Improving Bank Innovation: Don't settle for "because." Instead, ask "Why not?"

When you hear the word “innovation,” it’s easy to get immersed in the fantasy that it’s all about flying cars and computer chips implanted in people’s brains. The reality is, the innovation that’s truly impacting the world today is much simpler than that and it’s rooted in the basic concept of improving the experience for the people that use products and services. Ultimately, that means that improving bank innovation doesn't have to be nearly as complex as it seems. Amazon provides some of the best examples of convenience-driven innovation for their customers, most recently with their “Instant Pickup” program that gives Prime members virtually instant access to an extensive list of products.

Consider the value this system provides: Make a purchase within seconds … From a device you carry in your pocket… With established payment information … Receiving goods immediately… At a location convenient to you… The “innovation” was re-conceptualizing how to remove friction points in order to deliver faster, more frequent interactions which in turn results in more satisfied customers. No flying cars, no new computer chips, no bending of the laws of physics required. As banks strive to be competitive, success lies in the ability to follow the examples of Amazon and other companies that are focused first and foremost on the customer’s experience. In order to be an indispensable resource rather than a complex, necessary evil that’s difficult to navigate, the drive needs to be on making the customer’s lives better with the technologies that exist today.  Banks have made strides to improve the consumer banking experiences, but unfortunately, this is a dream that’s in the distant future for their business banking customers – at least as the facts stand today.

69% of small businesses consider their financial institution (FI) to be a utility rather than a business partner, and sadly, 83% of banks in the same study agreed. All of the senior bank executives that I’ve met believe that simplifying things for their customers is critical to the success of their business as well as for the bank. Banks are even asking the right questions in order to make that happen: Where are the friction points? How does friction creep into the process? How can that friction be removed? What is standing in the way of delivering powerful yet easier to use solutions? Unfortunately, the answers they give to those questions are what doom them to failure: ‘Because of regulators’. ‘Because of auditors’. “Because that’s just not the way things are in banking”. They’re old answers to new questions and are certainly not the way to get ahead in this age of technology-driven innovation. I’m not surprised by these roadblocks. There are lots of reasons that can be thrown on the table about why the banking industry needs to be as complicated as it is. We are talking about the movement of vast sums of money rather than a ride service, selling socks or ordering pizza.

However, statements from financial institutions such as “we’re more complex, we have different responsibilities” does not completely ring true. It implies that somehow billions of dollars’ worth of on-line purchases are somehow less important. Or that other retail-focused businesses are not complex. The reality is, the other businesses are just different. And they’re successful because they’ve learned how to innovate within the constraints of their particular complexities. So let’s step back and ask a different question: “does business banking have to be SO complicated for the customer?” Think about that for a second before you answer. Forget about taking on the juggernaut of creating an Amazon-like experience and consider for a moment all of the areas in which you could make your customers’ lives more convenient.

What small steps could your bank take to make the experience even just a little bit better and easier? Where are the small agitations that are leading to a death by a thousand paper cuts? Where is the friction? I can guarantee you that there is friction bloat taking place in virtually every financial institution operating today. I know this because in my experience, most processes are built over time by the unrelenting architect of “because.” Why is this workflow set up like this? Because. Why is this step in the process here? Because. Why does the customer have to provide this information at this time? Because. When I press for explanations to help me understand more about all of these “becauses,” what I generally discover is that there are no concrete reasons behind a large majority of them.

Removing problematic friction points is hindered by the voice of ‘because’ which refuses to relent, leaving the friction as a roadblock to success As banks look towards the future and consider all the ways they need to be competitive in this ever-changing technology landscape, my advice would be to think big by focusing on the basics. Focus on the principle of creating a convenient, frictionless, experience. If you start with a genuine desire to make customers’ lives easier, the innovation will easily follow -- especially if you’re willing to abandon “because” in favor of the more effective “why not?” Remember, it’s the small changes over time that lead to revolution. Keeping that in mind is how banks will be able to compete effectively going forward.