Fintech Innovation Practices: Probably Less Consistent Than You Think

If the author (me) was surprised by the many findings in my latest research report 'Innovation Speed to Market Report: How Financial Sector Firms Manage Innovation Projects to Meet Timelines and Customer Needs', I'll bet you will be too. While many of my studies have a primarily quantitative approach, this one relied solely on IDIs (In Depth Interviews) of leaders responsible for the biggest digital innovation projects in fintech or payments, ranging from three of the largest four North American banks, global payments providers, insurers and investment sector firms, to mid-market and small credit unions. Many of the interviews were conducted by phone, with the remainder at the U.S. Money2020 conference that I recently spoke at. For this study, I had operational support from the study's sponsor, Comrade and the firm that recently acquired them, digital technology solutions provider CI&T.

So how does a researcher attempt to define the undefinable, such as "how long does the 'average' big innovation project take?". I took copious notes on three questions: 1) Describe the stages for your biggest innovation projects, in your own words 2) How long does such projects take, from unapproved idea to full customer availability? 3) What best practices can you share? The answers were fascinating.

Project durations vary widely, but the answer is '24 months'. Surprisingly, shorter durations (less than a year) are achieved by either the largest or smallest FIs, yet with reasons and implications that are in position to those experienced at the largest firms. Select top banks get big innovation projects to market faster with Lean methods (something the study describes in detail, and note that being Lean is more than just being Agile), and get to dictate most of the full outcomes. The smallest FIs essentially don't choose the outcomes–and rather choose a vendor they believe to be best-positioned to deliver the most innovative outcomes possible now and in the future–and give up freedom of specific choice to meet budgetary and timings requirements. Among the vast rest, some projects are still taking anywhere from five years to infinity (in the latter case, cited by a few hangdog interviewees who have largely given up hope that their current employer can ever be competitive).

Innovation project stages are about as different as you could possibly imagine, which is why I graphed just a few of them in the full study. A couple of forward-thinking leaders essentially said "our projects don't start with ideation, they start with problem statements. Ideas are a dime a dozen if not accompanied by a statement of the need or market opportunity, and they get shot-blocked". Some leaders perceive their innovation projects as having just three stages, and others 12! One big overlooked factor: some non-executive respondents gleefully explained that they get approvals one time (and only for the years' total budget rather than at the project level), while others must constantly re-present updates on each individual project to gain the approval to continue. In the latter case, all I heard was despondency (and possibly, background sounds from a multi-tasking interviewee either updating their resume or opening a drawer to take another shot of liquid courage).

Serious point: there was a strong correlation between morale and how open or advanced any given company’s innovation processes are. I could write a book on that point alone, and to C-level executives out there I underscore the finding this way: today's tight tech talent pool will only seem worse within shops that a) only allow ideas to come from the top b) are perennially a "fast follower" (fintech's code-word for "laggard"), and c) are still exclusively developing in old-school platforms and development models. On the other hand, interviewees working with lean methods that embrace constant customer and market definition expressed much enthusiasm and optimism about what they do. I silently concluded several interviews with the thought "I'll bet this person is working somewhere else in six months", and in one case, the respondent has already moved on. My conclusion is that poor talent recruiting and turnover is the second deadly aftershock that follows weakened innovation practices.

There's so much more the report covers. I went in a skeptic on *today's* innovation labs and was converted to believe that they are the winning approach–but only for organizations that have the right profile. Several organizations were as surprised as I was to find an individual from a so called "staid" function (irony intended...I of all people should know better!) like security, fraud or compliance had earned a place at the table of their most creative innovators (because desperation). And developing primarily for online? Take it from a top competitor and skip a full step ahead. One $1T bank not even developing or prototyping in 'mobile first' anymore, having already gone to the 'mobile only' approach that allows them to deliberately leave their new mobile products' online versions as an afterthought.

Hope you enjoy!


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