“What is the one thing you would change?”, “what is the strongest impediment to innovation?”, “why is it virtually impossible for a fintech to sell to a large bank?”…I could go on and on with the questions I have been asked during my numerous public speaking appearances.
First of all, innovation is to me really about pushing the boundaries of what we know is possible else it is a mere improvement. Innovation is about being 5 years old, a complete beginner creating a new paradigm because he/she wouldn’t know it is inconceivable. For example, during the era of horses carriage explaining the concept of a “car” would have taken hours and leave most doubting that such an awful thing would work (“you said small explosions in what you called an engine if I remember well, create energy and motion?!?!?!”). That is innovation. If I explain the concept of an electric car, I would take less time. I’d say a few words and you would get it straight away. That is an improvement. Both are important but in most of the fintech “innovation” I witness, it is more improvement than innovation. End of the parenthesis.
Everyone answers “mindset” to the questions above and I do too…but I want to go deeper into that shallow one-liner. What is a mindset? A collection of beliefs, experiences, environmental pressures but in short it is ego. Nothing more. Nothing less.
Mindset is ego because it underpins a few story lines: “I know what is right”, “I am an expert”, “this is ridiculous”, “you really don’t know what you’re talking about”, “I have been doing this for a long time you know!” and so forth. Ego simply means “I am” but more often than not it unfortunately translates into behaviours that cry “I am more than”. We are all afraid of something and most of us are deeply unseated by change. Change is insecurity, it is unknown and it is raw. It uncovers our flaws, shortcomings: we cannot pretend anymore, we might try to put on a good face but we have to adapt to the situation as it presents itself.
Change makes us feel like flotsam without any control.
Incentives and mindset are closely related: without a clear incentive, mindset doesn't budge. At the very simple level it is just a “what’s in it for me?” paradigm.
It is not easy to get incentives right because we all are different and complex and…most of us do not want to be read too easily. You need to spend time trying to understand the psyche of your customer, colleague or whoever you want to influence (influence as in “to get someone off their arse”). Whilst being transparent and up-front with your own motivations will help lower their “defence” it is not a guarantee they will open up to what really matters to them. Incentives can be monetary, self-promotional, philosophical, aesthetic, getting a new role etc. They may change over time. Once the incentives have been understood and addressed then change may begin.
But don’t hold your breath if you like us, are in the B2B/B2B2C space, because even if you think you have the found right incentives, you won’t be signing that deal any time soon. A lot of incumbents I have met got switched off when I told them that either we didn’t have one of their competitors as client, we had other fintech as clients (that’s a heavy discount on a reference client: “who? dunno them, ah a fintech…ok”) or I couldn’t mention the name of our clients because of non-disclosure. Whilst they know I am from the same industry, speak the same language and they can check my references, they wouldn’t trust our ability to deliver something that wouldn’t blow up later and jeopardise their career. Simply because we didn’t have a mate of theirs who went “through the pain” of working with us, there was no way they would take the role of a guinea pig. The size of their mortgage must have been the culprit, not my accent, my stubble or tieless appearance!
Another hindering factor is that a lot of banking managers (as you know from my last post, I am parsimonious with using the term “leader”!) hide behind regulated activities as a reason for the status quo. I like to challenge them by asking which legislation, article, paragraph they refer to so I can be as enlightened as them but usually I get a fluffy answer in return. I even was asked once to talk to the local financial authorities to understand their position on cloud computing and loop back to tell that senior manager what to do!
Contagion is another one of these screen-words used to hide behind and kill innovation. Granted, contagion is a risk no-one wants to take because anything that touches the client can badly stain a brand but technology is so advanced nowadays that a sample subset can be opted-in and segregated from the wider clientele. Solutions can be tested in-house without any leakages and if biotech and pharmas can do it, why banks cannot do it? So how do you change your own mindset then and become innovative?
- Being humble, realising deep inside there is a lot more we don’t know than what we profess is only the start.
I will give you a very practical and personal example on humility: we looked to re-engineer our trading app and some of us in the team are capital markets experts. Had we gone down our “we know it all” route we would have been completely off the mark. We would have designed our apps around the trading pad and news but rather than do that we went down the route of “we don’t know anything yet, let’s define a persona and find out about its behaviours, motivations and needs”. We let our UX designer Hanny who has a background in psychology do his design thinking magic. The result was showing the portfolio performance as a feel-good/re-assurance factor for the user. We uncovered a lot more insights and developed a few interesting features we could have missed with our amazing but biased expertise. We improved upon the original design but I am confident that some of our “impossible” goals will create a lot of innovative products in the near future...
- Another thing about innovation is to try and fail fast. Failing fast, breaking things is nice and gimmicky because hierarchies and incentives in a bank are not conducive to innovation: no-one has been promoted for being a failure, no boss wants to publish a litany of failure under his leadership and go on the record to say that he/she didn’t know or made the wrong decisions.
- There cannot be the “boss of innovation” simply because everyone has to be able to chip in and participate. Sometimes, as I have seen more than once, a “stupid question” (they never are) brings a different viewpoint, changes the way we do things because it feels logical and natural.
- Listening to the staff at the coalface, (a term I have heard more than once in my banking years which I would replace here by “being near the client’s mouth”) is a source of insights that will accelerate any innovation endeavour. They have the pulse on what a personalised service may mean, what clients prefer or abhor, their motivations and behaviour. More often than not though, their insights are not valued or they get simply lost within the organisation.
No-one wants to keep tab of any intelligence if it is not put to good use (purpose goes hand in hand with incentive). We might not sell to any incumbents any time soon but we are selling faster than ever to like-minded fintech, entrepreneurs and new digital players. I have a simple explanation: our incentives are closely aligned from the very first interaction. Both parties are not afraid to make a decision fast, develop a lasting mutually beneficial relationship and take a punt on a possible outcome.
We are building the future of capital markets…Stay tuned.