Banking / Finance

Reality does not match perception in banking innovation

Banking industry executives see the perception of their brands’ innovation skyrocketing.
The reality of how much innovation is going on in banking: not so much.
That’s the essence of Bank Innovation‘s State of Banking Innovation study for the third quarter of 2015. Specifically, industry executives rated the overall innovation at their companies at 2.67 on a scale of 1 to 5, where 1 is “poor” and 5 is “excellent.” That innovation rating is down from 3.08 a year ago and off nearly 100 basis points from the second quarter of 2013, when it peaked at 3.45.
Those numbers compared to a soaring of level of innovation perceived for industry brands. Industry executives scored their brands a 4.65 on that scale of 1-to-5. That’s much higher than the 2.80 a year ago.
“There’s a clear disconnect between innovation practice and operations,” one respondent wrote. “Banks wants to be perceived as innovative, rather than actually innovate.”
A total of 115 people took part in the Bank Innovation study.
The true explanation for the disconnect is hard to decipher, but it seems to be rooted not just in desire, but technical challenges. As one respondent put it, there is a “very superficial layer of innovation, not based on true-customer service [or] shared objectives. Banking is unable to destroy [its] IT legacy, thus making innovation slow-moving.” The culprit, it seems, is a “lack of new ideas,” according to one respondent.

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