INNOVATION IS VITAL FOR TODAY’S FINANCIAL SERVICES SECTOR.

Richard McCann discovers how Britain’s biggest mutual is creating a culture of innovation and creativity.

“Changing the relationship a customer has with their bank from the transactional to the emotional is the Holy Grail in customer retention and advocacy,” says Nationwide Building Society’s Head of Group Innovation Daryl Wilkinson.

But can a home loan and savings business – particularly one with two centuries of history and assets of around $300bn – ever become ‘customer-focused’,  ‘innovative’, ‘high-performance’ and ‘marketing-led’?

It’s vital, says Jake Chambers, Nationwide’s Head of Insight & Innovation. “Only by continually challenging and re-imagining the best way to meet customer needs can any brand ensure continued relevance and success. If we hang on to the past too tightly, it’s only a matter of time until we realise a brighter future has slipped through our fingers.”

Identifying Breakthrough Solutions

“Tech-savvy consumers are used to 24/7 multi-channel communications,” says Steve Bailey, who is director of Identity Methods, a consultancy advising UK banks. “If they can’t get the customer experience they demand from an existing supplier, they’ll move rapidly to where they can – and they’ll use social media to tell the world about it. But delight them and they’ll broadcast that too.”

Think of the disruption to the music business, print advertising and traditional publishing because of the failure of those industries to understand and respond quickly to the challenges of new technologies and trends. Organisations must be capable of responding to new, rapidly evolving consumer and market expectations.

“We need the culture and capacity to imagine and implement new ideas that maintain consistency with our brand but offer something new – better – for our customers,”  says Daryl Wilkinson. “We want to identify the breakthrough solutions that will improve our customers’ everyday lives,” he adds, while acknowledging that giving a team the freedom to completely re-think the customer experience is “a big ask, particularly in financial organisations – that requires senior management to resist the urge to pull back their best people back from the Innovation Lab to help deal with operational priorities.”

Unintended Consequences

Companies can incubate new practices or products to gain market prominence or maintain performance, and those ideas often need to be implemented quickly in order to have maximum impact. One of the Chief Innovation Officer’s (CINO’s) key roles is to speed up this process.  Harvard Business School entrepreneur-in-residence Eric Ries advocates the ‘Innovation Factory’ approach with solutions that start with a ‘minimum viable product’, hence the increasing popularity of Low-code IT platforms that allow for the ‘build-and-learn feedback loop’ recommended by Ries.

Daryl Wilkinson points out that fintech innovation is about delivery above method: “It requires thinking about propositions from the customer’s point of view, rather than delivering new technology because it’s there.”

“The internet is now at the stage of presenting ‘unintended consequences’ which CINOs can turn from negative to positive,” explains Identity Methods’ Steve Bailey. “For example, when social media presented the opportunity for virtual conversations, few businesses saw this apparently benign activity as eventually empowering users to complain, praise, or recommend a product, service or brand to millions, making or breaking mighty corporations and turning SMEs into global powerhouses.”

Nationwide’s use of those unintended consequences to innovate USPs – for example their Savings Watch initiative that responded to customer complaints of the industry in general by innovating a service designed to engage on an emotional as well as a practical level –  shows precisely the negative to positive trend reversal that an Innovation Factory should produce.

Presenteeism

 “A lot of people are frightened of change generally,” says Hollywood-born business psychologist Professor Sir Cary Cooper. “So we have to get them engaged in the change process. But sometimes the introduction of technology is so long and cumbersome and so complex (that) they get fed up – so do it quickly, be experimental. If you create the right kind of culture you will get innovation and creativity.

“There are now fewer people doing more work,” adds Sir Cary.”They’re feeling job insecure because of what’s happened around them during the recession. They’re working longer hours to show ‘face time’ – or what I call ‘presenteeism’ – so they come early and stay late. They send emails at night, they work while they’re on holiday. All that is affecting the culture of innovation negatively. Innovation comes from the interface of all sorts of people and how well you team-build. And insecure, overworked people don’t do that well.”

The quicker you innovate, the better, advises Sir Cary. “The longer the process becomes, the more chance it’s going to be made redundant by time. I like the idea of lean technology because you’re going to try something and you’re not going to spend a lot of time. If it doesn’t work – dump it, and go on to the next idea.

You’ve got to do something differently. People need to feel part of the process, particularly technological change. We have to get them involved.  The simpler it is, the better.”

But innovation won’t happen by itself, warns Sir Cary: “People need technological enablers. It’s better to go to the top – a CEO or a COO – because they’re going to make sure it happens. “