Financial services organizations are reconfiguring their digital transformation strategies, which had become somewhat unfocused and ineffective, as they strive to innovate to stay ahead of their competition, reveals new research from business information publisher Arizent.
“Increasing competitive, regulatory and financial pressures are forcing companies to innovate to stay competitive and drive their businesses forward,” said Janet King, vice president of research at Arizent, in a news release. “This new study offers business leaders new insights into the way their peers are organizing their internal cultures, teams and processes to deliver innovation.”
The survey from Arizent—the parent company of American Banker, The Bond Buyer, National Mortgage News, Financial Planning and other leading information brands—finds a scattered distribution of where financial services firms land relative to innovation.
One in four (24 percent) are outpacing their peers or “guiding” the sector with respect to the extent of their commitment to innovation policies and practices. A majority (52 percent) are “following” or moving along with the masses with their innovation decisions and 23 percent are trailing their peers with respect to the adoption of innovations policies and practices.
Other key findings of the research include:
- Among companies actively pursuing innovation, about half have a documented strategy or roadmap. Not surprisingly, those with a documented strategy are also more likely to have the policies, practices and tools in place to support and advance innovation.
- Customer experience is the primary goal driving innovation initiatives, with far fewer companies prioritizing efforts that deliver operational or business model innovations. This leads to potential misalignments as back-office areas will be key to sustaining and advancing customer-facing innovation.
- 6 out of 10 innovation stakeholders admit their firms have not aligned their technology roadmap and investments with key areas of innovation, a critical gap that could undermine future success. Big data, analytics, security, cloud, digital payments, APIs and AI are most widely seen as vital to progress.
- Corporate innovation programs are still relatively new. The most commonly adopted course of action is establishing a dedicated innovation team, taken by just under half of those surveyed. Only a minority report implementing open innovation programs like hackathons, demo days or innovation labs.
- That minority looks ready for growth, with innovation lab or external partnership investments doubling to 20 percent in the next two years. This will need to be balanced against other programs, with organizational interest in both internally oriented projects and outside investment/acquisitions.
The results and implications of this survey are covered in stories in the following Arizent publications:
- Rebooting Innovation, American Banker
- Rebooting Innovation, National Mortgage News
- Rebooting Innovation, Financial Planning
- Rebooting Innovation, Employee Benefit News
- Rebooting Innovation, Digital Mortgage
Arizent conducted a survey of innovation leaders from March 19 to April 5. Respondents were screened for employment at companies pursuing innovation initiatives and personal involvement with or knowledge of those programs. It resulted in 287 qualified participants representing perspectives across the financial services ecosystem including banks, credit unions, mortgage brokers, insurance carriers, wealth managers, financial planners, accountants and fintech firms.