Most if not all of the major banks now have an innovations team to cultivate new ideas and services that often manifest as technology offerings, such as banking apps and other online solutions. But do banks really need a department specifically dedicated to innovation?
Innovation has become a fundamental part of financial services, or is at least now a common word in the financial services lexicon.
Companies including Westpac and its sister bank St George, as well as the Commonwealth Bank and ANZ, all have innovation units within their businesses.
Bendigo and Adelaide Bank head of customer-led connections Andrew Cairns, however, has derided the concept of innovation teams in banking.
"Don't set up an innovation department," he said at the FST Media banking technology conference in Sydney. "To me, innovation is a cultural and leadership issue.
"It's not a department's responsibility; it's a company responsibility."
According to Cairns, organisations are capable of fuelling innovation themselves as a whole by taking advantage of existing assets, ideas, and skill sets.
He also highlighted that customers should also have a voice in driving innovation ideas and development within an organisation.
"Because that is who we serve," Cairns said.
AMP head of growth and innovation Munib Karavdic (who was, ironically, seated next to Cairns) shot down Cairns' suggestion to do away with innovation departments in a moment worthy of an "awkward turtle".
"There is a misconception that when you have an innovation team, everybody in the organisation believes that team should provide all the innovations — which is not the case," Karavdic said.
When AMP first set up an innovations program and formed a team for it, Karavdic said that he was very vocal about his intention to make his department redundant in three to five years' time.
"Because by then, the entire organisations will be on the same journey," he said. "But before you actually get the organisation on that journey, you need to have some people who will actually help build that infrastructure [for innovation]."
Now, you'd expect that from Karavdic, considering that he heads up the innovations side of things at AMP and would be shooting himself in the foot if he didn't defend the relevance of his department. But he does actually have a point. Banks are often saddled with bureaucracy, which traditionally governs their operations.
Ideas are weighed up carefully, and are usually based on how much they would cost and how much money can be made from them. It's a system that's not really conducive to an innovative environment.
Commonwealth Bank CIO Michael Harte lamented this fact last month at the ACS Young IT conference, although he was commenting broadly on the enterprise space as a whole. He noted that traditional ROI business models "can retard innovation."
It's hard to imagine the staff of innovation units holed up somewhere in a back office fervently spewing out bright ideas on how banks can improve their services. What's more likely to happen, as Karavdic said, is that these teams will be the catalyst for the cultural and leadership changes that Cairns was talking about.
Indeed, every worker at a bank, from back-end IT to front-end service staff, should be encouraged to come up with new ideas and offerings that will benefit the customer. But to cultivate an environment where that happens isn't something that can be done overnight (cue the overused "Rome wasn't built in a day" reference), and just having an innovations team may be enough to remind workers that their companies are actually open to accepting new ideas.
Do banks, or any enterprise organisations for that matter, actually need innovation teams? Let us know what you think in the comments section below.