organization did not launch something similar?
Vivid launched a well designed and fun onboarding process for private customers that takes only ten minutes including the Apple Pay integration.
Do you have a video, a podcast, a book, or an article that you would recommend to peers?
Yes, in fact it’s the novel ‘Big Five for Life’. I enjoyed the ideas, how an organization creates the enthusiasm and physical space for innovation. The key character founded an organization, searched for people to work there who had a deep connection to the business idea and managed over and over again to connect the personal lifeblood of every single employee to the business case of the company.
Special thanks to Markus Höhne 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.

The New Normal.

The COVID-19 outbreak is a new global reality that arrived fast and unexpectly, resulting in the birth of completely unfamiliar business context. With the beginning of the new calendar and fiscal years, businesses have seen their plans for 2020 become obsolete over the course of a few weeks. Undoubtedly as part of immediate crisis management, business leaders are coping with today but also revising plans, projections and priorities for what many are calling the ‘New Normal’.