Professor Walter Van Dyck of Vlerick Business School says retail banks are some of the slowest innovators. He suggests there are three crucial steps these institutions need to take to keep ahead of the innovation curve.

1.       Develop partnerships across sectors

The ultimate advantage will come from connecting across sectors. Imagine a bank working with a real estate agency on innovating solutions for their market.  Expand the ecosystem beyond your arena and you come across disruptive ideas.

2.       Utilise data analytics and ISPs to understand the customer

Banks need to further refine their segmentation in order to better understand the customer. It is essential that they work with data analytics companies and service providers. Whilst the former will give them insight into what the customer wants, the latter will connect them to the customer.

3.       Asset optimisation

Rather than having R&D departments, banks have service operations and a client base. In order to maximise their potential, they have to move beyond optimising their assets by improving (i.e. procure faster servers and better computers) and start optimising by innovating. Developing genuinely innovative IT-enabled customer facing processes would be a good place to start.

 Professor Van Dyck says:  ‘’The service based ecosystem is far behind other innovation ecosystems particularly because it only recently started innovating. In this industry banks in particular are known for being traditional and this is the reason why they have fallen behind the innovation curve. The key is to look outside of your ecosystem and think of smart product combinations. The iPhone disrupted the market simply because it facilitated smart partnerships and product combinations – its technology was not that innovative.’’