A collaborative culture is critical for innovation. For banks, it means innovation from within will remain difficult and may also hinder direct cooperation with start-ups.

The topic of collaboration in banking crept up in a few conversations after the release of an Accenture report on “The Future of Fintech and Banking” suggesting that: “Openness, Collaboration and Investment are the critical themes that emerge for existing banking players”.

Collaboration is critical to innovation

The report focuses on collaboration as “co-innovation” between incumbents and start-ups. Of the banking executives who took part: “56% claim that organisational culture is the biggest area of their business that needs to change in order to work effectively with start-ups”. Collaboration is often a last resort strategy with external parties, but that only reflects the inner culture, where individual performance remains the cornerstone of the banking world.

It’s true for front offices, but it permeates most areas, even when individual performance doesn’t mean much altogether. IT is a good example: the delivery of a product doesn’t rely on individual performance but on team effort. And a team performance is not equal the sum of its parts: we all have our preferred sport examples to illustrate this.

“56% claim that organisational culture is the biggest area of their business that needs to change in order to work effectively with start-ups”

So individuals, and on a wider scale teams or departments, must collaborate in order to increase global productivity or deliver transversal projects. But somehow, individual targets, at team or personal level, are still considered the only motivation factor. Of course it can make sense, specially if the individuals are independent. But that is rarely the case, and when collaboration is the only way towards higher overall performance, it is sad to see individualistic behaviours formally encouraged.

“72% feel their bank has only a fragmented or opportunistic strategy to dealing within digital innovation”

The consequence is that, of the respondents of the Accenture report: “72% feel their bank has only a fragmented or opportunistic strategy to dealing within digital innovation”. The only way to gather all the pieces and come up with a coherent innovation strategy would require cooperation between departments, teams and individuals. But transforming culture is simple in theory but complex in practice.

Within any culture, some behaviours are rewarded while others are penalised, explicitly or implicitly. Being aware of which behaviour is rewarded is a great indicator of a culture. And when a reward/penalty system truly changes, behaviours follow immediately. So it is possible to increase collaboration almost mechanically.

Only few people in banking truly perceive how critical innovation has become.

In practice though, sketching a new collaborative culture by modifying the reward/penalty model is a daunting task. Of course, it’s about reviewing appraisal systems with cooperation in mind (seeing grins of disbelief), but it also means devising cleverer ways to manage teams and projects which are not based solely on a mathematical division of work. And all this needs to be performed as a deep transformation, not just a box ticking exercise. So it would take extraordinary vision to kick off a change of this magnitude while the reasons to modify the existing system are still fuzzy and only few people in banking truly perceive how critical innovation has become.

Co-innovation will probably develop mainly in the form of localised “outsourced innovation” or investment opportunities

Innovation is unlikely to flourish within banks and true collaboration with start-ups may remain unnatural. In this context, co-innovation will probably develop mainly in the form of localised “outsourced innovation” or investment opportunities. As time passes and the “innovative” solutions become the new standards, banks will find themselves relying more and more on start-ups for their technology solutions. Innovation is exponential, so time - not that long - will tell what impact the current days will have on banks and incumbents.

Collaborate to innovate: what will innovation look like for banks?
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